Chipotle Bucks Fast-Food Convention While It Still Can

Chipotle CMO Mark Crumpacker is in an enviable position. He leads marketing for one of the best-performing fast-food chains in the country. The 19-year-old company posted an 11% jump in same-store sales last year, and there's no sign it will slow. Yet he also has one of the leanest traditional-marketing budgets around. Mr. Crumpacker joined Chipotle in 2009 as its first chief marketing officer. Not long after, the company ditched the agency-of -record model and brought its advertising in-house. Chipotle made the change "mostly because it didn't work several times in a row. ... The problem -- I can see now -- was that we simply didn't know what the right message was for our brand at the time," Mr. Crumpacker told Ad Age . "It's an expensive and difficult process to try to figure that out within the typical agency model. I don't think [it] is set up to answer a question that fundamental." It was an unusual move in the fast-food world, especially among the big, national players, which rely on consistent, big-budget marketing campaigns from major agencies to drive traffic and promote new offerings. "This business is all about same-store sales, and what drives that is television," said restaurant marketing veteran Dan Dahlen. Mr. Crumpacker hopes to avoid that strategy, at least for the time being. But that didn't stop him from opportunistically jumping on the TV bandwagon, albeit in a novel fashion. Last month, Chipotle aired its first national TV ad, an animated two-minute spot, during the Grammys. "Back to the Start" featured Willie Nelson covering Coldplay's "The Scientist." The ad, originally released online in late August and in some 5,700 movie theaters in September, told the story of a farmer whose farm had grown into a massive industrial compound. He has a crisis of conscience and moves back to a more humane, sustainable way of operating. Chipotle contracted Creative Artists Agency for the spot. The short film was never intended to be a TV ad, Mr. Crumpacker said, but when Chipotle saw how well-received it was, his goal became "to have as many people see it as possible." The company considered advertising during the Super Bowl, he said, but the cost of a two-minute spot would have exceeded Chipotle's measured-media budget for the entire year. Mr. Crumpacker and his team eventually decided on the Grammys, in part because "music is so powerful." Airing any TV ad (let alone one that 's two minutes long) is highly unorthodox for the chain. It spent just $5.8 million on measured media last year, according to Kantar, down from $7.5 million in 2010. Some marketing experts argue that Chipotle's resistance to traditional media works in its favor. What the brand misses in mass-media exposure it makes up for in reputation -- particularly among a desirable younger audience. "Millennials view the lack of TV as more authentic," said Carol Phillips, adjunct marketing and branding instructor at University of Notre Dame. "Millennials are likely to dismiss a lot of claims. They're responding to everything the brand does and says." In her research, Ms. Phillips said, she has repeatedly heard millennials -- her focus demographic -- refer to Chipotle as a favorite. "It's not surprising that Chipotle would have found a sweet spot with them," she said, pointing out its reputation for offering fresher, more healthful fare than competitors. "It's all about freshness for [millennials]." Mr. Crumpacker said he tries not to identify the core Chipotle user as the typical fast-food fan -- 18- to 34-year-old men -- because "there's such a wide range" of groups he hopes to attract. "We're trying to appeal to an audience we call the "conscientious eaters,'" he said. "Those people are already pretty loyal, but we're trying to resonate with people who aren't thinking about that much. They don't have to choose Chipotle, ultimately. But we'd love for them to think about where their food comes from." Other marketing moves in recent months include Cultivate, a food and music festival Chipotle launched in Chicago in October. It featured live music and chefs from around the country, as well as educational elements that let attendees see how food is raised and grown. Mr. Crumpacker said the event attracted 17,000 people. Chipotle plans to expand the festival this year and add its hometown, Denver, to the schedule. It has also been working to roll out the Farm Team program, Chipotle's version of a loyalty program. Instead of recognizing frequency with a "Buy 10, get one free" scheme, Farm Team rewards knowledge. The typical reward route usually generates what Mr. Crumpacker called "transient loyalty" and therefore doesn't mesh with his goal of building long-term loyalty. The invitation-only, online program quizzes users on sustainability, organic farming and humane food sourcing. "The more knowledge you acquire and the more you share via social media ... the more stuff you get," Mr. Crumpacker said. "My hope is that this knowledge will help people connect with the brand because they feel like we're a company that 's trying to do the right thing." Another issue with the free-food reward is that it's often equivalent to a 10% discount. "That 10% has to come from somewhere, and in fast food, that 's probably the ingredients," Mr. Crumpacker said. "That's not in the program for Chipotle -- we spend more on our ingredients." Of course, one day Chipotle, should it expand to thousands of locations, may have to switch to a more traditional advertising approach. "Chipotle will eventually get to that point, that to drive same-store sales they'll have to go to TV," marketing expert Mr. Dahlen said. "As you get into the top spenders in the category, there's a correlation between share of voice and share of stomach." For now, many big chains are likely envious that Chipotle gets so much attention with such a small ad budget. Mr. Crumpacker said that , while anything is possible, for now the chain plans to continue building long-term loyalty through efforts like Cultivate, Farm Team and more short films. "The alternative is to switch to the type of marketing that every other fast-food company uses -- with these new menu items and big ad campaigns to promote them," said Mr. Crumpacker. "I think once you do that , you can't go back, because those work. ... Once you get on that model, I think it's very, very hard to get off. I want to try to do this as long as I can."

Chipotle Bucks Fast-Food Convention While It Still Can

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