On Tuesday evening, after days of speculation from financial analysts, Chipotle finally announced what we all knew was coming—that the leading Mexican fast-food chain had suffered a massive, multi-million dollar loss in the first quarter of 2016. The net loss, which totals $26.4 million, is the only first quarter deficit in the history of the company (it boasted a net income of $122.6 million this time last year), and management was quick to blame the slump on lower same-store sales and steep promotional costs.
Earlier this year, dozens of people were sickened by foodborne illnesses linked to Chipotle restaurants in 14 states, and the company has been scrambling to regain its footing with the public ever since. Just last month, a location in Billerica, Massachusetts was shuttered over norovirus concerns. The company reportedly spent $70 million dollars doling out free burritos this year, hoping the campaign would help woo back frightened customers.
Now, in what appears to be an attempt to offset a fresh wave of bad publicity and jumpstart sales, Chipotle announced a temporary rewards program for restaurant-goers this week, along with the introduction of a new menu item: chorizo.
“Our restaurants and leadership teams have worked hard to overcome the challenges of the first quarter,” Monty Moran, Chipotle’s co-CEO, said in a press release Tuesday. Despite the company’s struggles, Chipotle opened 58 restaurants in the first quarter of the year, and plans to open 220 to 235 new outposts by 2017. “What is most important is that we continue to build teams of top performers in our restaurants, and among our field leadership, which will allow us to continue to improve on our already high standards and exceptional customer experience.”
Eater points out that chorizo isn’t exactly groundbreaking territory for Chipotle. The restaurant chain began rolling out chorizo in Kansas City last year and has wanted the item appear on menus nationwide for some time. The rewards plan, which might mirror programs at other chains like Starbucks and McDonald’s, is slated to last through June in the U.S. and Canada, but a permanent system could also be on the horizon.
In Chipotle’s press release Tuesday, Steve Ells, the company’s founder, chairman and co-CEO, made it clear that the chain is in a period of “re-building.” It remains to be seen, however, if rewards—in the form of chorizo, free burritos, or temporary benefits programs—will truly win back the loyalty of its customers.
“As our sales are on a gradual path to recovery, we remain focused on our mission of changing the way people think about and eat fast food,” Ells said. “The best approach to re-building our business is to proudly serve safe and delicious food in our high-quality restaurants every single day, which is exactly what we will continue to do.”