Chipotle Mexican Grill – Navigating a Crisis

Today’s consumers are savvier than ever before when they select a brand. Consumers are not just selecting a brand because of price any longer, they are seeking a brand that tells a story and shares their values. No brand in the fast food industry has represented this more than Chipotle Mexican Grill that boasted ‘food with integrity’. It was one of the fastest growing fast food chains in recent memory appealing to consumers that ranged from millennials to blue collars. Wall Street and consumers could not get enough of the chain that touted its fresh and organic ingredients which they call “food with integrity”.

Then disaster struck. Last fall, Chipotle closed 43 restaurants in Washington and Oregon after six restaurants were linked to an E. coli. Then additional illnesses were reported in seven more states. In December 80 college students in Boston fell ill after eating at Chipotle. Health officials in Boston said the cause was norovirus and cited the company for two health violations. On January 6^th, the company announced that it had been served with a grand jury subpoena in California related to a FDA and federal attorney investigation. Sales and stocks at Chipotle have been tumbling since this first happened. The company has also announced that it was severing ties with its public relations agency, Edelman.

Many are wondering if Chipotle can recover or if consumers will no longer buy into its story. The answer is the brand will survive and recover but it will takes years to win back consumer loyalty and trust. And before this crisis is over it can expect more bad days ahead.

The company in its initial crisis did do some good things such as their full-page ads apologizing to customers and pledging to do better. They also erred in saying they would make their restaurants absolutely safe (there is no possible way to guarantee that and also it begs the question why weren’t they already absolutely fresh) and in explaining what E.coli and norovirus are rather than offering the company’s solution (remember when a crisis hits, the public wants to know how a brand is going to fix it).

The company has to develop a crisis strategy to address investors, employees, consumers, and franchise owners. So what should they do?

For consumers:

1. Address the criminal investigation forthrightly as well as what led to the outbreaks at the various locations.
2. Explain what new safeguards have been put in place to see that this does not happen again and what other things the company is doing to safeguard consumers.
3. Have the CEO appear on the morning talk shows to speak to consumers and apologize.
4. Full page ads yet again in major daily newspapers apologizing to consumers and asking for another chance.
5. Invite the media into restaurants to show them what safeguards are being done to insure safe quality food.
6. Have a social media policy that corresponds with the traditional media approach.
7. A strong community relations program to show Chipotle in local communities and as a company that cares.

For investors:

1. Appear on the financial networks and in the financial print media to reassure nervous investors that the company has a plan in place and will survive this crisis as well as discuss the recovery plan.
2. Meet with analysts and discuss the company’s plan both short term and long term to rebuild.
3. Downplay sales projections.
4. Get all the news regarding this crisis out – both the good and bad news.

For employees:

1. Address the crisis and discuss the steps being done to fix it.
2. Keep employees informed of what is being done and any news that is breaking rather than have them find out via the media.
3. Allow employees to give input on solutions and how they see the crisis playing up.

For franchise owners:

1. Reassure them that the company will survive.
2. Outline the steps being taken short and long term to fix it and repair the company.
3. Keep them informed of everything that is happening and allow them input.

Chipotle will survive this crisis. Other brands have faced similar issues or worse and survived and flourished. What the company needs to do is begin implementing a renewed strategy moving forward, as the longer it delays the worse the crisis will become and the longer before recovery begins.