Chipotle Admits to Poor Customer Service, but Promises to Improve


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At a Barclay's investors conference earlier this week, Chipotle founder and co-CEO Steve Ells admitted that the company has underperformed in terms of customer service and roughly half of its 2,100 restaurants received C grades for service. Ells explained that after the company's recent E. coli contamination crisis, Chipotle shifted its focus to food safety and neglected service. Last quarter, sales dropped 21.9 percent, and the company is getting worried. 

To turn this around, Ells said Chipotle is devoting "laserlike" attention to the situation, retraining employees and making customer service a key priority again. "It's very brave, courageous, and shows a great deal of integrity for the Chipotle's CEO to say that they lost their focus on customer service and that they are retraining employees," says Natalie Petouhoff, vice president and principal analyst at Constellation Research. "Unfortunately, integrity is a rare commodity in senior leadership roles, so I have gained a new respect for him."

Fixing the situation won't be easy, analysts agree. Once customers lose trust in a company—as they may have following Chipotle’s E. coli outbreak—it's not easy to get it back. "When customers have a consistent, positive, customer-centric experience, they gain the trust required to retain their customer base, have loyal customers come to the brand's recuse when they make a mistake and remain loyal—spending more over time, thus increasing each customer's lifetime value. When a crisis happens, it requires all hands on deck to fix it," Petouhoff says.

Retraining employees is a solid start. In 2008, Starbucks CEO Howard Schultz closed more than 7,000 stores to give employees three hours of training. "He thought they were focusing too much on speed of service and not enough on the emotional connection with customers," says Chip Bell, customer service expert. "It was a great move to signal the importance of service to employees, reaffirm a commitment to their customers, and bolster their brand promise of providing a warm human connection," he adds. For Chipotle, employee retraining could bring similar success.

But setting the company on the right trajectory long term will require more than improvements on the employee level—the real changes have to start at the customer level. "Start by remembering to organize everything a company does around the customer—whether it is external marketing, sales, and customer service initiatives as well as all back-office systems. When the customer is put first, not only will customer remain loyal, but the revenue will follow,” Petouhoff recommends.

It's not as simple as it sounds, and it may require making fundamental changes to the way the company functions on the back end, but it's an investment worth making, both on the technology side and the strategy side. "This may mean that more margin needs to be built into the system to make sure that the company can run as a customer-centric company," Petouhoff explains. "Being customer-centric is not inexpensive, but it is the key to long-term profitability, revenue and margins," she says.

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