The Chipotle brand needs help for customers to return

Woe is the Chipotle brand. Its third-quarter results showed net income plummeting nearly 95% versus last year and same store sales declining more than 20%. The food safety issues that plagued the chain last year continue to haunt it as once loyal customers are fearful of coming back.

Chipotle brand
The Chipotle brand is in need of serious repair.

Publicly, Chipotle continues to laud its industry leading food safety program and praising store efforts to create an excellent guest experience. Chipotle has also doubled its marketing efforts and is running its first television ads since 2012.

However, I don’t think Chipotle has fully grasped that its failure is not a business one but a brand one.

How the Chipotle brand can fix itself.

Prior to its very public food safety catastrophe, Chipotle was a Wall Street darling. It touted fresh and sustainable menu offerings, made to order for each customer. The Chipotle brand was so tightly tied with the freshness of its food that it was positioned as the anti-fast food establishment.

So what did it expect when people got sick from its food? Any connection that Chipotle made with the customer quickly vaporized. The expectation with food being fresh is that it is safer than at other places. Being non-processed gave consumers a certain security blanket.

Jump ahead a year later and consumers still feel like they were lied to.

The Chipotle brand is in serious need of repair. Shortly after the food safety incidents, it launched the before mentioned industry leading food safety program. If your brand is supposed to be about fresh and non-processed, why didn’t Chipotle have such a program in place already? The simple answer is that Chipotle never placed the bar high enough to fulfill its brand promise. Food safety to them was non-processed.

This is the rub. It is facing an almost insurmountable climb to get consumers to come back based on the laurels of its past. Chipotle appears to be simply telling consumers, “Come back to Chipotle, this time we mean it!” Customers are wisely not buying it.

As painful as it may be, Chipotle needs to revaluate its brand in an effort to reconnect to its lost customer base. They’re not just going to come back to the brand that has already failed them with a safety program. Consumers need an emotional reason to return.

Sponsoring the Today Show and others

Advertisers have been scrambling for the last few years to find new channels to reach target audiences. People are cutting the cord, watching TV on streaming services and recording shows on their DVRs so they can fast forward through the commercials.

Therefore, advertisers have looked for other avenues, primarily social media and ads on YouTube and the like. TV still represents the best way to reach a broad audience, but the playing field has become more complex.

Today Show
Is sponsoring a show like The Today Show the new (old) thing?

So what are advertisers to do? Well, they can go back to the future, which is just what American Express has done. It will now sponsor entire segments of the Today Show that will reduce the number of commercials, increase the amount of show content and give American Express a channel to raise its profile.

Sponsoring The Today Show is old hat, but also the new wave.

This tactic, of course, is nothing new. In fact, it’s as old as television itself. The early 50s saw the Texaco Star Theater, a vaudeville show hosted by Milton Berle. It was common for shows throughout that decade and the 60s to have a title sponsor that simply owned that time on the air.

American Express is spending $28.1 million of its $141.7 million advertising budget on NBC alone, with a good chunk of it going to the Today Show. Is this the wave of the future (the past)?

Absolutely. And it won’t just be broadcast TV. Networks and streaming services are playing in a field advertising dollars spread thin. It’s not a big stretch to imagine advertisers owning a show, either on broadcast, cable or even (gulp) streaming.

Does this approach have the potential to turn off viewers? Yes and no. It would actually be welcomed, if the programming already includes advertising. As a viewer, I’ve always appreciated the European model in which the programs are sponsored and ads are shown at the beginning of the program, thus not interrupting during the show itself.

I don’t expect an immediate push to adopt the American Express Today Show model. But don’t be surprised if, in the desperation to open up new channels, that advertisers and TV networks don’t consider it more often.

Logistics – Parcel delivery market study

Logistics particularly as it relates to the consumer delivery business is a two horse race. FedEx and UPS have long duked it out, in effect, having a duopoly over an entire category. One might argue that the US Postal Service should be included in this group as well, but FedEx is one of the USPS’s biggest customers, co-opting its last mile delivery.

However, the industry is in a state of flux and all players, regardless of size, should take note.

The state of FedEx and UPS, the leaders of logistics

UPS Logo - LogisticsFedEx LogoBy all measurements, both FedEx and UPS continue to strengthen their market dominance. FedEx accounts for about $50 billion in revenue with UPS doing about $10 billion more. There are an ample number of customers to keep FedEx and UPS fat and happy for a while, with more and more consumers turning to online retail.

With that being said, what are these two saying about themselves to both preserve and attract new customers? First take a look at FedEx:


FedEx’s two main divisions, FedEx Express and FedEx Ground, are each on display here. FedEx is huge sponsor of the PGA and, during golf season, there are many ads like the first one. The ad touts the technology of FedEx Express with its app that can reroute packages to a local FedEx store, as if that is more convenient.

The second touts the price savings FedEx Ground customers could have over UPS Ground. While price is a sensitive issue for most businesses that ship a lot of products, it’s difficult to believe that the price differences between FedEx and UPS are all that significant, if they really exist at all. Each is going to do what it can to keep or get new business.

For UPS, it’s much of the same, ads trumpeting technology and cost savings. UPS played around with the idea of “What can Brown do for you,” which was a good segue into the idea of owning logistics. After all, isn’t what these delivery companies do, logistics?

What is lacking is any real reason to choose. Like many categories, the major players try to outmaneuver each other by claiming the very attributes that all players in the industry, regardless of size, possess. In fact, they are the bare minimum that any player must have. How can you be in the shipping business if you are not price competitive or have the technology deliver packages.

More over, both FedEx and UPS (especially UPS) try very hard to tell their stories from the perspective of the consumers who are receiving the package. Do consumers have much of a choice as to who actually ships the packages? That decision is often based upon price and when the consumer actually wants the item delivered.

Most typically, customers don’t have a choice between FedEx and UPS. The entity shipping the package makes that choice.

Being basically a duopoly affords both carriers the luxury of building larger and more sophisticated networks capable of delivering more shipments with each trying to outmaneuver the other. All the while each tries to woo more businesses to choose it over the other.

The FedEx and UPS brands both accomplish the same thing – getting stuff from one place to another. The FedEx brand feels a bit more sophisticated and harkens back to one of its old messages. “When it absolutely, positively has to be there overnight” is ultimately about piece of mind.

UPS feels more like the hard-working blue-collar challenger even though it actually ships more often than FedEx and has greater revenues.

Neither brand has proven over time to be superior to the other. They both work well and neither has really given customers a compelling and unique reason to choose one over the other.

Regional players are becoming more sophisticated and integrated

OnTrac LogoLaserShip LogoWhile FedEx and UPS continue to grow and optimize their networks, regional courier and LTL shippers are doing the same. Regional comDicom Logopanies like Dicom (Eastern Connection), LaserShip, GSO, OnTrac and even Pitt Ohio whois more of a LTL (less than truckload) once exclusively dealt with their own geographies. Now, those regional players are transporting parcels and freight that originated with another carrier. This model is not completely unlike the US Postal service delivering some packages the final mile for FedEx or UPS.

Regional players can ship most things quicker and less expensive than UPS and FedEx. The caveat is that, in most cases, the package must originate and arrive in the same coverage area in order to get these savings.

While these regional players present an alternative to the major players, they have a much more difficult climb. First, while they are known in certain circles and industries, what little awareness they have is limited to these niches. Their awareness pales in comparison to FedEx and UPS. Secondly, they all regurgitate FedEx and UPS sales messages – innovative technology and cost savings. Because of that, they have to prove some of the table stakes, such as timely delivery and size of delivery network.

When these regional players and their associated national networks act like FedEx and UPS, the best they can hope for is to be viewed as an equal. All their messaging does is reinforce the position of the market leaders. A company can’t gain share against a market leader by merely copying what the market leader says.

There is a unique advantage the regional players are not effectively exploiting. Each of these regional players should possess innate knowledge of their regional customers that is unique to the region in which they operate. The brand should always be from the perspective of the customer not the company itself and no regional player has positioned itself as that.

Local disruptors in the market

Uber Rush LogoMore companies are getting into the delivery business. Some with familiar names like Uber and others with not yet familiar names like Roadie. Using the same blueprint as Uber, these companies take a preexisting work force, drivers going from point a to point b, and pay them to move packages across town. (Or across the Roadie Logocountry, in the case of Roadie.)

None of these are being taken seriously as a competitor for traditional shoppers because they have not reached the needed critical mass. But the major players should take note, and they are.

While players like FedEx and UPS have an extensive driver and delivery network, they lack the driver density of the likes of Uber. Uber has the ability to pickup and deliver (on a local level) in real time, on-demand. Even the traditional bicycle courier can’t do that to the degree Uber or even Lyft can do it. FedEx and UPS can promise same-day delivery but Uber could be as close to instant as possible until we develop the coveted transporter.

A Major Development

Amazon has quickly ramped up its own delivery network, recently unveiling its new 767 plane with the words “Prime Air” written across the side.  Amazon claims having its own delivery network only augments its existing relationships with its current partners. But can Amazon be trusted?

TAmazon Logohe reality is that Amazon wants to own the entire supply chain. You don’t have to look much further than its expansion into private label products and cloud-based computing services to understand that. Amazon’s business is about getting stuff from one place to the other. Amazon doesn’t really make anything at all. Doesn’t that sound familiar?

The actual shipping part of delivering that stuff is expensive. It is good business for Amazon to want to control the costs of that. After all, it is by far the largest e-retailer in the US and is second in the world only to China’s massive Alibaba.

Ultimately, Amazon does not want to augment anything with its current delivery partners. It wants to replace them. And quickly and quietly, it is developing its own network to be able to do so. Its grocery delivery and same day Amazon Prime deliveries are prime examples of this. Amazon trucks deliver products ordered through Amazon.

What’s more is that the Amazon brand gives it permission to go down this road. In fact, its brand dictates the necessity for it to do so. But there is are two problems. First, severing the important relationships Amazon has with FedEx and particularly UPS could be problematic. Secondly, and more importantly, Amazon must convince other retailers to use it over FedEx or UPS.

The first issue is pretty cut and dried. Amazon will reach a point where it does not need FedEx or UPS but only for special circumstances. At this point, Amazon will be all in with its delivery model and there will be no turning back. It would be doubtful that either FedEx or UPS would welcome Amazon back anyway.

The second is much more difficult. Once Amazon gets really good at delivering its own stuff, it will reach out to other retailers who need delivery services. This will be a tough nut to crack because retailers will likely be hesitant to partner with a competitor that could use the delivery information as a competitive advantage. Amazon has become successful in part because it knows what to do with data and any additional data it can get on its competitors could hurt those competitors.

The opportunity

There still is real brand opportunity in this space. The natural default for most shippers is either FedEx or UPS and you can throw in USPS in there too. The reason those choices are always the default choice is simple. No one in the space has given anyone any reason to care. Reliability and price are really the only two things that matter at the end of the day and most, if not all of the players regardless of size, are reliable and are cost competitive. Cheaper options might take a bit longer but packages will still get there. Next day delivery will get there too but will be more expensive. In short, they all work.

The different world of John Hancock

Readers of this blog, visitors to our site and all our clients know that Stealing Share develops brands that are a reflection of the audience. That’s how you build preference.

The shocking thing to us is how few brands actually practice that. Most brand messaging – or just messaging in general – is either identical to the competition or about the brand itself, or both. That’s the single biggest reason why there is stagnation in most markets.

Therefore, there’s always a bit of elation when a brand actually practices the art of having a brand face, who customers believes they are when they use the brand.

Even though it doesn’t go far enough (more on that later), the new ad campaign for John Hancock does it right. The campaign, with the heading of “Different World, Different Approach,” actually considers who the target audience has become.

One of the spots features a variety of couples getting married, including interracial and same-sex couples. That ad is nice, but the one tilted “CEO” is the winner.

It works because the hallway of past CEOs represents the old way of doing business. In an indirect way, it positions John Hancock against the competition. When the young Hispanic woman walks past the row of profiles, we know it is a different world – a direct reflection of the world we live in today.

The brand of John Hancock needs to make the next step.

Kudos to John Hancock and its ad agency, Hill Holiday, for this campaign. The campaign is terrific, but here’s the problem. The brand is still the same. This is just an advertising campaign. It does not signify a radical shift with the brand. It may be a different world, but it’s the same old John Hancock.

So, this campaign will air over the next few months, then John Hancock will switch to another ad campaign and what the brand of John Hancock means will remain unchanged.

To prompt a true change in the market, one that creates preference, John Hancock needs its brand to reflect the target audience. It’s all well and good that it has a campaign that does, but long-term preference comes from the brand.

Why we don’t switch to alternative energy

We like to think we live in a world of alternative energy. There’s solar power and many of us drive hybrid cars that use electricity to increase gas mileage. There’s even a Hillary Clinton ad airing in my area, North Carolina, which showcases her promise to increase the number of solar panels in our country.

But you wouldn’t know that we are moving to an alternative energy world Saturday night in the South. A pipeline near Birmingham, Alabama, broke, starting a gas shortage, thus creating empty pumps, long lines and high gas prices.

What year is this? 1979?

Alternative energy
Switching to alternative energy is not easy, even during a crisis.

Many gas stations have that dreaded plastic bag over the pump handles, while increasing gas prices. We’re not in panic mode by any means, but it is still startling.

Fully switching to alternative energy will take more than concern over the environment.

It got me thinking that switching to anything is such difficult work. Most of us, including myself, talk a good game when it comes to the environment and alternative energy, but I do little about it. Oh, I have an energy efficient air conditioner, but honestly I have it because it reduces my energy costs. Not because I’m doing something for the greater world.

Think about this. Remember when the metric system was supposed to take over our highways? We were going to join the rest of the world in adopting the system. It only seemed logical.

But that effort failed.

I bring this up not to berate anyone. But to point out that getting people to switch to anything is enormously arduous.

That is the biggest reason why I do berate brands that believe the same old approach will get consumers to switch brands, even though there is little differentiation among each market’s players.

Each car ad looks and sounds the same. Each beer ad is a copy of another. Car insurance, which spends untold amounts on advertising, offers little reason to switch.

To actually prompt a change in any market you have to be different and better, and often that means being so different that you actually offer a true choice. The definition of a switching trigger is switching to something you don’t have. Otherwise, you stay put.

I don’t think we’ll be switching to the metric system anytime soon. To fully adopt alternative energy we’ll need a stronger and more emotional reason than saving the environment. When a gas shortage directly affects us, then we consider switching.

Sometimes it’s in the crisis where the greatest leap forward takes place. But there are better ways to prompt a switch.