Chipotle mulls more food giveaways as customers slowly return

Chipotle May Give Away 9M Burritos
Chipotle May Give Away 9M Burritos

Chipotle Mexican Grill Inc (CMG.N) has recovered about one-third of sales lost to a string of food safety lapses last year, and more free offers may be forthcoming as part of its turnaround strategy, executives said at a conference on Wednesday.

The formerly high-flying burrito chain plans to send 21 million free food coupons via snail mail to U.S. consumers. The company already has sent as many as 7 million, and it expects roughly a quarter of those to be redeemed.

"Free burritos work," Chief Financial Officer Jack Hartung said at a Bank of America Merrill Lynch investor conference. "They bring people into the restaurant."

SEE MORE: Chipotle's shares drop after latest food safety incident

Sales and visits remain down from a year ago, but have come off their worst levels in January. That said, paid transactions are 30 percent lower, executives said.

The Pacific Northwest and the Northeast, which were most affected by 2015's food poisoning outbreaks, have been the slowest to recover.

The company is also sending coupons to mobile phones and other devices. Redemption rates for those are significantly higher, at 67 percent. Future offers aimed at spurring visits will likely be delivered via those means and could take the form of buy-one-get-one-free, said Mark Crumpacker, Chipotle's chief creative and development officer.

Shares of Chipotle were down 0.3 percent at $501.30 in midday trading.

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(Reporting by Lisa Baertlein in Los Angeles; Editing by Lisa Von Ahn)

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