Can a Game Help Chipotle Win Back Customers?

By Markets

Chipotle has released a new game that offers players free food. Image source: Chipotle.

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After spending the summer rewarding customers for frequent visits, Chipotle (NYSE: CMG) is continuing its efforts to woo back diners scared away by its food safety scandal by launching a game.

The chain, whose revenue decreased by 19.9% and comparable-restaurant sales dropped by 26.5% through the first six months of the year, has been pulling out all the stops in order to get people to move past its E. coli problems. Those issues date back to July 2015, with the last E. coli-related incident occurring in October of last year, but the recovery has been slow.

Now, Chipotle has followed up its Chiptopia summer loyalty program with a new online game designed to tout the quality of its ingredients. It's an interesting idea that educates people about the company's food while rewarding players with free meals.

What is Chipotle doing?

Before its foodborne-illness woes, Chipotle rarely offered discounts or free food. Now, the company needs to entice people to come back to its stores after they were scared away by its food safety problems, by which over 350 people in nine states were sickened by E. coli and another 136 were exposed to norovirus in a Boston Chipotle.

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Its latest tactic is an online game based on the company's animated short film,A Love Story, which runs about 4 minutes. The card-flipping free game lets players test their memory by matching real Chipotle ingredients like lettuce, cilantro, and brown rice while not selecting "added flavor" and "added color," which it does not use.

"A Love Storyillustrates how competition among food businesses has caused food to become increasingly processed and filled with added colors and flavors," the company wrote in a press release. "The film -- which has been viewed more than 61 million times -- follows the story of two young entrepreneurs, Ivan and Evie, and the escalating rivalry that leads them to build competing fast food empires with vast menus and heavily processed food."

Anyone who plays the game gets a mobile buy-one, get-one free entree offer redeemable at any Chipotle in the United States or Canada.

Will this work?

While a game based on teaching people about ingredients seems like a less-than-direct route to convincing people that Chipotle has fixed its food safety issues, its research shows that it does work. "Chipotle's own research on A Love Story shows that 71% of consumers the company surveyed said that they would be more likely to agree that Chipotle uses high quality, whole ingredients, and 65% [said] it made them more likely to trust the company." That last stat is perhaps most important.

It's hard to know if the game will have the same impact, but it should increase exposure for the movie. In theory, that could lead to more people deciding they trust the company and even those who don't watch the film might be swayed by the free food offer.

"A commitment to real, unprocessed ingredients remains central to our mission," said Mark Crumpacker, chief marketing and development officer at Chipotle. "This new game furthers the important themes in A Love Story while reinforcing our commitment to sourcing the very best ingredients and preparing them using classic cooking techniques."

Chipotle is pulling out all the stops

While a game alone will not solve Chipotle's traffic problems, it's a piece of the puzzle. The E. coli scandal lost the company some trust and in many cases it simply got consumers out of the habit of visiting the Mexican eatery. Whether it's a game, a free food offer, or something else, the company simply needs to entice people back through the doors.

Doing that has been a multistep process. Part one was improving how its stores handle food and increasing safety procedures. Since addressing those issues, the company launched Chiptopia, rolled out chorizo (a rare menu addition) nationwide, and now it has the game pushing A Love Story.

It's a long process, perhaps longer than it should be, but the chain's Q2 2016 results showed slight gains over Q1. In the first quarter, Chipotle saw revenue drop by 23.4% to $834.5 million while comparable-restaurant sales decreased 29.7%. In Q2, the chain's year-over-year revenue fell by 16.6% to $998.4 million while comparable-restaurant sales decreased 23.6%.

Those are bad but improving numbers. The game may not be the ultimate answer, but it's another step on the road to recovery.

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Daniel Kline has no position in any stocks mentioned. He eats at Chipotle at least twice a month. The Motley Fool owns shares of and recommends Chipotle Mexican Grill. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.