In this Market Foolery podcast segment, host Mac Greer, Total Income's Ron Gross, and Motley Fool Pro and Options' Jeff Fischer discuss the current troubles of Chipotle Mexican Grill (CMG 3.87%). Now that people have stopped worrying that they might get E. coli while eating there, the problem is too much healthfulness: Nobody buys queso looking for "healthy" -- people want artificially smooth gooeyness. The Fools have some specific desires about what they'd like to see the chain do next, more broadly than just dropping or redesigning its cheese dip.
A full transcript follows the video.
This video was recorded on Oct. 12, 2017.
Mac Greer: Let's pivot to Chipotle. We've been talking about their queso, and their queso is really taking a lot of heat, a lot of criticism. Why doesn't Chipotle just come out and say, "We kind of blew it with the queso. We were trying to make it healthy"? People don't want healthy queso. They don't want horsey-tasting queso. They want yummy queso.
Ron Gross: Does it tastes like horse? Is that a thing?
Greer: I'm just saying, they're solving a problem that doesn't exist.
Jeff Fischer: Horsey Sauce?
Gross: I think they're going to have to do something, because it's pretty universally not well received. You either take it off the menu, you improve it, or you leave it and be self-deprecating. I think leaving it and being self-deprecating is probably the last thing they'll do, because if people aren't going to buy it, what's the point in having it? I think they're going to have to just go back to the drawing board. It was on the drawing board for a really long time. That's why they haven't had it for all this time. They thought they finally got it right. They appear to have been wrong.
Fischer: Mac, you're right. People don't want healthy queso. Queso is an indulgence. They just want to enjoy it. That's their once-a-week treat. But Chipotle overall, I want them to show us how they're better than average, not tell us. All these years, they've told us, food with integrity, period, and they just left it there, without really laying out -- and Whole Foods called them out on this as well -- why it has integrity, and where they're sourcing it from, and what makes it better.
I'll compliment Whole Foods, which of course now is part of Amazon -- they've always laid out how they source their seafood and their produce, and why it's better and how they're working with farmers to make it sustainable and better for the environment and healthier for you, with well-detailed programs and explanations and supply chain follow-through, something that I haven't seen Chipotle do. Chipotle instead put an asterisk up and says, "When we can get the pork from small farmers, we do." Otherwise, you don't know what you're getting. So Chipotle, across the board, by being holier than thou, has turned off a lot of consumers.
Gross: Does it bug you when people say "Chipolte" instead of Chipotle?
Greer: Yeah.
Fischer: It bugs me.
Greer: That holier-than-thou point is, I think, a really good point, Jeff. And I'm a Chipotle shareholder, but I want, and I've talked about this before, to create the sanctimonious index. And the more sanctimonious and self-righteous the company or CEO is, the more I think it should be shorted. And that's based on nothing.
Gross: Well, people love to knock people or things off pedestals. That's just our nature.
Greer: Right, but I also think it limits your market opportunity. If you're claiming to be something that you're not or that people don't care about, I think you limit the number of people that you potentially appeal to. Like, with the queso deal, why doesn't Chipotle just come out and say, "This is a guilty pleasure." They could even have a little starburst up on the menu -- guilty pleasure, queso. And then, bring in the Velveeta. Or do you think that hurts the brand?
Fischer: Too late now, I would say.
Gross: Yeah, I think it hurts the brand. You guys have made fun of me before about saying it's the stabilizers that the average stores put in the cheese to keep that creamy consistency, that they didn't want to have to use at Chipotle. So they tried their best to find a way to keep that creamy texture without stabilizers, and they just failed. Turns out it's not so easy.
Greer: Yeah, you have to have stabilizers.
Fischer: So they give you straws instead. Here's some queso and a straw.
