Chain Restaurants Fight Dirty With Discounts

To say the least, Chipotle has had a rough go of things over the past few months. As the Mexican food chain continues to deal with the fallout of the E. coli contamination that brought the chain’s national operations to its knees, its competitors aren’t content to just sit on the sidelines and let Chipotle get back on its feet on its own time.

Instead, they’re using discounts to go straight for Chipotle’s jugular.

International Business Times reported that when Chipotle closed all of its stores on Monday (Feb. 8) in a widely publicized event to train staff on improved food safety measures, Freshii, Taco Bell and other competitors in Chipotle’s segment sprung into action — each with their own plan to capture some of Chipotle’s market share away from it at its lowest hour. Freshii offered 50 percent off all “Mexican-inspired menu items” in a slightly veiled swipe at Chipotle’s offerings, complete with the mocking hashtag #chipotfrii. Not to be outdone, Moe’s Southwest Grill is also running a buy one, get one promotion through Feb. 12, telling TIME that its deal represented “the best rebound burrito on the market.”

“We figured the least we would do was look after their customers while Chipotle pauses to recalibrate,” Matthew Corrin, founder and CEO of Freshii, told IB Times. “If a few Chipotle customers fall in love with a Freshii menu item, we hope they’ll come back to both stores more often.”

Of course, a world where customers split their dining budgets equally between the competitors in any market isn’t really what Corrin and the heads of Chipotle’s competitors really want. The press releases may remain cordial and courteous, but with Freshii, Moe’s, On The Border and more offering discounts — and Taco Bell releasing its new quesalupa menu item — all on the very Monday Chipotle had announced weeks prior that it would be closing, these promotions take on the light of the cutthroat competition for diners’ dollars in the mid-range dining industry.

According to a report from Nation’s Restaurant News, sales at chain restaurants were on the decline heading into the new year, with same-store traffic for October and November down 2.2 percent. That was an acceleration of the downward trend that chain eateries had been on for the first three quarters of 2015, as foot traffic slid at a constant pace of 1.1 percent.

As chain restaurants look around and find that there are fewer and fewer diners to go around, it makes a certain amount of brutal sense that they would take the opportunity to kick Chipotle while it’s down. However, Wyman Roberts, CEO of Brinker International, which owns and operates chain restaurants, including Chili’s and Maggiano’s, told the crowd at Monday’s ICR Conference that discounting in this industry is never a constant thing.

“The industry discounting tends to ebb and flow,” Roberts said, as quoted by The Street. “It’s more flowing right now; we have watched the industry increase their rate of deals. We have done some discounting, but we haven’t done it as dramatically as others.”

This cyclical nature of discounting seems to hold water in the context of the current rush to siphon off as much market share from Chipotle as possible. At the moment, it’s financially viable for Chipotle’s competitors to take losses or cut profits for the potential of increased traffic in the future. However, if they can’t provide the value that customers expect once it no longer makes sense to give half off half the menu, consumers might find that they don’t mind the threat of food poisoning if it means a classic burrito from their old friend Chipotle.