Years after the two companies split, the fates of McDonald's and Chipotle Mexican Grill are again linked, as each struggles to overcome a myriad of obstacles that -- at their core -- come down to corporate reputation.
The details are different. Chipotle is in crisis mode, dealing with the after effects of an E. coli outbreak that began in the Pacific Northwest and spread to other regions. McDonald's issues are a continuation of a much longer-term decline in fortunes. But both brands need to work to rebuild the emotional connection they have with consumers.
On its face, that's a funny way of thinking about it. After all, these are restaurants. If they get the food right, everything else should fall into place.
However, we've studied consumer behavior for years and in no industry does the actual product account for even half of an individual's decision to purchase from a particular company. The same is true in the food service industry. We eat with more than our stomachs.
Chipotle has always understood this, which is why it's invested so much time, effort and money over the years into telling the story of its local food suppliers, GMO-free menu and humanely-raised meats. These initiatives perfectly dovetail with the expressed preference for authenticity by under-35 consumers.
The result for Chipotle has been -- prior to the latest news -- a very high reputation with American consumers. In our survey of the general public earlier this year, which included more than 50,000 interviews across the country, Chipotle finished in the top 100 among all companies for how consumers perceived its corporate social responsibility and was in the top ten for quick-service restaurants overall.
McDonald's is consistently at the other end of the spectrum in our measurement. We found an eight-point drop in that company's reputation on our "Pulse" metric this year, the largest decline of any U.S. restaurant chain. And that wasn't starting off a high baseline.
So how can both companies turn it around?
For Chipotle, it's time to stop treating this as an issue that can be minimized and contained. Company leadership needs to be visible and transparent, apologize truthfully and take accountability that's backed by meaningful action.
Chipotle does have an advantage in that it's past work to build its reputation gives it a "buffer" during a crisis. Companies with stronger reputations bounce back faster and higher after a crisis -- both in the real world and on the stock exchanges. More than 50 percent of consumers say they'll give a reputable company the benefit of the doubt in a crisis, compared to only 20 percent for companies with poor reputations.
On the flip side, a strong reputation also gives a company far more to live up to. When consumers have high expectations, a violation of trust can spur a disproportionate response. That's the challenge Chipotle is facing if it doesn't start taking a more aggressive approach to this situation.
For its part, McDonald's needs to start doing what Chipotle has done for years, which is to bring focus and passion to its corporate story. (One look at the very different social responsibility pages for Chipotle and McDonald's highlights the vast gap between their respective storytelling approaches).
The food also matters. Consumer perceptions of McDonald's offerings are mixed regarding freshness and quality. But McDonald's can keep changing its menu every month and it's still not going to matter unless it also fixes the corporate story.
Consumers now care about whom they buy from as much as the details of what they actually buy. That's true for all businesses, from burgers and burritos to banking and books.