Is the new Chipotle pricing initiative foolish?

Tom Dougherty, CEO – Stealing Share

4 September 2012

It all sounds so fishy

Chipotle – a brand we have long admired at Stealing Share as we watched it steadily increase its market share – has recently made headlines. Chipotle pricing is about to change.

New Jersey’s Star-Ledger reported last week that Chipotle has quietly incorporated a curious practice to its pricing process: It now rounds customer checks up or down to the nearest nickel.

This is great for those customers who luck out and pay less. But what about those who pay more?

“Any time a company takes money from customers without their permission, it violates a trust.”

This Chipotle pricing initiative isn’t fair.

Chipotle pricingChipotle shared its reasoning for bill rounding and Chipotle’s penny pinching:

“It’s something we do in some high-volume markets. The way it works is that prices auto-round to the nearest quarter and that’s indicated on the receipt. The idea is simply to limit the possible combinations of change on cash transactions to keep the lines moving quickly in high volume areas.”

This makes sense, but is it a savvy move for Chipotle’s brand?

No.

Any time a company takes money from customers without their permission, it violates a trust. Eventually these customers realize they’ve been duped, which creates a negative image for Chipotle.

While such minor increases and decreases in price totals are practically benign, it’s a dash of chicanery that taints a trusted brand.

Until now, Chipotle’s success has been due largely to a brand that is consistent with purpose, products and its customer base.

When Chipotle stops pinching pennies, it will return to the sensible business model that built its prosperity but will find its brand has already been damaged.

See more posts in the following related categories: Chipotle Chipotle brand Chipotle pricing

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