Chipotle's Biggest Strength Is Suddenly Its Biggest Weakness

[marmar]

(Bloomberg) Chipotle is fresh -- and suddenly, that’s a problem.

After years of winning customers and investors with its promise of healthy fast-food and premium burritos, the chain and its business model have been upended by a far-reaching E. coli outbreak. Sales have plummeted. So has its stock price.

The E. coli outbreak linked to Chipotle Mexican Grill Inc. has sickened at least 52 people in nine states. And pinpointing the source of the contamination hasn’t been easy. Unlike the big burger-and-fries chains that deal with a handful of beef and potato suppliers and distributors, Chipotle depends on a more complex supply chain for its 1,900 outlets that includes scores of small, independent farmers. That can lead to ingredient shortages and questions about food safety.



When Chipotle can’t deliver on its healthy and fresh promise, its greatest strength can turn into its biggest weakness. In the latest sign of trouble, Chipotle temporarily closed a restaurant in Boston on Monday after several Boston College students, including members of the men’s basketball team, reported getting sick after eating there. It’s not yet clear if those illnesses are related to the wider E. coli outbreak. ..................(more)

http://www.bloomberg.com/news/articles/2015-12-08/chipotle-s-greatest-strength-is-now-its-greatest-weakness-too

[TwilightGardener]

1. Every once in a while you just get the bad burrito, the bad burger, the bad salad,

the bad shrimp platter, etc. I see eating as a microbial game of chance, even though most chain restaurants try very hard to maintain safety standards. Therefore I will continue to eat at Chipotle's (or maybe Qdoba for a little while instead, LOL). It took my husband a few years to eat Subway sandwiches again, after he was virtually incapacitated for two days with some, er, GI issues...but we still go there sometimes.

[OneGrassRoot]

2. I know this is a tinfoil hat comment but...

sabotage keeps coming to mind.

[NV Whino]

3. I had the same thought

This is so widespread it is a puzzlement. If I were to guess, I would say someone is trying to drive down stock prices (accomplished) for a takeover. Can't imagine any other reason to deliberately do this. A personal vendetta is way over the top.

[GreatGazoo]

6. I have worked with new farmers who refuse to do GAP

They have chickens next to their veg fields and refuse to do anything differently. Any vegetables which are consumed raw coming from such an environment are a risk because workers and vehicles can transport the poop from the chickens to the veg. They sell through CSAa and some farmer's markets.

That said, Chipotle requires GAP certification AND tests incoming product for pathogens as do other chains which have been affected by e coli -- Jack in the Box, Taco Bell, KFC.

[HuckleB]

4. Sanctimony will always bite a company back.

Chipotle has chosen baseless demonization of safe foods as a marketing strategy. It's not ethical, and it shouldn't surprise anyone that it's customers leave, ASAP. When your customers were driven there based on fear mongering, they're going to leave at first sign of a scare.

Nevermind that the switch to non-GMO ingredients is actually bad for the environment.
http://weedcontrolfreaks.com/2015/05/what-does-chipotles-switch-to-non-gmo-ingredients-mean-for-pesticide-use/

[zappaman]

5. Well, I love their poo burrito!

So I hope they keep it on the menu.

[GreatGazoo]

7. Chipotle's biggest strength is its dominance in fast casual dining:

the combination of made to order and meeting the customer's perception for high quality, healthier fare.

Basically the stock has returned to the level it was at 5 months ago, a 20% drop from its peak. This incident will soon be a blip on the radar so this may be a buying opportunity before Chipotle rolls out its pizza concept to more stores.

[marmar]

8. I don't see it.....

.... this is going to stick with them for a long time. The E.Coli eatery.

[GreatGazoo]

9. Pizza is cooked, fully cooked at 450F

Ain't gonna be no live e coli coming out of a 450 degree oven.

http://www.fool.com/investing/general/2014/07/02/10-things-you-need-to-know-about-chipotles-pizza-a.aspx

As for burritos, they will find the source and eliminate this threat.

73,000+ people get sick in the US every year from e coli. Chipotle may be the source of about 50 cases this year -- in that context Chipotle may be 0.007% of the e coli in the US. That hardly qualifies them as a prime source of e coli. If anything this proves again that eating out is safer than eating at a pot luck or mom and pop restaurant.

[marmar]

10. Doesn't matter. It's all about perception. ....

Their rep is in the toilet.

[olddots]

11. the naure of fast food is dangerous

convenience becomes more inconvenient .