After Chipotle Outbreaks, Will 'Food With Integrity' Still Resonate? | KUOW News and Information

After Chipotle Outbreaks, Will 'Food With Integrity' Still Resonate?

Jan 5, 2016
Originally published on January 11, 2016 11:17 am

Chipotle Mexican Grill is struggling to convince its customers it's a safe place to eat, after several outbreaks of foodborne illnesses have sickened hundreds of its customers. But no one thinks the task is going to be easy.

"This is a fairly significant problem for Chipotle," Timothy Calkins, clinical professor of marketing at Northwestern University's Kellogg School of Management, tells us. While customers are often quick to forgive companies for transgressions, that may not be the case this time, he says.

"The difficult thing for Chipotle is that, it's not that there was one incident. There have been a number of different incidents," he says. "And the problem with that is that it creates an overall perception, and it raises questions about safety."

The once-high-flying restaurant chain has been hit with two separate outbreaks of E. coli over the past three months. The larger one sickened 52 people in October, mostly in Washington and Oregon, according to the Centers for Disease Control and Prevention. A separate outbreak in November sickened five people in Kansas, North Dakota and Oklahoma, the agency said.

In December, scores of students at Boston College fell ill after eating at a nearby Chipotle, an outbreak the company said was due to a norovirus, which causes vomiting, nausea and diarrhea.

And in August, a salmonella outbreak in Minnesota sickened 64 people who had eaten at Chipotle. The state's Department of Health later linked the illness to tomatoes served at the chain.

Founded in Colorado more than two decades ago, Chipotle has enjoyed rapid growth by positioning itself as a healthy, fresh alternative to traditional fast-food chains, a company that serves "food with integrity."

"To eat at Chipotle was sort of the ethically and ecologically right thing to do, which resonated with a great deal of customers," says Andrew Alvarez, an analyst at IBISWorld, a market research firm.

The multiple outbreaks of foodborne illnesses have struck at the very heart of that image, says John Stanton, professor of food marketing at St. Joseph's University in Philadelphia.

"They've kind of positioned themselves as a special company that caters to the fresh and delicious product, etc., and they've let people down. And when you let people down, they take that pretty seriously," Stanton tells us.

The bad publicity has taken a toll on the bottom line at the company, which has warned that its sales fell in the last quarter of 2015. Once a darling of Wall Street, Chipotle's stock fell 30 percent last year, and the company says its sales have fallen by as much as 11 percent.

Chipotle has responded by promising to become an "industry leader in food safety." A press release promised more stringent testing of produce, better training of employees and "continuous improvements throughout its supply chain, using data from test results to enhance the ability to measure the performance of its vendors and suppliers."

The company's founder and CEO, Steve Ells, also apologized for the outbreaks in a Dec. 10 interview on NBC's Today show:

"It was a very unfortunate incident, and I'm deeply sorry this has happened, but the procedures we're putting in place today are so above industry norms that we are going to be the safest place to eat."

But a message of contrition could be hard to sell to customers, Stanton says.

"I mean, my first question, as soon as they said that, was why didn't they do that originally? I mean, they obviously weren't doing all they could to make their products safe, and they're now paying a price for it," he says.

Northwestern's Calkins says companies can eventually recover from public relations disasters such as this one. Chipotle first has to discover the source of the recent outbreaks, he says.

Once it does, Calkins says, "they need to get out there and get people feeling good. They've got to invest a lot in advertising, so that when people think about Chipotle, they're not thinking about food safety. They're thinking about that great brand, and the food they love so much."

Calkins says other companies, such as Toyota, have come back from big public relations disasters, so it is possible. But he says it will take time for Chipotle to crawl out of the hole it has stumbled into.

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AUDIE CORNISH, HOST:

One of the most successful fast casual restaurant chains now faces the biggest challenge in its history. Hundreds of Chipotle Mexican Grill customers got sick last year after eating at branches across the country. The company's trying to determine the source of the foodborne illnesses. Once it does, it faces an even bigger challenge. As NPR's Jim Zarroli reports, it has to convince customers it's safe to come back.

JIM ZARROLI, BYLINE: Chipotle boasts that it serves food with integrity. Its meats are said to be naturally raised. It serves fresh ingredients and it hand-prepares food in front of its customers. This image has been a big part of Chipotle's remarkable growth over the years, says Andrew Alvarez, an analyst at IBISWorld.

ANDREW ALVAREZ: To eat at Chipotle was sort of the ethically and ecologically right thing to do, which resonated with a great deal of consumers.

ZARROLI: Then last year disaster struck. In December, dozens of customers in Boston were sickened by a norovirus outbreak. Before that came a salmonella outbreak in Minnesota and a pair of E. coli infections. Some 500 people in all were said to be sickened after eating at Chipotle. John Stanton, professor of food marketing at St. Joseph's University, says the company's image has taken a big hit.

JOHN STANTON: They've kind of positioned themselves as a special company, you know, that caters to the fresh and the delicious product, et cetera. And they've let people down. And when you let people down, they take that pretty seriously.

ZARROLI: In the wake of these outbreaks, Chipotle says its sales have fallen by as much as 11 percent. And the company, once a Wall Street favorite, has seen its stock price fall 33 percent in three months. Company officials say they are trying hard to discover the source of the outbreaks. They're promising a radical overhaul of their food preparation techniques and an expanded effort to train employees in food safety. Here was founder Steve Ells in an appearance on NBC's "Today" show last month.

(SOUNDBITE OF TV SHOW, "TODAY")

STEVE ELLS: This was a very unfortunate incident, and I'm deeply sorry this happened. But the procedures we're putting in place today are so above industry norms that we are going to be the safest place to eat.

ZARROLI: But that message is something of a hard sell to customers, says John Stanton.

STANTON: I mean, my first question, as soon as he said that, was why didn't they do that originally? I mean, they obviously weren't doing all they could do to make their products so safe. And they're now paying the price for it.

ZARROLI: Stanton says Chipotle does deserve credit for quickly closing stores where the outbreaks occurred. But it has more to do. Tim Calkins, a professor of marketing at Northwestern's Kellogg School, says the most important task facing Chipotle right now is to discover the source of the various illnesses. Then it needs to work on repairing its image. Calkins says it will take time.

TIM CALKINS: They need to get out there and get people feeling good again about Chipotle. They've got to invest a lot in advertising so that when people think about Chipotle they're not thinking about food safety but they're thinking about all of that great brand and the food they love so much.

ZARROLI: Calkins says other companies, such as Toyota, have come back from big public relations disasters, so it is possible. But he says it will take time for Chipotle to crawl out of the hole it stumbled into. Jim Zarroli, NPR News, New York. Transcript provided by NPR, Copyright NPR.