Chipotle Focuses On Food Safety To Lure Back Public (NYSE:CMG)
Chipotle Mexican Grill is heavily touting its focus on food safety in an effort to lure back customers after food-borne illness scares decimated its store traffic. Since July, Chipotle has experienced six food safety failures involving norovirus, salmonella and E. coli. More than 500 customers have reportedly become ill.
The Centers for Disease Control and Prevention estimates that roughly one in six Americans get some form of food-borne illness every year. Chipotle believes that the norovirus contaminations, which caused the greatest number of illnesses, were introduced to the restaurants by sick employees. The salmonella outbreak in Minnesota and Wisconsin that sickened more than 60 people was linked to chopped tomatoes. Of the two different types of E. coli that sickened 60 people in 14 states, neither Chipotle nor the C.D.C. has been able to determine the exact cause. The C.D.C. closed its investigation last week.
On Monday, Chipotle closed its more than 2,000 restaurants for four hours to hold a meeting with its employees about food safety and regaining consumers’ trust. During the meeting, more than 50,000 employees were connected to Chipotle’s Denver headquarters via video. Marketing experts applauded the company for its transparency about the meeting.
Since the outbreaks, the company has instituted paid sick leave for employees in an effort to encourage them to stay home. The company has also told employees to report colleagues who come to work sick. Steve Ells, the company’s founder and co-chief executive, announced a $10 million program to help small farmers who are Chipotle suppliers afford the costs of putting the company’s new food safety system in place. The new system will require the suppliers to do more rigorous testing.
The company has also started its most expensive marketing and promotion campaign ever. Chipotle plans to spend $50 million to try to lure existing customers back into its restaurants. Signs in store windows on Monday invited customers to text the company for a free burrito.
Consumers are clearly still concerned about eating at Chipotle. Stores have been far less busy since the outbreaks became big news. Chipotle’s sales in stores open at least a year nosedived 14.6 percent in the last quarter of last year.