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Tuesday, July 29, 2014

How One Brand Is Growing Sales While Raising Prices In a Weak Economy

Written by  Duane Bailey

The American fast-food segment is highly competitive. Competition among brands is fierce – with respect to price, food quality, service, location, and the condition of each restaurant. Established brands are struggling and, for many, same-store sales are declining.

So when rising food costs caused Chipotle to raise U.S. menu prices an average of 6.25% to 6.5% during the second quarter of 2014, analysts expected a negative impact on store traffic and sales. Instead, Chipotle's same-store sales grew 17.3% for the second quarter, despite a weak U.S. economy. This was preceded by a strong first quarter, with 13.4% growth, and a steady history of extraordinary growth since the company was founded in 2003.

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Chipotle's growth is unique among its peers in the U.S. restaurant industry, whose same-store sales rose a mere 0.3% in the second quarter of 2014. In an attempt to lure customers and boost sales, many of Chipotle's competitors now offer lower-cost, "value-meal" or "healthy choice" menu options in addition to their standard fare.

Chipotle has taken a different approach.

Instead of trying to be like everyone else, Chipotle is redefining the customer experience. Chipotle believes food served fast doesn't have to come with the look and feel of a traditional "fast-food" experience. Their "Food With Integrity" promise is a strategic gamble that American consumers would be willing to pay more for food with great taste and nutrition. It's also evidence of their commitment to sustainability – that educated consumers would place a higher value on food that is sustainably raised with respect for animals, farmers and the environment.

The market research firm, PlaceIQ, recently profiled fast-food customers at several competing restaurant chains and found Chipotle customers to be among the best-educated. And as Chipotle has shown, better-educated consumers are willing to pay more for a product that is better and more sustainable.

For more on how brands are using sustainability to redefine and differentiate their customer experience, please see:
How Doing One Good Thing Is Making a Difference
Beyond Green: The Transformative Nature of Sustainability
A FRESH Approach to Going Green
Maximum Fun Meets Minimal Impact

Duane Bailey

Duane Bailey

Duane Bailey is a regular contributor to The Chief Storyteller® online conversation. He has helped organizations of all sizes drive growth in revenues and market share through the development and delivery of key business messages that resonate with target audiences. He holds an MBA in International Business and a BS in Marketing. He brings 28 years of experience in marketing communications and high technology sales.

Website: www.TheChiefStoryteller.com E-mail: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

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