What a wild ride the last twelve months have been for Chipotle. From GMO-free to E. coli-laced with a touch of norovirus in between, much has been written about Chipotle Mexican Grill's wild year. Once the darling of Millennials and Baby Boomers alike, the norovirus and E. coli outbreaks have changed the national perception of the chain. As it picks up the pieces, will it be able to return to its former glory?
I've previously written about the chain's food safety woes, and its plans to win customers back. Armed with a $50 million advertising budget, they will attempt to win customers back the old fashioned way. However, it was the Feb. 8 company-wide safety meeting that most interested me. Would the company be able to institute new safety measures that actually work? Would those measures actually convince the public that their food is safe?
At the meeting, Chipotle noted that it will invest $10 million to create the Chipotle Local Grower Support Initiative. The program is intended to help smaller, local suppliers meet the new, heightened food safety standards instituted by the company. The move seems to be in-line with other directives at the company. Chipotle has long touted the importance of locally-sourced food in its meals, so it makes sense that it would want to ensure that remains a possibility at its locations as producers contend with higher costs associated with those foods. Chipotle founder, co-CEO and chairman Steve Ells summed it up nicely:
"We have supported local farms around the country for a number of years because we believe it is the right thing to do. We recognize that it may make it difficult for some local farms to comply with our heightened standards, but we are looking to help local farmers comply with our standards and to continue our support for local farms and rural communities around the country.”
That wasn't the only news to come from the meeting. Fast Company reporter Mark Sullivan attended the food safety meeting, and reported that Chipotle rolled out a central reporting entity called the SSR (Safety, Security, and Risk) for internal food safety issues. The chain mandated that managers immediately report when employees or customers become sick at a store. In addition, the company mandated that stores be immediately closed in the event that someone within a location became sick. Interestingly, the company also expanded its employee leave program in such cases, ordering workers to return to work five days after the last symptom of an illness was seen. The company noted that it would pay employees for these sick days.
Will this be enough to lure customers back? The company may have learned some valuable information about its cult-like status with certain demographics because of the outbreak. Teenagers, for one, don't seem to care about E. Coli. According to the NPD Group, although total visits were down 5% for the year, the teens and young adult demographics increased their visits to Chipotle by double-digits within the last 12 months. According to Bonnie Riggs, NPD Group’s restaurant industry analyst:
“Young adults represent the largest share of Chipotle’s overall traffic. Their willingness to overlook any food safety concerns to eat at Chipotle could be a result of unabashed loyalty or lack of awareness.”
In addition, the competition didn't do much to grab any off-put customers. Customers who avoided Chipotle did not turn to other Mexican quick-service chains, according to ITG Consumer Research. The group studied several markets following the foodborne illness scare at Chipotle, finding that consumers who avoided the company's locations turned to quick-service restaurants focused on hamburgers, pizza and chicken before other Mexican quick-service chains. Perhaps those looking for burritos are just waiting for Chipotle to get back in gear.
Will these new food safety policies bring more customers through the door? That remains to be seen, but I for one am encouraged enough to give them a shot. Besides, a free burrito never hurt.
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Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at email@example.com to talk about anything food-related.
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