Come Back! How Chipotle Is Picking Up The Pieces

In the wake of a widespread and damaging food safety crisis that sickened people in more than a dozen states, Chipotle Mexican Grill, the burrito chain that built its reputation on food integrity, is working hard to regain public trust.

Chipotle’s highly-publicized outbreaks of E. coli, salmonella and norovirus are risks that come with the territory in the restaurant business. Chipotle bled money and earned unfavorable media attention — and eaters stayed away. As if that weren’t enough, Chipotle is under criminal investigation in connection with one of the norovirus outbreaks, and has been sued by shareholders and customers alike.

It was expected that the company would see a $30 million loss for the first quarter of 2016. A recent report by J.P. Morgan projected a serious uphill battle: no earnings growth likely for Chipotle until 2018.

Experts say that while some restaurateurs may be breathing a collective sigh of relief and possibly experiencing some schadenfreude that this didn’t happen to them, it would be a mistake not to learn from Chipotle.

“A lot of times we forget that even before the taste of the product, the most important thing for a restaurant to deliver is food safety,” restaurant consultant Achipotle-burritoaron Allen said. “Food safety is first order. Profit, and how fast you’re getting, and efficiency, and all those things are shiny and important targets, but it only takes one crash to send an airline to the point of bankruptcy. The same is true for restaurants.”

Food safety isn’t a sexy topic, internally, and it rarely has a voice at the table until something goes wrong, Allen said.

John Stanton, a professor of food marketing at St. Joseph’s University in Philadelphia, says it may be business as usual for some restaurant executives. Others will recognize there is too much at stake not to frequently review food safety and food handling procedures.

Says Stanton: “This is an example that everyone should look at and say, ‘What can we learn so we avoid this kind of problem in the future?’”

 

THE CRISIS

The food safety crisis strikes right at the core of how the company positioned itself and how it was seen by the public, Allen says. The 22-year-old company had built its empire on its “farm-to- fork” approach, using simple, fresh ingredients sourced from farms, not from factories.

Three years ago, the company made headlines for becoming the first national restaurant chain to voluntarily disclose the presence of GMOs in its food. Last year, it succeeded in its quest to serve food made only with non-GMO ingredients, across the board.

But more recently, Chipotle has made headlines for unwanted reasons.

Chipotle’s troubles began in July when five people who ate at a Chipotle in Seattle became ill; officials confirmed E.coli. In August, a norovirus outbreak in a Simi Valley, California, restaurant sickened 243 people. That same month, more than 60 people reported getting ill after eating at Chipotle restaurants in Minnesota and Wisconsin. The culprit: Salmonella in a batch of tomatoes served at 22 restaurants.

Chipotle’s troubles continued in October and November when 60 people in 11 states became sick from E. coli. The source hasn’t been identified.

In December, another norovirus outbreak made 143 people ill, this time in Boston. Chipotle said that, most likely, the norovirus outbreaks in Simi Valley and Boston were caused by an employee who went to work while sick, in violation of policies. The highly contagious virus can be spread when someone who has it touches food or drink with his or her bare hands.

In March, a restaurant in Massachusetts was closed temporarily and cleaned after employees reported being ill. There were no reports of customers getting sick.

“We can — and will — get past this, and we believe we will be stronger in the long run,” Chipotle spokesman Chris Arnold said in an email. “Chipotle has been a leader in the industry and we are now working to establish the company as a leader in food safety.”

On Feb. 8, Chipotle took drastic action, closing all of its stores across the country for four hours to go over food safety measures with its employees. It gave out coupons for free burritos to disappointed customers who showed up to grab lunch or who contacted the company online.

Closing the stores, “sent a really good message to employees that this is serious enough that we’re stopping all operations,” said Allen, who added that Chipotle didn’t come out quickly enough and didn’t say enough about what they were going to do but were probably guided by legal counsel.

Stanton says he would put Chipotle’s response “in the category of pretty good.” But he agrees the business could have done more sooner. “They didn’t react fast enough with a dramatic result,” Stanton said. “They let this spread a little too long.”

Stanton says the online coupon for a free burrito was a way of saying, ‘We’re going to pay something for the mistake and by the way, thanks for sticking with us.’

Chipotle founder, chairman and co-CEO Steve Ells, a classically trained chef, apologized for the outbreaks and thanked loyal customers. He also introduced a comprehensive food safety program.

In a letter posted on Chipotle’s website, Ells wrote that Chipotle collaborated with top food safety experts to design a program to minimize health risks on farms, in the supply chain and in the restaurants.

The program includes a farm-to-fork assessment of all 64 Chipotle ingredients: “unprecedented” high-resolution sampling and testing of many ingredients to prevent E. coli and other contaminants from getting into the restaurants.

Now, employees will marinate chicken only at the end of the night — after all the other ingredients have been put away — and blanch lemons, limes, onions and other ingredients in boiling water for five seconds to get rid of any germs on skins and peels. Some ingredients, including tomatoes, will now be prepared at central kitchens to ensure they’re free of germs.

“In the end, it may not be possible for anyone to completely eliminate all risk with regard to food (or from any environment where people congregate), but we are confident that we can achieve near-zero risk,” Ells wrote.

The food safety plan also details new sanitation procedures and additional training for employees.

Stanton says many chains don’t have the kinds of food safety procedures Chipotle is putting into place, but he wonders why all of this wasn’t front and center before the outbreaks.

“Why did it take so many people getting sick before they took these food safety precautions?” he said.

Allen says Chipotle’s experience points out the importance of having plans and measures in place to not only prevent these types of situations but to respond to them.

“Overall, I think this is a going to be a good thing for the industry,” Allen said. “It’s a wake-up call.”

LOOKING FORWARD

The good news for Chipotle is a loyal customer base, consumer willingness to not only forgive and forget, but to actually accept a certain amount of risk.

“Consumers are willing to forgive a mistake because they love the brand, they love the food; they are loyal,” Stanton said. “Chipotle really took care of its customers [before the outbreaks] with great customer service. That was like an insurance premium against the catastrophic event. By doing a good job day-to-day, they were able to overcome a pretty significant setback.”

Nonetheless, Stanton also contends that some people are afraid of everything and will never eat at Chipotle again.

Melissa Arnoff, senior vice president at LEVICK, a public relations and strategic communications firm in Washington, D.C., said she has seen interviews with people who say they love Chipotle so much they are willing to roll the dice.

“The American public tends to have a very short memory for these kinds of things, even though it was a widespread outbreak across 14 states,” Arnoff said. There were no deaths connected to the outbreaks but the fact that the source of the E.coli hasn’t been identified is a little bit tricky, she said.

The other challenge Chipotle has is that it built its brand on the idea of food with integrity.

“Is food safety really where Chipotle wants to tie its brand?” Arnoff asks. “You’re not talking about taste. You’re not talking about quality and ingredients and to suggest you are focused on food safety makes people think there might be a problem.”

In the coming months, Allen says to expect a barrage of media campaigns aimed at winning consumers back.

In six to 12 months, Chipotle should be able to get back to where it was if it maintains the same opening schedule, Allen says. But that’s only if everything runs smoothly.

“If they have another one pop up again, it will be very difficult to come back from,” he says. “There’s tremendous pressure and a lot at stake for them to get it right.”

By Lisa O’Neill Hill
Lisa O’Neill Hill is a freelance journalist who lives in Southern California