THE INC. LIFE

Why Chipotle Will Survive Yet Another Health Crisis

The beleaguered upscale fast food favorite will survive this latest health crisis because of its customer-first strategy.

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BY Peter Gasca - 26 Jul 2017

PHOTO CREDIT: Getty Images

Chipotle, the popular upscale fast food chain, is in the news again -- but not for the reasons it wants. The company, which has been mired over the past two years by illness-related problems in its restaurants, has yet another health-related crisis on its hands.

Food Safety News reported today that 135 customers had reported becoming ill after visiting a Virginia-based Chipotle from July 13 through 16, 2017.

Early test results seem to indicate that the illness was caused by a strain of norovirus, also known as the stomach flu, a highly contagious but common illness that "is easily transmitted through food, which can become contaminated during production or preparation from contaminated water, contact with contaminated surfaces or from being handled by an infected person."

For Chipotle, this is just another in a series of restaurant and food related crises dating back over the past two years.

  • July 2015: E. coli sickens five people in Seattle, WA. The source is unknown.
  • August 2015: Norovirus sickens 234 people in Simi Valley, CA -- Norovirus. The Source was a sick employee.
  • August through September 2015: Salmonella sickens 64 people across Minnesota. The source was linked to tomatoes, but it is unclear when the tomatoes became infected.
  • October 2015 through February 2016: E. coli sickens 55 people across California, Delaware, Illinois, Kentucky, Maryland, Minnesota, New York, Ohio, Oregon, Pennsylvania and Washington. The source was unknown.
  • December 2015 through February 2016: E. coli sickens five people across Kansas, Oklahoma and Nebraska. The source was unknown.

While this issue is just now unfolding, business leaders should be watching very closely, as the company's survival will depend on what it does next.

Act Immediately

Today, news of business problems spread at lightning speeds. An issue might arise in the morning and become a Twitter moment by lunch. For this reason, businesses no longer have the luxury of time when trying to analyze before acting. It is best to assume the worst and work backwards.

News of the sickness first broke after customers reported the illnesses on a crowd-funding sites called iwaspoisoned.com. Upon learning of it, Chipotle leapt into action, and according to Steve Ells, Chipotle CEO, the company "quickly and proactively notified local health officials, deployed our safety support teams, and voluntarily closed the restaurant. While the restaurant was closed, multiple teams performed complete sanitizations of all surfaces."

The company did all of this before any results from studies were released.

Take full responsibility

For most businesses -- and in particular large businesses -- the public is typically quick to pass a guilty judgment before evidence can even be collected. Any attempt at controlling the message is typically tardy and washed over by the next news cycle.

Chipotle still does not know for certain if the illness derived from this restaurant. In fact, according to the reports, only "two customers (of the 135 reported cases) have confirmed they were sickened by the same strain of norovirus" -- and there was no early indication that they contracted the illness at the restaurant.

Furthermore, according the Centers for Disease Control and Prevention, about 48 million people (one in every six Americans) are infected with food-borne illnesses each year, and the norovirus is one of the most common forms.

Regardless, Chipotle did not take defensive stance and instead immediately closed the restaurant and quickly cleaned it. And, according to Loudoun County Health Director, David Goodfriend, "The Health Department is not aware of any customers becoming ill since the reopening of the facility," just two days after the last reported incident.

Take care of your customers

One of the main reasons businesses survive significant challenges such as this is because of a very loyal customer base. In the case of Chipotle, they have always been known for putting quality first and taking a proactive role in supporting organic food and fair business practices, priorities close to its target customers.

Furthermore, the company took immediate action to assist those who were sick, prior to knowing how they became so. CEO Steven Ells stated, "We also provided support to any customers or employees who had reported illness to ensure their well-being" immediately after learning of the outbreak.

I am a fan and supporter of Chipotle, both the food and the corporate social strategy. I even lobbied -- bordering on harassed -- the company for years to open a Chipotle in Myrtle Beach (we have one now). I am hopeful that the company can rebound, and I think if they continue to employ their customer-first strategy, they can recover.

Time will tell, however, and it is already looking bleak. The company's stock price reached a high in August 2015, just before news of the first health-related breakout hit the news, and had been rebounding well from its health-related issues. Since the news of this recent outbreak, however, the stock price has dropped to a three-year low.

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