Chipotle: We're losing customers to McDonald's

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McDonald's has been benefitting from the E. coli outbreaks that sent Chipotle's sales tumbling, according to a Chipotle executive.

The burrito chain has been spending millions on free food offers and ads to lure customers back into its restaurants and assure them that Chipotle is safe to eat in the wake of the outbreaks.

But even some customers who trust that the food is safe aren't returning.

Instead, they have started going to restaurants like McDonald's and "Chipotle knockoffs," Chipotle marketing director Mark Crumpacker told the Associated Press' Candice Choi in a new interview.

The company is launching a new round of ads on Wednesday in another appeal to get customers to return. The ads will feature an open letter from Chipotle cofounder Steve Ells.

A look back at Chipotle closures in wake of the outbreaks:

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Chipotle closings because of E.coli
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Chipotle closings because of E.coli
Passers-by walk near a closed Chipotle restaurant on Monday, Dec. 7, 2015, in the Cleveland Circle neighborhood of Boston. Chipotle said late Monday that it closed the restaurant after several students at Boston College, including members of the menâs basketball team, reported âgastrointestinal symptomsâ after eating at the chain. The school said it was working with local health officials to determine the cause of the illness. (AP Photo/Steven Senne)
A sign is posted on the door to a Chipotle restaurant, Monday, Dec. 7, 2015, in the Cleveland Circle neighborhood of Boston. Chipotle said late Monday that it closed the restaurant after several students at Boston College, including members of the menâs basketball team, reported âgastrointestinal symptomsâ after eating at the chain. The school said it was working with local health officials to determine the cause of the illness. (AP Photo/Steven Senne)
A customer leaves a Chipotle restaurant in Seattle as the company started to reopen the outlets closed because of an E. coli outbreak in the Pacific Northwest, Wednesday, Nov. 11, 2015. (AP Photo/Donna Blankinship)
Customers leave a Chipotle restaurant with food in Portland, Ore., Wednesday, Nov. 11, 2015. Chipotle started reopening its restaurants in the Pacific Northwest on Wednesday after an E. coli outbreak sickened about 45 people, a high-profile example of foodborne illnesses that are more common than the public realizes, health experts say. Forty-three outposts of the Mexican food chain in Washington state and the Portland, Oregon, area were closed at the end of October because of the outbreak that hospitalized more than a dozen people. The first restaurants opened for lunch Wednesday. (AP Photo/Don Ryan)
A customer enjoys lunch at a Chipotle restaurant in Portland, Ore., Wednesday, Nov. 11, 2015. Chipotle started reopening its restaurants in the Pacific Northwest on Wednesday after an E. coli outbreak sickened about 45 people, a high-profile example of foodborne illnesses that are more common than the public realizes, health experts say. Forty-three outposts of the Mexican food chain in Washington state and the Portland, Oregon, area were closed at the end of October because of the outbreak that hospitalized more than a dozen people. The first restaurants opened for lunch Wednesday. (AP Photo/Don Ryan)
Rosanna Fleming enters a Chipotle restaurant for lunch as another customer enters a second door in the background in Portland, Ore., Wednesday, Nov. 11, 2015. Chipotle started reopening its restaurants in the Pacific Northwest on Wednesday after an E. coli outbreak sickened about 45 people, a high-profile example of foodborne illnesses that are more common than the public realizes, health experts say. Forty-three outposts of the Mexican food chain in Washington state and the Portland, Oregon, area were closed at the end of October because of the outbreak that hospitalized more than a dozen people. The first restaurants opened for lunch Wednesday. (AP Photo/Don Ryan)
Workers clean inside a still-closed Chipotle restaurant Monday, Nov. 9, 2015, in Seattle. Health officials in Washington and Oregon have said that more than three dozen people have gotten sick with E. coli in an outbreak linked to Chipotle restaurants in the two states. More than 40 Chipotle restaurants remain closed in Washington state and the Portland area while authorities search for the cause. (AP Photo/Elaine Thompson)
FILE - In this Nov. 9, 2015, file photo, pedestrians walk past a still-closed Chipotle restaurant in Seattle. An outbreak of E. coli that originated in the Pacific Northwest has spread south and east and has now infected people in six states. New cases have been reported in California, New York and Ohio, the Centers for Disease Control and Prevention said Friday, Nov. 20, 2015. (AP Photo/Elaine Thompson, File)
A worker sits at a counter inside a still-closed Chipotle restaurant Monday, Nov. 9, 2015, in Seattle. Health officials in Washington and Oregon have said that more than three dozen people have gotten sick with E. coli in an outbreak linked to Chipotle restaurants in the two states. More than 40 Chipotle restaurants remain closed in Washington state and the Portland area while authorities search for the cause. (AP Photo/Elaine Thompson)
Workers clean inside a still-closed Chipotle restaurant Monday, Nov. 9, 2015, in Seattle. Health officials in Washington and Oregon have said that more than three dozen people have gotten sick with E. coli in an outbreak linked to Chipotle restaurants in the two states. More than 40 Chipotle restaurants remain closed in Washington state and the Portland area while authorities search for the cause. (AP Photo/Elaine Thompson)
A closed Chipotle restaurant is shown, Tuesday, Nov. 3, 2015, in Federal Way, Wash. Chipotle closed 43 of its Pacific Northwest locations after the chain's third foodborne illness this year sickened about two dozen people. (AP Photo/Ted S. Warren)
A pedestrian, right, walks past a closed Chipotle restaurant Monday, Nov. 2, 2015, in Seattle. An E. coli outbreak linked to Chipotle restaurants in Washington state and Oregon has sickened nearly two dozen people in the third outbreak of foodborne illness at the popular chain this year. Cases of the bacterial illness were traced to six of the fast-casual Mexican food restaurants, but the company voluntarily closed down 43 of its locations in the two states as a precaution. (AP Photo/Elaine Thompson)
A sign posted on the door of a Chipotle restaurant in Portland, Ore. reads that the location is "temporarily closed due to a supply chain issue," on Monday, Nov. 2, 2015. An E. coli outbreak linked to Chipotle restaurants in Washington state and Oregon has sickened nearly two dozen people in the third outbreak of food borne illness at the popular chain this year. (AP Photo/Don Ryan)
FILE - In this Nov. 2, 2015, file photo, a pedestrian walks past a closed Chipotle restaurant in Seattle. Washington state health officials say they have found no source for the E. coli outbreak related to Chipotle and the chain's Pacific Northwest restaurants could reopen later this week. Washington state epidemiologist Dr. Scott Lindquist says all the tests of food from Chipotle stores in Washington and Oregon came back negative for E. coli. (AP Photo/Elaine Thompson, File)
A woman talks on the phone as she stands in the kitchen area of a closed Chipotle restaurant, Monday, Nov. 2, 2015, in Seattle. An E. coli outbreak linked to Chipotle restaurants in Washington state and Oregon has sickened nearly two dozen people in the third outbreak of foodborne illness at the popular chain this year. Cases of the bacterial illness were traced to six of the fast-casual Mexican food restaurants, but the company voluntarily closed down 43 of its locations in the two states as a precaution. (AP Photo/Elaine Thompson)
Signage hangs from a closed Chipotle restaurant in Portland, Ore., Monday, Nov. 2, 2015. Chipotle voluntarily closed down 43 of its locations in Washington and the Portland area as a precaution after an E. coli outbreak linked to six of its restaurants in the two states has sickened nearly two dozen people. (AP Photo/Don Ryan)
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McDonald's same-store sales grew 3.6% in the most recent quarter. Meanwhile, Chipotle's same-store sales tumbled 23.6% in the second quarter. That's an improvement from the nearly 30% decline in the first quarter, but not enough of a gain to please Wall Street.

Analysts have expressed some doubts recently over whether Chipotle will ever fully recover from the outbreaks.

In a note published earlier this month, BTIG analyst Peter Saleh said the company's marketing strategy has become "stale" in the minds of consumers and that its millions of dollars in free food offers aren't working.

"The multiple promotions run this year have seen little apparent success and we believe a new approach may be necessary to drive a quicker pace of sales recovery," Saleh wrote.

chipotle burritoThomson ReutersIn a separate note, Morgan Stanley analysts said Chipotle appears to be running out of options.

"We see no quick fix to what Chipotle really needs, a revitalization of top line, and activism's traditional tools for restaurants — spin offs, re-franchising, asset sales and cost cuts — don't appear to offer short term opportunities, leaving few obvious quick levers to pull."

Stifel analysts had an even more brutal reaction.

"We emphatically reiterate our sell rating on [Chipotle] shares following the news that Pershing Square has started a 9.9% activist position," Stifel analysts wrote in a note, referring to billionaire activist Bill Ackman taking a 9.9% stake in the company this month. "We cannot fathom Pershing's operational or mathematical investment thesis.

If you work at Chipotle and have a story to share, reach out to this reporter at hpeterson@businessinsider.com.

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