THE MORNING RANT - Brand-Damaging Management Strategies: Chipotle, Reese’s, Red Robin

The revenue and product strategies employed by executives at companies in charge of Reese’s Peanut Butter products and Chipotle Mexican Grill have received unfavorable media coverage recently.

The grandson of the inventor of Reese’s Peanut Butter cups accused Hershey of substituting cheaper products in the Reese’s roster of candies. Specifically, Brad Reese alleged that “the company has replaced milk chocolate with compound coatings and peanut butter with peanut butter style crème across multiple Reese's products, a move he alleges has eroded the Reese's brand and jeopardized consumer trust.”

Meanwhile, the CEO of Chipotle seemed to say that because its customer base is somewhat affluent, the burrito purveyor is in a position to aggressively increase prices without consumer resistance.

“Chipotle CEO wants more customers who make over $100K — which means price hikes are coming” [NY Post – 02/09/2026]

“We learned that 60% of our core users are over $100,000 a year in average household income,” he added. “That gives us confidence that we can lean into that group in a more meaningful way, whether it’s the solo occasion and/or group occasions to really drive meaningful transaction performance in the year.

Corporate “Kamala-speak” makes my ears hurt. Will ”driving meaningful transaction performance” allow them to be unburdened by what has been. Where do they learn to talk this way? Anyhow, there was significant backlash to Chipotle’s CEO.

First though, I want re-visit a subject to which I keep returning - the corporate management practice that is destroying brand equity and driving away customers from too many once-great brands. As I documented in a recent piece titled, “MGM Resorts & Panera Bread Learn that Slashing Headcount, Reducing Quality, and Gouging Customers Is Not a Viable Long-Term Strategy.” A corporation can target its loyal customers for revenue mining and temporarily increase its profits. It can also slash employee headcount and customer service, thereby reducing labor expense to produce a short-term increase in profits. It can even reduce its product size and cheapen the product’s quality to reduce cost of goods sold, also giving a short-term boost to gross profit. But in every case, these actions tell customers that rather than being valued, the corporation sees customers as marks to be exploited. A great many customers may get hoodwinked once, providing the short-term profit boost that was being sought, but then never come back, thus destroying the company’s long-term prospects. A downward spiral of alienated customers, declining revenue, deteriorating facilities, and degraded reputation ensues.

Back to Chipotle, “Not the Bee” tweeted this analysis: “People can be mad about this all they want, but every restaurant chain follows the same arc…great quality/great price until they gain success, then slowly lower quality and raise prices until you reach a saturation point. It’s us consumers that have to start rejecting it.”

A guy named Christian (@RENEGADEARTH494) responded on Twitter with a similar, albeit coarser, explanation: “And you want to know where it went wrong?? When it went from ‘How can we deliver a better product at a better price’ to ‘How can we financially engineer a way to maximize the extraction of resources from our customers and simultaneously decrease our financial commitment to the business.’ AKA… how can we f*** these people over and dress it up just good enough to market it as a business strategy? You make burritos… focus on making burritos. No one gives a sh*t about your core customer calculations. They just want a burrito that is as good as it used to be.” I really wish these words were being taught in our elite business schools, rather than whatever is causing executives to see employees as a pestilence and customers as prey.

Finally, a gentleman named Aakash Gupta provided an explanation at Twitter/X on how Red Robin regrettably took many of those actions discussed above, and ended up destroying the once high-flying restaurant chain. Headcount was slashed, cleanliness and quality suffered, and customers never came back. Every word of this piece is worth reading, but he summarized management’s destruction of Red Robin with this line, ”So Red Robin was now serving worse food, slower, in a dirtier restaurant, at a lower price point. That combination is how you enter a death spiral.”

Red Robin is a case study in how to kill a restaurant chain from the inside out. In 2015, the stock hit $92.90 per share. Revenue peaked in 2017 at $1.4 billion across 573 locations. Families loved the place. Bottomless fries. Birthday parties. “Gourmet” burgers when that word still meant something in casual dining. The brand had real equity.

Then management panicked about rising minimum wages and made the single worst decision in the company’s history: they fired all the bussers.

January 2018. CEO Steve Carley cut bussers across every location, eliminated expeditors, and replaced kitchen managers with generic “back-of-house” roles. The logic was pure spreadsheet thinking. Labor costs were rising, so remove labor. The savings looked great in quarterly earnings. The second and third order effects were catastrophic.

Tables stopped getting cleared. Wait times ballooned. Walkaways increased 85% year over year. 75% of the dine-in traffic loss came during peak hours, the exact window when the restaurant makes money. Ticket times out of the kitchen jumped a full minute on average. Customers who waited 20 minutes for a table and another 20 for a burger stopped coming back. Red Robin’s own CEO at the time, Denny Marie Post, admitted the damage was self-inflicted.

And here’s the compounding problem. While Red Robin was gutting its own service model, it simultaneously launched a “Tavern Double” value menu at $6.99 to drive traffic. Orders of the cheap burgers jumped from 9% to 15% of all orders, which cratered the average check. So Red Robin was now serving worse food, slower, in a dirtier restaurant, at a lower price point. That combination is how you enter a death spiral.

Meanwhile, 16% of locations were in malls. Mall traffic was already declining. Those locations saw 5.5% sales drops versus 3% at standalone stores, dragging the whole system down. Management acknowledged the problem quarter after quarter and did nothing about it for years.

Five CEOs in 10 years. Think about that. The one leader who provided stability, Michael Snyder, was with the chain from 1979 to 2005. After that, it was a revolving door. Every new CEO launched a new turnaround plan. Every plan was abandoned by the next CEO. The North Star plan. The First Choice plan. New menu rollouts. Loyalty program reboots. None of it addressed the core issue: they’d trained an entire generation of customers to think of Red Robin as the place where the service is terrible.

The contrast with Chili’s makes the failure even clearer. Kevin Hochman took over Chili’s in 2022 and did the opposite of what Red Robin did. He simplified the menu, invested in operations, launched a $10.99 “3 for Me” deal that went viral on TikTok, and let the food speak for itself. Chili’s just posted 31% same-store sales growth. Red Robin’s comparable revenue was down 1.2% for all of 2024.

Both chains were in roughly the same position three years ago. One chain invested in the customer experience. The other spent a decade cutting it. Red Robin’s $65M market cap and Chili’s $3.3B market cap tell you which approach works.

The stock went from $92 to $3.61. That’s what happens when you optimize for the quarterly earnings call instead of the customer walking through the door.

[buck.throckmorton at protonmail dot com]

posted by Buck Throckmorton at 11:00 AM

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