Why Is Chipotle Mexican Grill's Marketing Strategy So Dangerous?

Chipotle Mexican Grill, (NYSE: CMG  ) is the most innovative fast food company out there today, opting to offer "responsibly raised" meats, and local, raw, whole foods in a build your own format. But its envelope-pushing doesn't stop there; in fact, Chipotle has flipped fast food marketing on its head. Opting to foster an emotional connection to its brand, the burrito maker has focused on building a loyal following of customers, something companies like Yum! Brands (NYSE: YUM  ) and McDonald's (NYSE: MCD  ) could use a bit more of.

Recognizing that there is value in reaching out to its customer in a meaningful and creative way, Chipotle has embraced a new wave of marketing focused on developing more "owned media" and visible event strategies, both of which tend to appeal to its ideal customer base: millennials.

Source: Chipotle website.

The millennials are coming!
Millennials are young (between 16 and 34) and were raised on technology and social media. They have become accustomed to customizing the world around them to fit their needs. Millennials have also been inundated with the idea that collective action and personal choice matter a lot. Cause-oriented marketing speaks to this youthful cohort, as about 40% of millennials choose to buy products or services that support causes that they believe in. As such, Chipotle has positioned itself to gain and sustain relevance among this 80 million-strong market segment.

Just 'cause
What customers choose to eat says a great deal about what they value, especially considering the increased cultural awareness about how our food choices impact our health and the ecosystem in which we live. Chipotle has centered its business strategy, operations, and marketing on serving food with integrity. It has chosen to draw customers in by marketing to their sense of moral obligation through education focused on the effects that traditional agriculture has on the Earth, as well as on the food they eat. What's more, Chipotle has been able to make this moral pitch a catchy, emotionally connected experience.

Source: Chipotle YouTube channel.

Casting a wide net
Yum! and McDonald's have both relied on casting a wide net in order to catch a variety of customers. In doing so, their menus have become so diversified that there is no clear identity with which customers can connect. Both Yum! and McDonald's have a global scope of influence and dubious morals, which have left their brands scrambling to stay relevant in each of their markets. The fast food moguls continue to depend on traditional advertising, such as television and print ads, and while each company has stepped into social media as a means to reach the millennial market, their respective identity crises leave the customer wondering just how authentic and trustworthy their brands are.

Source: Chipotle website.

Strong brand, stronger voice
Chipotle has proactively built its brand strength and identity around its core value of driving a positive change in the world's food supply. Staying steadfast and committed to this transparent goal has fostered trust among its growing customer base. Yum! and McDonald's, on the other hand, have historically taken a defensive approach, addressing issues in their supply chains only after concerns have been raised. The traditional fast food approach to gaining and staying relevant based on convenience alone is a trend that seems to be dying out, which puts both Yum! and McDonald's at risk to lose their market share. Rest assured that Chipotle will likely be there (with a sustainably sourced burrito in hand) to pick up the slack.

Put your money where your mouth is
In a marketing landscape devoid of a moral compass, the fast food industry has a lot to learn from this new type of strategic entertainment. Opting out of marketing strategies traditionally embraced by companies like Yum! and McDonald's affords Chipotle the opportunity to make a lasting emotional connection with its customer base. This relationship-based marketing has contributed to the burrito maker's impressive growth. In fact, David Gardner recommended Chipotle as a buy before it hit big.

David does it again
Folks doubted him then, they said that it couldn't be done. But Gardner has proved them wrong time, and time, and time again with stock returns like 926%, 2,239%, and 4,371%. In fact, just recently, one of his favorite stocks became a 100-bagger. And he is ready to do it again. You can uncover his scientific approach to crushing the market and his six carefully chosen picks for ultimate growth instantly, because he's making this premium report free for you today. Click here now for access and get the in on what could be the next Chipotle.

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Leah Niu

Leah is a freelance writer for The Motley Fool. She is interested in socially responsible investing, conscious capitalism, and Tesla.

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Related Tickers

9/1/2015 2:21 PM
CMG $706.96 Down -3.05 -0.43%
Chipotle Mexican G… CAPS Rating: ***
MCD $93.44 Down -1.58 -1.66%
McDonald's CAPS Rating: ***
YUM $78.74 Down -1.03 -1.29%
Yum! Brands CAPS Rating: ****