Chipotle revises its turnaround plan

Coming off a sales and traffic slowdown, Chipotle Mexican Grill detailed several new initiatives yesterday for regaining momentum in its nearly 2-year-old turnaround effort.

The updates include enlisting the help of yet another industry veteran, this time from Starbucks, and adding more expected traffic drivers to the menu. Executives cited the benefits of adding queso, saying it has drawn back lapsed customers and now figures into 15% of orders. The sauce is available both as a side, served with chips, or as a topping for other items, and generated a 6% boost in September comparable sales, management said.

Here are the new initiatives they previewed yesterday.

Help from a longtime Starbucks veteran  

Now leading the chain’s development efforts, at least temporarily, is Mike Malanga, the former SVP of store development for Starbucks. Chipotle CEO Steve Ells revealed that Malanga had been providing expansion advice on a consulting basis. His guidance prompted the Mexican chain to ask for a deeper involvement.

Malanga, a 12-year veteran of Starbucks, “will align our development organization with our long-term strategic goals and identify a permanent leader for development,” Ells told the investment community.

The recast of Malanga’s role follows the addition to Chipotle’s team of such veterans as Chief Restaurant Officer Scott Boatwright, formerly of Arby’s, and Chief Communications Officer Laurie Schalow, a longtimer with Yum Brands.

Ells noted the expansion of Malanga’s duties will free another key member of the team, Mark Crumpacker, to serve in a new role as chief marketing and strategic officer, with responsibility for several other initiatives.

Frozen margaritas are coming

Among those other initiatives is the addition of a blended version of the Mexican cocktail, a staple of casual dining but still a relatively rare choice in the fast-casual market. Chipotle already offers an on-the-rocks style of margarita, along with bottled beers.

The frozen margarita is part of what Crumpacker described as “a top to bottom redesign of the beverages we serve and how they are merchandised to our customers.”

Salads to get a spotlight

The chain is also planning changes in its notably simple menu, Crumpacker said. Among the items being developed are “new salad greens and dressing,” he said, without divulging additional details.

He noted that Chipotle’s R&D team is also working on new desserts.

New catering program

Chipotle is revising its catering program to make it accessible to more groups. During the fourth quarter, the chain will start accepting orders for groups as small as 10 people, instead of the current threshold of 20.

The pricing will also be lowered, Crumpacker said. Currently, Chipotle charges $13 per person. “We're piloting three new price tiers, with prices starting at under $9 per person,” he said.

Tech enhancements

Sales coming through smartphones or computers have jumped 51%, according to Ells, prompting the chain to look at other ways of riding that wave. Those measures could include the development of a “digitally forward restaurant design,” he added, without divulging details.

Ready to roll is a new Chipotle phone app, with a target introduction date of Nov. 6, said Chief Digital and Information Officer Curt Garner. He revealed that the program will run on both iOS and Android-run phones, and will incorporate such new features as Apple Pay. The new tech will also load virtual coupons into users’ digital wallets.

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