• by Thom Forbes  @tforbes, January 14, 2016

Chipotle executives promised Wednesday to pour marketing dollars into a campaign next month to woo back customers who fled after reports of food-borne illnesses in several locations last year and they nixed the idea of mass layoffs in anticipation they will eventually succeed in doing so. It apparently was a convincing story to otherwise dismal investors as the stock jumped nearly 6% yesterday after falling to $428 a share from about $750 over the last quarter.

Speaking at the ICR investor conference in Orlando, Fla., Chipotle co-CEO Steve Ells said: “I have confidence that we're going to recover from this, that we're going to win our customers back, and we'll emerge a much stronger company.” 

“Ells said that confidence is anchored in a food-safety approach that includes testing initiatives at the supply level, and in central kitchens and restaurants, to ensure ingredients are free of pathogens,” reports Alicia Wallace for the Denver Post. 

And the Denver-based chain, with more than 1,900 locations, will “start ‘inviting customers back … with stepped-up marketing and direct mail offers” in mid-February, the AP reports. 

“Advertisements won't be a mea culpa, executives said, but rather a reminder of what Chipotle's all about: fresh and sustainably sourced ingredients. The ads will be simple, featuring ‘beautiful pictures of food ... and a clever headline,’ Ells said, reports Samantha Bomkamp for the Chicago Tribune. 

“Chipotle will also hold a companywide meeting Feb. 8, where some 60,000 employees will tune in to messages from top brass,” Bomkamp writes. “All Chipotle restaurants will be closed ‘for a few hours in the morning’ that day to allow everyone to listen in, Ells said.” 

“Another goal of the advertising campaign is clearing up with customers what’s happened at Chipotle. The chain’s health woes began in late October with a spate of E. coli cases linked to its restaurants in the Pacific Northwest, but intensified after a norovirus outbreak traced to a Chipotle location in Boston sickened more than 140 college students in December,” writes Alison Griswold for the Quartz.

“Consumers have conflated those two things and are somewhat confused about what happened where and when,” Mark Crumpacker, Chipotle’s chief creative and development officer, said, she reports.

An audience member asked whether it was too soon to say that the outbreak is over but Ells was adamant that it was, CNN Money’s Patrick Gillespie reports. “We are all very confident that this E. coli outbreak would not happen again,” he said.

But Matthew Wise, who leads the Centers for Disease Control and Prevention’s outbreak response team, “said he was surprised to hear Chipotle say that the CDC is close to calling an end to the outbreak,” writes the Wall Street Journal’s Julie Jargon. “It’s true we’ve seen some positive movement in the right direction. It’s been well over a month since we’ve seen any reports from ill people,” Wise said. But the cause hasn’t been determined, Wise told Jargon, and “we’re more cautious about closing it. It’s a conversation we’ll have over the coming weeks.” 

Citigroup’s Gregory Badishkanian and Catherine Lee, who attended the conference, say “Chipotle won’t spend a lot of time trying to squeeze labor down to as low as it can with the sales decline,” Barron’s Ben Levisohn reports. “The margin deleverage may be greater than normal because Chipotle wants to be ready when advertising kicks in and more customers return to the store.”

CFO Jack Hartung warned that 2016 will be volatile, report Reuters' Lisa Baertlein and Noel Randewich. “It's going to be messy in terms of margins. It's going to be messy in terms of earnings. The visibility is not going to be great,” Hartung said.

Meanwhile the chain has doubled the amount of free food its outlets can give away to customers. “While the practice has existed at the company since the ‘old days,’ it had diminished,” Hartung says in an interview with CNBC’s Katie Little. “We've always had it, but it just kind of drifted to such a low-grade level that it was kind of non-existent.”

Chipotle execs “expect it to be well into 2017 before sales recover,” writes Shelly Banjo for Bloomberg Gadfly, while pointing out that Bloomberg Intelligence analyst Jennifer Bartashus notes “it took about five quarters for sales to recover after past food-safety incidents at Taco Bell and Yum! Brands. 

“That's partly due to easier comparisons from a lower base, but it's also because American consumers tend to have pretty short memories after news headlines disappear,” Banjo says.