Will Chipotle ever be able to get its burrito business back on track?
As predicted by Bloomberg earlier this year, the fast-casual chain’s attempt to recover from their fall from grace through free food offers has backfired.
Bloomberg got ahold of a letter that Chipotle’s CFO Jack Hartung sent to the U.S. Securities and Exchange Commission last month stating that he does not actually know what impact, if any, the chain's free burritos promotions had on customer support.
"Promotional offers of free food do not directly impact revenue," the letter says. "Furthermore, given the unusual sales trends resulting from the food borne-illness incidents, we were unable to calculate or accurately estimate any indirect impact that promotional activity had on revenue."
This admission comes five months after Hartung claimed the free burritos were actually working.
Chipotle began giving out free burrito coupons after it reopened stores following an emergency food safety meeting that closed all locations. Earlier this month, we reported that in certain markets, Chipotle even started giving away free alcohol in two-for-one happy hour deals.
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But the free food and beverage giveaways probably aren't the answer to the chain's ongoing struggle.
Chipotle’s sales have dropped 24 percent overall since last year before a series of foodborne illness scandals hit store locations around the country. From March to June of this year, the fast-casual chain saw some gains (about six percent), but nowhere near the levels of profitability that it had in 2014.
What will Chipotle try next?