Report: Americans trust Chipotle, but not McDonald's

Chipotle's cool factor is on the rise, and meanwhile, McDonald's is losing its sizzle, according to a new report out by the Reputation Institute.

The global consulting firm researches how customers' emotional connection to a brand correlates with willingness to buy a client company's product. Their annual survey asked 27,000 people to weigh in on a few of the 1,000 U.S. companies of which they were most familiar.

The study found brands like Chipotle, Subway and Panera Bread (PNRA) really do have consumers' hearts, and that reputation can be more about a company's attitude than its products, said Brad Hecht, vice president and chief research officer of the Reputation Institute.

"The key takeaway is that it's really not about the products or services the company provides," Hecht said. "The company has to have a core purpose and stand behind it. The best companies do an excellent job at both."

The 10 chains on top? With a score of 80, Panera Bread leads the list, followed by Dunkin' Brands (DNKN), Subway, Krispy Kreme (KKD), Texas Roadhouse (TXRH), Wendy's (WEN), Chipotle, Mrs. Fields, Papa John's (PZZA) and Cheesecake Factory (CAKE).

To understand how the scores work, take the example of Chipotle, which made the list of top 10 most-reputable companies, and McDonald's, which did not.

On a scale from 0 to 100, Chipotle's reputation score jumped to 74.2 in 2015 from 69.4 in 2014, based on whether customers said they would recommend it, trust the company to do the right thing, want to work for the company, want to invest in the company, say something positive about the company, buy from Chipotle or welcome a Chipotle to the neighborhood.

Meanwhile, McDonald's score dropped to 55.3 in 2015 from 64 in 2014 — with only 30.3% of respondents saying they would invest in the company, down almost 10 percentage points from the year prior. Both studies were completed between January and March.

The fast-casual Mexican grill and the burger behemoth certainly perform differently in the market: Shares of Chipotle (CMG) are up about 3% over the past year, while shares of McDonald's (MCD) are down 4.9% over the same period.

"With Chipotle, we did a case study of a next-generation company that has holistically embraced the idea of the company taking a stand," Hecht said. "They made some improvement of employee support and food with integrity."

For instance, this spring, Chipotle stopped serving carnitas when a key pork supplier didn't meet animal welfare standards. It also eliminated genetically modified organisms (GMOs) from the menu and began offering paid vacation, sick leave and tuition reimbursement to all workers.

McDonald's has also looked into similar moves, with mixed response.

After complaints from workers and franchisees, McDonald's has made a commitment to sell antibiotic-free chicken and raise the pay of 90,000 workers beginning in July. Not to mention implementing leadership changes, like the appointment of new CEO Steve Easterbrook and new appointees in marketing and communications.

At the end of May, Easterbrook addressed McDonald's turnaround at Bernstein's Strategic Decisions Conference, where he said growth would come from "re-commitment to regaining the trust and confidence of the customer," adding that McDonald's must be more "agile" in responding to customers' changing needs.

Reputation is often equated with health, with many food chains opting for all-natural menus, like Subway.

Justin Zandri, vice president of marketing for Subway, pointed to the open-kitchen style of the restaurants, started in 1965, as a way of "offering nutritional transparency."

But some notably less-healthy products, like Krispy Kreme doughnuts, also made the list.

"Krispy Kreme has never claimed to be anything other than what they are," said Hecht of the confectioner. "They also started donating to charity in the '50s. That's consistent on every one in the top 10 — very focused on providing the best service, but also doing the right thing."

That said, reputation is far from the only driver of performance in the restaurant business.

Industry database Hoovers lists household discretionary income and retail sales of food services as other potential drivers of fast-food profit. And Moody's Investor Service recently found costs like rising wages could potentially take a bite out of profits for large restaurant employers, too.

Still, Zandri doesn't discount the importance of reputation to his business.

"Subway is always improving and working to meet our consumers' rapidly evolving needs," he said. "It's a simple process and one that has been a cornerstone of our business."