Chipotle Will Test a Quesadilla, and a New Strategy
Tortillas. Meat. Cheese. Salsa. What’s so complicated about a quesadilla?
Plenty, for Chipotle Mexican Grill. The restaurant chain announced Thursday that it will add five new menu items — quesadillas, nachos, chocolate milkshakes, avocado tostadas and an updated salad — at its test kitchen in New York City, for eventual rollout nationwide.
But while most fast food companies introduce new products routinely to get people in the door, such changes are antithetical to the deliberately limited menu that built Chipotle into a $13 billion company.
New grills must be purchased. The assembly line must be re-choreographed. When those quesadillas finally hit the market, Chipotle simply must get them right. A string of food-borne illnesses and a crop of new restaurants have driven many of Chipotle’s customers toward its competitors, and now the company is retooling its menu to win them back.
Chipotle’s 2,500 stores aren’t set up to make foods that deviate wildly from the basic menu of burritos, bowls, salads and tacos. The grills, for instance, are designed to warm up tortillas in a few seconds. But they take two and a half minutes to cook a quesadilla, which some stores already offer as an off-menu item. That’s an eternity for a restaurant like Chipotle, which falls within the “quick-service” category that includes fast food and its slightly more upscale cousin, fast casual.
In an interview on Wednesday, Chipotle’s chief executive, Brian Niccol, acknowledged that a snack easily mastered by the average hungry tween becomes trickier on a nationwide scale. “We’re not built right now to make a great quesadilla,” he said. “The worst-case scenario is the person in front of you orders a quesadilla.”
Chipotle already offers a small cheese quesadilla on its children’s menu, but the grown-up version — a bigger tortilla with meats, salsas and other toppings — is more complicated.
Mr. Niccol added: “That will slow you down. We want to fix that.”
So Chipotle is experimenting. It will offer the five items at its NEXT test kitchen in Manhattan, then expand to a wider group of stores, making tweaks along the way. The trick will be introducing the products without slowing down the assembly line.
The last time Chipotle offered a new product — queso, last September, to a great deal of hype — critics panned the taste, and the company was forced to adjust the recipe.
“They are going to be exceedingly cautious with products because of the lessons that they learned,” said John Gordon, a principal at the restaurant advisory firm Pacific Management Consulting Group.
In addition to the five new items announced on Thursday, Mr. Niccol said, Chipotle plans to add one or two promotional items during the year. “One of the things we’re learning is what’s the right way to bring in a product for a limited time,” he said.
Mr. Niccol said he didn’t plan to start rolling out a steady stream of new items every few weeks, a strategy that’s essential at fast food companies like Taco Bell, where he helped lead a turnaround before joining Chipotle this year.
Like Chipotle, Taco Bell was suffering from sputtering sales and a public image problem when he joined the chain in 2011: A customer lawsuit, later withdrawn, accused Taco Bell of serving filling that was more filler than beef. The suit hurt the company’s reputation, which Mr. Niccol worked to repair with newer, hipper marketing campaigns and slogans that helped reposition Taco Bell as more of a lifestyle brand.
The reinvention also required new products, like Doritos Locos Tacos and nacho fries, that helped get customers excited again. But that’s an entirely different proposition at Chipotle, where both the ordering flow and the marketing are based on food made with fewer, higher-quality ingredients.
For much of the last two decades, fast casual restaurants like Chipotle have grown at the expense of fast food companies, promising meals that are comparably quick but tastier and healthier.
But a wave of new restaurants in recent years, including in the fast casual space, has crowded the market. A series of E. coli outbreaks at Chipotle in 2015 hurt the company’s healthier-than-thou appeal, and sent the stock plummeting.
Fast food restaurants recouped some of their losses, and pushed Chipotle to reconsider its rivals’ steady introduction of limited-time offers to stoke customers’ interest.
Without that kind of innovation, “you’re going to lose sales and you’re going to lose traffic to competitors who are constantly marketing,” said Nick Setyan, an analyst at Wedbush Securities.
For Mr. Niccol, the challenge will be persuading a customer base trained to rarely deviate from its favorite orders to try new things. And he has no illusions that, say, avocado tostadas will dethrone burritos on the sales charts anytime soon.
“There are certain items that people are willing to switch up their order with, but it’s not going to become their permanent go-to order,” he said. “Ultimately, they’re going to go back to ordering chicken or steak or the barbacoa.”
