As predicted by Bloomberg earlier this year, the fast-casual chain’s attempt to recover from their fall from grace through free food offers has backfired. Bloomberg got ahold of a letter that Chipotle’s CFO Jack Hartung sent to the U.S. Securities and Exchange Commission last month stating that he don’t actually know the impact that free burritos had on customer support.
"Promotional offers of free food do not directly impact revenue," the letter says. "Furthermore, given the unusual sales trends resulting from the food borne-illness incidents, we were unable to calculate or accurately estimate any indirect impact that promotional activity had on revenue."
Chipotle began giving out free burrito coupons after it reopened stores following an emergency food safety meeting that closed all locations. Earlier this month, we reported that in certain markets, Chipotle was giving away free alcohol in two-for-one deals.
This admission comes five months after Hartung claimed the free burritos were actually working. Chipotle’s sales have dropped 24 percent overall since last year before the series of damning foodborne illness scandals. From March to June of this year, the fast-casual chain saw some gains (about six percent), but nowhere near the levels of profitability that it had in 2014.