Preventium Investigates

In 2015, the Chipotle chain of restaurants was met with a significant crisis when two E.coli outbreaks affected over sixty customers across fourteen states; unfortunately, this resulted in a ten per cent drop in the chain’s stock and an investigation by the Centres for Disease Control.

In response, Chipotle implemented new safety protocols.  It closed all its stores for a day to educate staff on food safety, indicating it was ready to rebuild its brand image and regain customers’ trust.

The outbreak shocked the public and was a significant challenge for Chipotle.  Foodborne illnesses are all too common, making 1 in 6 Americans ill yearly and resulting in over 128,000 hospitalisations and 3000 deaths.  In addition, half of these foodborne illnesses are caused by food consumed in restaurants or delis.

Then following the E.coli outbreaks after a staff meeting in Billerica, Massachusetts, four workers tested positive for Norovirus.  The unit was closed for two days and sanitised while all food was discarded.  Despite the employees not coming to work sick and no reports of customers becoming ill, Chipotle still wanted to ensure customers felt safe.  To do this, they sent customers 21 million direct mail offers for free burritos in the following weeks.  In light of multiple outbreaks of foodborne illnesses in a short period, Chipotle hoped this campaign would reassure customers of their food safety standards.

Despite the difficulties, Chipotle has been a leader in the fast-casual restaurant segment for the past decade.  In 2015, they were the second fastest-growing restaurant chain and had a total sale of $4.1 billion from 2000 units.  Furthermore, their stock had jumped 58% two years before the crisis.

Chipotle has been successful due to its “Food with Integrity” goals of providing healthy and high-quality food, such as responsibly raised meats, organic and local produce, and the absence of antibiotics, hormones, and GMOs.  They were the first restaurant chain to disclose the presence of GMOs voluntarily and were one of two chains awarded an ‘A’ grade by the National Resources Defence Council in September 2015.

However, with the food safety issues Chipotle has experienced, some have questioned its focus on sustainable sourcing instead of food safety.  It is important to note that food safety and sustainable sourcing are two different things.  Chipotle must continue striving for its “Food with Integrity” goals while emphasising food safety’s importance.  Consistent with the organisation aligning their crisis management strategy with its organisational values, with the intent of maintaining its reputation.

Crisis Management: Recovery strategies

Chipotle had taken various steps to recover from the crisis, from creating a comprehensive food safety plan website to sending a letter from Co-Founder Steven Ells to the stockholders.

New food safety strategies and protocols have been proposed and implemented to help regain customer trust and create a safe environment.  These include additional microbiological kill steps, stricter testing of produce throughout the supply chain, new sanitation procedures, preparing particular food at different times, preparing certain items at a central kitchen, enhanced standards of food safety inspection, a rigorous paid sick leave program, investing in the Local Growers Support Initiative, and introducing an automatic closure policy if an employee or customer vomits in a Chipotle restaurant.

After a public relations crisis that threatened to end its career, Chipotle became more transparent with its customers.  Rebranding from ‘As Real As It Gets‘ to ‘For Real,’ the restaurant chain collaborated with Oscar-winning director Errol Morris to create a docu-style commercial showcasing the kitchen’s inner workings.  This campaign, dubbed ‘Behind the Foil,’ allowed customers a sneak peek into Chipotle’s kitchens.  To further emphasise its commitment to transparency, Chipotle displayed all 51 ingredients on a Times Square billboard, hosted a two-hour live feed on its Facebook page of a kitchen in Irvine, CA, and sponsored a Scripps National Spelling Bee.

These efforts have paid off.  According to the New York Times, the company’s stock has reached a high of $759, surpassing the mark it set in August 2015, while according to Money.com, Chipotle became the second-highest performing stock on the S&P 500.

Today’s customers demand transparency during food crises, and this case study provides an in-depth analysis of the action Chipotle took in implementing changes within restaurants, policies that reinforced food safety and the wellbeing of its employees and customers, and, importantly, having a communication strategy that is open and direct.

Reference Cha, J., & Cichy, R. F. (2018). Lessons From Chipotle Mexican Grill’s Foodborne Illness Outbreaks.  In SAGE Business Cases.  International CHRIE.