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The Food Institute Blog

Can Chipotle Dig Itself Out of This Hole?
Posted on July 20, 2017 by Jennette Rowan

Chipotle just cannot catch a break. After reports this week that diners were falling ill from eating at a Chipotle location in Sterling, VA, the chain was forced to shut down the location and investigate into the cause of the outbreak.

The company claimed the customers' symptoms were consistent with norovirus, and that it would reopen the locations after a "complete sanitation," reported CBS News (July 18). It also noted norovirus does not come from its food, and that it is safe to eat at its restaurants.

Of course, any other restaurant chain that experiences a norovirus outbreak at one location sees it as a blip on the radar and is not concerned about it impacting overall customer perception of the brand or long-term sales. Norovirus is actually the most common cause of foodborne illness in the country, and while it is serious, most patients recover within a few days. In the 2015 norovirus case at a Boston Chipotle restaurant, a sick employee was believed to be the source of the outbreak, but in this instance, it could have just as easily been a sick customer that started the spread of the illness. Despite this, because of Chipotle's past with food safety scares, it has become more of a PR nightmare than a short-lived incident.

Chipotle has since reopened the Sterling restaurant, but the effects of the outbreak are far from over. More than 130 people have now come forward and claimed they fell ill after eating at the Sterling location, according to the foodborne illness tracking website iwaspoisoned.com, reported Business Insider (July 20). While that might not sound like the most reliable of sources, the website has had a successful track record of identifying foodborne illness outbreaks before health officials. Patrick Quade, the website's founder, notes a surge in reports is normal in cases like this.

In turn, investors are pessimistic about the outlook of the chain. Wells Fargo Securities and BMO Capital Markets downgraded the stock to the equivalent of "hold" from "buy," while Baird and Barclays cut their estimates for the company, reported Fortune (July 19). An analyst from BMO also notes that normally a norovirus outbreak at one restaurant would not be of much concern, but "customers' psyche likely remained fragile and we believe there is a reasonable probability that media coverage of the new illnesses will outweigh the actual severity of the incident and create renewed [sales] weakness."

An analyst from investment banking firm BTIG also noted, "While norovirus does not come from the food supply, we believe customers will take little comfort in that distinction and some will likely avoid Chipotle at least in the near-term."

Aside from the norovirus outbreak, the chain is also dealing with a report from a customer in Dallas, TX, that claims there were "rats falling from the ceiling" at a Chipotle in the city. Even though a company spokesperson noted this is "an extremely isolated incident" and is not indicative of the cleanliness of the chain as a whole, the video was viewed almost 115,000 time as of July 19.

Stories like these are far from rare in the restaurant industry, especially with the advent of social media making it easier for customers to share bad experiences. But for Chipotle, they have become the shovel digging the chain into an even larger hole. Even claims that are as outrageous and overblown as "rats falling from the ceiling" now have the ability to hurt customer perception because the damage was done two years ago for Chipotle, and it will likely take quite some time before customers are ready to trust the chain again.

Posted in Chipotle  

 

About the Author

Jennette Rowan
Product Manager
The Food Institute

Jennette writes and edits the Food Institute’s annual publications, such as Food Business Mergers & Acquisitions, The Food Industry Review and The Almanac of the Canning, Freezing, Preserving Industries.  She also handles marketing and promotions for books, seminars and the monthly webinar series. Additionally, she writes for the daily news update, Today in Food, and periodically contributes to the weekly Food Institute Report. She has a background in non-profit and environmental marketing, programming and writing, and joined the Food Institute in 2013 with a degree in Communication Studies from Rowan University.

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