2015 was a notoriously difficult year for Chipotle. The popular Mexican chain that is known for serving a healthy alternative to fast food experienced a wide spread E. Coli outbreak throughout August and September. During the outbreak approximately 60 customers became sick, and in between the E. Coli cases a norovirus affected over 200 customers. The incidents severely affect the Chipotle brand leading to a large drop in revenue and a 30% drop in stock prices. Customers shared news of the business’s decline via social media often posting pictures of Chipotle restaurants that did not feature the company’s notoriously long lines.
Chipotle Recovery Plans
By February 2016 the Centers for Disease Control officially announced that the outbreaks associated with Chipotle seemed to be over. Chipotle immediately began to work on repairing the company’s image by closing all of its locations for several hours on February 8, 2016 to hold meetings about food safety. The company has changed its food purchasing and preparation methods to prevent future problems. Additionally, Chipotle has widely publicized several promotions designed to regain customer loyalty and improve the overall image of the brand. These promotions including a free burrito giveaway in March 2016, and a free meal for all children 12 or younger throughout September along with free drinks for students.
The Results of the Chipotle Recovery Effort
Unfortunately, these promotions have not led to the full recovery that Chipotle was hoping for. A survey conducted by a Wall Street firm found that 25% of Chipotle customers are not willing to dine at Chipotle because of the previous E. Coli outbreaks. Company profits have continued to decline as locations receive less business and the company spends money giving away products. The company has also started experiencing higher employee turnover rates leading to reduced customer satisfaction and more money being spent on employee training. In July 2016 was hit with more controversy when Mark Crumpacker, a Chipotle creative and development executive, was involved in a cocaine drug sting.
The Chipotle founder has stated that the company will continue to focus on rebuilding customer trust and increasing customer loyalty. At this point Wall Street analysts believe it will take years for Chipotle to fully recover financially.