Chipotle Shows Limits of AI in Research Marketing

I have been involved in the news business off and on since 2003, when I started an online news publication called “Freedom Through Autonomous Living.”  Since then, I’ve run various online and even print news publications, including local newspapers.

One thing that I have learned all this time is this, if you ask the public what kind of news they really want, they’ll really lie to you.  No, they don’t intentionally lie.  They’re really lying to themselves.

What they tell you they want is what they THINK they should want.  They THINK they want positive stories that shows people doing good things.  What they REALLY want is car accidents, theft, disasters, drama, sensationalism.

It seems that Chipotle hasn’t learned this lesson, nor did the AI they had assess the feedback from customers through social media.  The AI told Chipotle that the customers wanted fresh ingredients, no preservatives.  So Chipotle built that product, and the customers wholly rejected it.

How Artificial Intelligence Realized Chipotle’s ‘Worst Queso Scenario’

For a note titled “Worst Queso Scenario?” RBC trained a machine to assess how social media backlash impacted ChipotleDavid Palmer, RBC Capital Markets’ restaurant and packaged food analyst, outlined how RBC Capital Markets’ research department uniquely used artificial intelligence to robustly understand how social media actions, like tweets and Google searches, could be linked to the chain’s future business health. Among other findings, the bank’s machine learning group found that negative tweets outnumbered positive tweets in the weeks after the product’s launch.

Coupled with predictions that labor costs would increase alongside increasing avocado prices, Palmer cited the negative findings of the AI-based analysis as a means to support reducing their price target for Chipotle from $400 to $330, thus substantially cutting estimates on the chain’s earnings and sales. This note reflects Royal Bank of Canada’s disruptive foray into AI-based research, as one of the few North American banks to have meaningfully and publicly invested in this space……

…..Unfortunately for Chipotle, RBC’s findings proved that customers did not actually like that. Despite seemingly providing consumers with the “real ingredient” recipe that they initially thought they wanted, Chipotle has listened to these masses of vocal critics. The chain has since altered its queso recipe to address complaints about its gritty texture, with select outlets beginning to speak positively about the product in December 2017. Consumer sentiment still remains tepid, with the chain noting that 15% of its orders include queso — a paltry portion in comparison to the 40% that include guacamole.

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