Hard lessons from Chipotle
March 15, 2016
by Theresa Cogswell
Chipotle Mexican Grill, until recently one of the brightest stars in the restaurant universe, came crashing to earth because of recent problems linking it with foodborne illnesses. The company has centered itself on claims about the wholesomeness of its foods, but that bright image dimmed quickly. It’s still not certain where Chipotle went wrong, but can you learn from its problems how to avoid similar food safety issues for your business?
From the first, the Denver-based chain committed to source locally and avoid GMOs. It claimed to serve the best food possible. Those marketing pitches fit its intended demographic very well, and Chipotle enjoyed successful year-over-year growth for the past decade. Investors enjoyed year-over-year profits as well. And Chipotle customers enjoyed eating the fast-casual food they love and feeling good about it.
You would have to live under a rock not to know about Chipotle and its food safety issues. First, it was E. coli incidents in California and then a norovirus outbreak in Boston. But these may be the unintended consequences of the decisions Chipotle made early on that are now likely keeping company executives awake at night and the media busy. Here’s what is at stake:
In the wake of the past year’s food safety problems, sales plummeted 30% in December, and sales in the fourth quarter overall dropped 14.6%, marking the first decline since Chipotle went public in 2006. Last month, the company said it could no longer reasonably predict sales trends given the food scares, and it retracted its forecast for 2016.
Chipotle was subpoenaed as part of a federal criminal investigation. The investigation is by the US Attorney's Office for the Central District of California with the Food and Drug Administration's Office of Criminal Investigations, according to a filing with the Securities and Exchange Commission.
In a regulatory filing, the company said it was asked to produce a broad range of documents tied to a norovirus outbreak this summer but declined to provide further details. In that filing, Chipotle said it could not determine or predict the amount of any “fines, penalties or further liabilities” it might face in connection with the federal investigation.
Food safety is the topic that keeps many of us awake at night. But what about food safety issues for which you cannot find a source? The Centers for Disease Control (CDC) originally surmised the problem to be in the meat Chipotle served. Then a vegan customer became ill, and that theory went out the window.
Adding to the uncertainty, scientists have tested and retested Chipotle foods without being able to find reasons for the outbreaks. A Vanderbilt University Medical Center researcher, William Schaffner, MD, an infectious disease expert, doubted whether they will ever identify the cause. Dr. Shaffner observed that the tests done by various agencies were so rigorous that they would have already discovered the source.
The mystery surrounding Chipotle's outbreak has even sparked conspiracy theories, including one that claims Chipotle's competitors planted E. coli on the company's food. Rumor or not, this could help explain why a federal investigation was launched. Food tampering is a federal offence.
Having a serious food safety issue without being able to determine its root cause is the worst possible situation. Where do you start? What do you investigate first? Is there an internal issue causing the problem? Sabotage? Employee ignorance? Improper training?
If those questions aren’t hard enough, now your company is under federal investigation. How do you work to fix the problem, manage the media, deal with the federal investigation — all while working to regain corporate and customer trust?
To rehabilitate its image, Chipotle took out full-page ads in dozens of newspapers around the country, apologizing to customers. It also vowed changes to step up food safety at its restaurants, in part by tweaking its cooking methods and increasing testing of meat and produce. The company also announced a Feb. 8 “stand down” when all of its 1,900 stores nationwide were on a delayed start of 3 pm. The shutdown was to hold a national staff meeting about food safety.
To say this is a food safety nightmare is the understatement of the year. Chipotle is fighting for survival. It and the food safety community may never know why the problems happened.
However, to my way of thinking, all the hype about buying from local farmers, not from factories, could be part of the problem. Those of us who produce thousands of pounds of food products every day in our bakeries and snack facilities are held to different, higher food safety standards than the local farmer. Don’t get me wrong, I grew up on that local farm, and buying local sounds terrific. But in reality — and in law — such establishments are not scrutinized as stringently for food safety as are larger corporations.
The consumer today who is looking for “real food” is usually the same one who demonizes all processed food, factories and big corporations. The “real food” might be the issue for Chipotle. The marketing concept was good; the execution, however, may not be. And from this we can take a valuable lesson: Don’t screw it up to clean it up.