Chipotle made one mistake over the years that’s costing it a ton of customers now

The company didn’t place enough emphasis on customer engagement.
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In late 2015, hundreds of Chipotle customers were sickened by food contaminated with E. coli bacteria or norovirus, which led the company to close dozens of restaurants. Chipotle’s same-store sales dropped nearly 30% in the first quarter of 2016.

Then, in June 2016, the company’s chief marketing and development officer, Mark Crumpacker, was charged with allegedly buying cocaine from a drug delivery service in New York.

A recent survey found that a quarter of respondents say they’ve either stopped going to Chipotle or are going less often. Chipotle is hardly the first big company to screw up, but the reason it’s now struggling to woo customers might have to do with a mistake it made while growing its business over the past two decades.

That mistake was placing too much focus on food and not enough on connections with customers.

That’s according to Chris Malone, founding partner of the consulting and professional services firm Fidelum Partners and coauthor, with the psychologist Susan Fiske, of “The Human Brand.” In the book, Malone and Fiske cite years of research suggesting that people form relationships with brands the same way they form relationships with other people.

We look for the same traits in brands that we look for in people – specifically warmth and competence. And Chipotle now falls short on both criteria – which spells trouble ahead.

“Chipotle was really vulnerable because of their heavy reliance on their claims about their food,” Malone told Business Insider.

That might sound weird – isn’t Chipotle a food chain? – but Malone suggested that interpersonal relationships are as important to a company’s perception as they are to the product it’s selling. In fact, one study found that people thought products of brands perceived to be competent and warm tasted better than products of companies that were just one or neither.

When something went wrong with Chipotle’s food, the company couldn’t fall back on being nice and friendly. It might be left with its ultracommitted customers, but it would be hard to attract new ones.

Malone said he doesn’t have concrete data, but before the outbreaks, he’d personally observed minimal interaction between customers and servers, almost no managerial supervision, and employees unfazed by long wait times.

Then the outbreaks – and the fact that the company couldn’t pinpoint their source – called into question Chipotle’s core competency. Suddenly the company had nothing going for it.

Chipotle recently released an animated short film, “A Love Story.”

“In the absence of knowing really anyone at Chipotle, or what they care about, or having any relationship with them,” Malone said, “we’re more likely to assume the worst intention.” Customers might think the company was cutting corners or even that it had malevolent intentions.

“Whereas if we know someone, we’re more likely to consider that they maybe had good intentions and just slipped up in that instance,” he added.

In “The Human Brand,” Malone and Fiske explain that corporate mess-ups can be opportunities for brands to increase customer loyalty by demonstrating that they’re human and therefore fallible like anyone else. But Malone said the company hasn’t done a great job of demonstrating its warmth even after the outbreaks.

For example, the company recently released an animated short film, about two kids selling orange juice and lemonade who grow up and try to beat each other’s businesses by adding artificial ingredients to their beverages. In the end, they go back to their roots and focus on fresh, whole food.

The problem, Malone said, is that the (admittedly adorable) film focuses on food, and not people. Instead of trying to seem warmer, Chipotle tried to seem more competent – but that isn’t the real issue.

If Chipotle wants to bolster its image among consumers, it needs to “put more of a human face on the company,” Malone said. But he’s skeptical that it would be able to do that.

“It’s human nature for us to forgive those people,” he added. “But we don’t have a lot of trust and forgiveness for faceless monoliths.”