To discuss the Chipotle Scarecrow MARKETING TEACHING MOMENT OF THE WEEK, we need to set aside several points:
- Ignore the fact that in the second half of the heralded video, the Scarecrow doesn’t come anywhere near a piece of meat (he apparently turns vegan)
- Ignore the fact that all food meat, whatever alternative “humane” reality people believe exists, is decapitated-throat-slit dead meat
- Ignore the fact that a similar Chipotle video from two years ago actually has a million more views than the current “must plotz over” production
- Ignore the fact that Chipotle has put to bed the canard “you can’t make your own video go viral” (Chipotle: “F*ck you, yes we can.”)
Allow us to go where no one else will: the Holy Grail, aka, true social media ROI. If 6-million views can’t get you there, then nothing can.
Sharpen your pencils kids…
Chipotle has achieved 20%-plus annual revenue increases in the past couple of years, but most of that growth is via new-store openings. The company knows that sort of expansion can’t go on forever (and it’s a big driver for its foray into the entirely new ShopHouse concept). Chipotle needs to grow in existing markets. Which is the realm of comp-store sales, mainly through net-new customer acquisition.
To wit: current Chipotle customers won’t be impacted at all by Herr Scarecrow. They either already know Chipotle’s “humane” slant; or they don’t, and don’t give a f&ck.
So, let’s assume that one-third of what will eventually top out at 6.5 million YouTube viewers are noncustomers, somehow “viraled” into watching the video. Now, assume that 5% of that cohort, so verklempt over the slaughtered cow, cares enough to grant Chipotle a try. And let’s roll all that into Q4, which begins October 1.
That equals 107,250 new customers. Assume 1.5 visits over all of Q4 on average, at an average ticket of $12. That nets $2 million in “new” revenue. Using Chipotle’s 2012 restaurant operating margin of 27% (which takes this discussion beyond the intellectual capacity of 99% of “viral video gurus”), in order to achieve a break-even ROI, the TWO-YEARS-IN-THE-MAKING Scarecrow video cannot have cost more than $ 521,000. So far, no one has come clean on that piece of data.
On a comp-store revenue basis, $2 million barely registers, the equivalent of three-tenths of a percentage point. The best we can do here is look at the comp trend for Q4-2013 (which we won't know until early 2014) compared to (a) Q4-2012, (b) Q3-2013, and (c) management’s 2013 full-year forecast. For what it’s worth, let’s see what Chipotle says – if anything, re: Scarecrow – on October 17, when it discusses Q3 results, the last two weeks of which will have been “post-Scarecrow.”
Just one more thing, as Detective Columbo would have said. If that bloody Scarecrow is so virtuous, then why the f&ck does he take a coal-burning, smog-belching train to work?