Chipotle has one thing going for its business - but there's a huge catch


Chipotle's new loyalty program is taking off.


The program, called Chiptopia, launched three weeks ago and it already has more than 3.6 million participants and accounts for 30% of all transactions.

That's great news for Chipotle, which is struggling to win back customers after an E. coli outbreak that affected 14 restaurants earlier this year.

The company said Thursday that revenue fell 16.6% to $998.4 million in the second quarter, despite opening 58 new restaurants.

Same-store sales dropped 23.6% in the same period, and transactions dropped 19.3%.


Chiptopia is designed to appeal to the chain's most frequent guests.

Customers are rewarded for their visit frequency as opposed to dollars spent. They earn free meals after their fourth, eighth, and 11th visits each month.

There are also additional rewards, such as free catering when customers reach certain status levels within the loyalty program.

But there's a catch: The program is only temporary, lasting just three months.

"The program's end in September could alienate some customers just as they are getting accustomed to the rewards," BTIG analyst Peter Saleh wrote in a recent research note.


Chipotle is already working on a permanent rewards program to mitigate any backlash once Chiptopia ends.

The company said it would use what it learns from Chiptopia this summer to inform the new program.

Chipotle has been spending millions of dollars since February on free-food offers, including direct-mail coupons and mobile offers, to encourage customers to return to its restaurants in the wake of an E. coli outbreak that sent the chain's sales plunging.

The outbreak, which sickened more than 50 people in 14 states, was declared over in February, but Chipotle's sales have yet to bounce back.

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