It's Time For Chipotle To Eat Crow, Mexican workers shit in the food.

From: Tyler ([email protected])

Chipotle has shitty food. Literally.

It's about time Chipotle turned on the charm.

On Tuesday, a defensive-sounding CFO Jack Hartung -- in
Chipotle's first public address since it lowered sales forecasts
Friday due to dozens of incidents of food-borne illness linked
to its restaurants -- said the company's reputation was being
hurt by "sensational headlines" in the media.

Executives also blamed what they called the "unusual and
unorthodox" reporting methods of the U.S. Centers for Disease
Control and Prevention (read: dripping information on new cases
one by one, rather than swiftly opening and closing an
investigation).Chipotle executives, speaking at the Bernstein
Consumer Summit, said they expected the backlash to continue --
partially because, in their view, the media blames Chipotle and
E. Coli every time "someone sneezes."

They made no mention on Tuesday of apologizing to customers and
said they didn't plan to roll out any type of customer marketing
until the CDC officially closed the case. The company said the
CDC hasn't given them a timeline for that.

When the case is finally closed, Chipotle plans to send
customers discounts via direct mail, take out full-page letters
in newspapers and do some "critically-placed interviews to say,
'Hey, this is over, this is what we've done, we invite you back
to our stores,'" chairman and co-CEO Steve Ells said, noting a
previous apology to the customers initially affected in the
Pacific Northwest area.

Ells and his team should consider acting sooner. As I wrote last
month, the E. Coli situation has potential to do real damage to
the company. Chipotle said Tuesday that just 57 percent of its
current customers are aware of the health incident, admitting
only that the company has "a little work to do there." But
survey results from YouGov BrandIndex show Chipotle's
favorability ratings have plunged to all-time lows.

Americans often stay loyal to foods they love even after a major
public-health scare. But luring customers back to Chipotle could
be a challenge. Even if you assume the company will become the
industry leader in food safety, as it has claimed, that may not
be enough to convince lost customers to return or to have
clarity on when sales will rebound.

More than just a food safety problem, executives need to realize
they have a serious public relations problem. Since October, 52
people from 9 states have reported E. Coli infections, 47 of
whom reported eating at Chipotle in the week before their
illness started, according to the CDC.

No deaths have been reported. The CDC said it hasn't identified
what specific foods caused the illnesses and that, even though
no new people are likely to be infected, more cases may be
reported in the ensuing weeks.On Monday, Chipotle temporarily
closed a restaurant near Boston College after 30 students got

The infection didn't stem from E. Coli but from norovirus, which
can be found in contaminated food. The company called it an
isolated incident. The hit to sales has not been isolated,
however. After Chipotle announced the closure of 43 restaurants
on November 3, sales at established restaurants plunged by as
much as 20 percent from a year earlier.

A week later, they were still down by 9 percent from the year
before. The company now expects fourth-quarter sales at
established restaurants to fall by a range of 8 percent to 11
percent from a year ago. Consensus analyst estimates had called
for a 1-percent increase in fourth-quarter comparable-store
sales before Friday's release.

And Chipotle says it can't even begin to predict its 2016 sales,
due to "additional uncertainty related to the E. Coli incident."
The stock has fallen 27 percent in the past four months -- and
that might be worse, if not for a $300 million share buyback
plan also announced on Friday.

While it's absolutely necessary for Chipotle to focus on
overhauling its supply chain, it's also important to immediately
and authentically reassure customers that it's safe to come
back. There's no reason to wait.

Chipotle has shitty food. Literally.;

Share |