Why did Chipotle have this problem?
By now everyone is aware of the E. coli outbreak plaguing Chipotle. The chain recently reported expectations of sales being down 8-11% for Qtr-4 and November sales were down in the 14-16% range with several locations down as much as 22%. Initially, the most severe impact on sales occurred closest to the epicenter; the further out the less impact. But as news of the outbreak spread to other states across the country the negative impact on sales spread as well. December channel check findings from Compass and others denoted markets across the country, such as Dallas, Miami, and Atlanta, had sales down 20-25%. These markets were thousands of miles away from the outbreaks. Additionally, we learned through our special Consumer Survey, that the consumers’ reactions portray the real depth of the damage:
- 38% stated they would continue to eat at Chipotle.
- 35% stated they would return after all was certified safe.
- 27% stated they would never return. They felt deceived and betrayed by Chipotle’s claims of “food with integrity.”
Initially, these findings might not appear that significant for the long-term. Most everyone believes Chipotle will make a full recovery over time; but, the real damage is to their loss of credibility and damage done to their reputation. What makes this worse for Chipotle than other restaurant chains are Chipotle’s somewhat longstanding arrogant attitude and claims to superior quality foods; foods that were supposed to be healthier, free of GMO’s, etc. Yet, in spite of their claims, this dangerous bacterium has been traced to multiple locations from coast to coast. Having E. coli associated to one location would be bad enough but to have it appear on the west coast, east coast and in mid-America is indicative of a far more serious problem. The real long lasting damage occurs from Chipotle’s lofty claim of superior, healthy food. But now Chipotle is being besieged by one of the worst food borne illnesses in the restaurant industry – this questions the authenticity of their claims. To make matters worse, Chipotle stated they are unable to find the source of the contamination. In the meantime, consumers have lost faith and trust in what Chipotle is supposed to stand for – being different and better, having superior standards and food quality. The damage might never be fully repairable because of the uncompromising stand the brand took on being better than everyone else’s standards.
Several questions being asked:
- If Chipotle uses locally sourced produce (when possible), how can the outbreak be in Seattle one week and show up in Ohio, New York, Indiana, Pennsylvania, Missouri, Maryland and California days later? (Over 3,000 miles apart.)
- What does locally sourced mean in general and to Chipotle? This strikes at the heart of their
“integrity.” - Also, the consistent reports of the inability to find the source of the contamination – How can that be? Proper protocol procedures for food borne illness: if the contamination is not found on the equipment or employees, then it has to be in the food source. With the spread of the contamination across the country, the food source has to be the culprit. Why wasn’t this found?
Another question: Where are the internal systems and checks that all restaurant chains have in place to ensure proper food safety. With this in mind, Chipotle’s food safety systems should have been superior to the average restaurant in these regards.
- In August/September timeframe 64 cases of Salmonella were reportedly linked to 22 Chipotle’s in Minnesota.
- Last Summer scores of customers in Washington, California and Minnesota were sickened with “something similar” to E. coli that was traced back to Chipotle – so how long has Chipotle really had a “food with integrity” problem?