How is Chipotle Rebuilding Its ‘Food With Integrity’ Image?



Impact of E. coli outbreak

The outbreak of E. coli has seriously dented Chipotle Mexican Grill’s (CMG) image since October. The recent 4Q15 results showed that the company’s same-store sales growth was -14.6%. In January 2016, the same-store growth was -36%.

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Measures adopted by CMG to overcome E. coli outbreak

Chipotle Mexican Grill (CMG) is not the first company to be hit by food safety issues. Earlier, Jack in the Box (JACK) and Taco Bell, which is owned by YUM! Brands (YUM), had also experienced E. coli outbreaks at their restaurants. However, both companies have recovered from the damage and have won their customers back.

With the intention of regaining its customers’ loyalty and to establish testing and safety protocols that ensure the quality of the products supplied, Chipotle conducted a comprehensive reassessment of its supply chain and restaurant practices and implemented the following measures:

  • The fresh produce and meat will undergo high-resolution DNA-based testing to identify harmful bacteria.
  • The company has implemented new food handling and preparation processes, which include blanching of certain ingredients and the preparation of tomatoes, lettuce, and bell peppers in central kitchens. The restaurants will marinate chicken, steak, and other ingredients to enhance food safety.
  • Enhanced food safety training program for the crew.
  • The company has also appointed a third party to audit its food safety procedures.

Having discussed the enhanced food safety procedures implemented by the company, we will examine the marketing and promotional programs implemented by Chipotle to regain its customers in our next article.

Alternatively, you can gain exposure to CMG by investing in the iShares Russell Mid-Cap Growth ETF (IWP), which has invested 0.58% in CMG. IWP has also invested 0.23% in Domino’s Pizza (DPZ).


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