Chipotle Mexican Grill is running TV commercials in select test markets, its first TV buy since 2012, as it tries to convince diners to come back to its restaurants.
The struggling chain said in late September that it was considering airing the "Ingredients Reign" campaign as TV spots. Now, it has begun running a TV commercial in test markets of Austin, Texas, Minneapolis and San Diego. This appears to be the first time Chipotle has aired a TV commercial since February 2012, when an animated two-minute spot about farming aired during the Grammys.
The new TV spot, which Ad Age could not immediately obtain, is based on "Ingredients Reign" online work (below) from agency GSD&M and animation studio HouseSpecial that Chipotle began running in September.
The decision to return to TV, even just in a few local markets, marks a shift for Chipotle after years of favoring other methods of marketing and promotion. The company has dramatically increased its marketing spending in the face of continued weak results after E.coli and other food issues came under scrutiny beginning last fall.
The "Ingredients Reign" campaign includes animated stop-motion short films, online, outdoor, movie theater and radio ads. It portrays ingredients such as avocados and tomatoes as royalty and often includes the tagline, "'Tis their world. We just cook in it."
Chipotle, which is set to report third-quarter results later today, has not posted positive same-store sales or an increase in total revenue since the third quarter of 2015. Analysts, on average, anticipate sales at longstanding locations fell 18.7% during the third quarter of 2016, according to Consensus Metrix. Chipotle's same-store sales plunged 26.5% in the first six months of 2016.
While sales have declined, Chipotle's marketing and promotional costs as a percentage of sales have gone up. Second-quarter marketing and promotional spending was 4.3% of sales, up from 2.3% a year earlier. In July, Chief Financial Officer John "Jack" Hartung said Chipotle's marketing and promotional investment "will remain at elevated levels as we continue to aggressively engage with our customers to regain their trust and loyalty."
Many of Chipotle's efforts to date have included giveaways and buy one, get one offers. It gave away free food after closing restaurants for an all-staff meeting in February, and a three-month Chiptopia loyalty program ended in September. On Tuesday, Chicago Cubs fans in the Chicago area who wear "Northsiders team gear" and Cleveland Indians fans in Cleveland and Akron can get buy one, get one offers. Chipotle is not an official sponsor, so those promotions omit phrases such Chicago Cubs, Cleveland Indians and World Series.
Along with sales declines, Chipotle's stock price has suffered in the wake of the food illness concerns. Chipotle currently trades at around $410 per share. The stock price was well above $720 in mid-October 2015, before the E.coli outbreak linked to a small number of locations made national news. In early September, shares rose after activist investor Bill Ackman's Pershing Square announced that it had taken a 9.9% stake in Chipotle.