Chipotle is spending millions on free burritos to increase sales.

Can Chipotle Buy Back Goodwill With $70 Million of Free Burritos?

Can Chipotle Buy Back Goodwill With $70 Million of Free Burritos?

Business Insider
Analyzing the top news stories across the web
March 17 2016 6:13 PM

Can Chipotle Buy Back Goodwill With $70 Million of Free Burritos?

A Chipotle burrito.
The fast-food chain has already given away $20 million in free burritos.

Aranami/Flickr

This post originally appeared on Business Insider

Chipotle is spending an astronomical amount of money on free food offers to get people back to its restaurants. The company is expected to give away a total of $70 million in free burritos between February and May, assuming that the cost of a burrito is about $8. That's about 16 percent of the company's total sales last year.

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Chipotle said Wednesday that it has already redeemed about 2.5 million mobile offers—or about $20 million in free burritos. The company is also sending out 21 million direct-mail coupons for free food in the coming weeks, and executives expect about 30% of those offers—or roughly 6.3 million—to be redeemed.

That puts Chipotle on the hook for another $50.4 million in free food before May 15, when the mailed coupons expire. If all the mailed coupons are redeemed—which is highly unlikely—that would be about $168 million in free food between February and May. Chipotle executives said Wednesday that the free food offers have been helping to drive traffic in the wake of two E. coli outbreaks that have sent the chain's sales plunging. 

"Free burritos—turns out it works," Chipotle CFO Jack Hartung said Wednesday. "It brings people into the restaurants." Chipotle's same-store sales, or sales at restaurants open at least a year, fell 26.1% in February, following a 36.4 percent drop in January, the company said Tuesday.