Chipotle, once the darling of the fast food industry, has been experiencing a series of setbacks of late. At Chipotles financial heyday, the company was trading at a high of $742.23 in July of 2015, to $491.56 as of this writing. Is the lower stock price today reflective of their foodborne illness outbreaks?
My root cause analysis that seeks to identify the issues plaguing Chipotle begins with identifying the event (foodborne illness outbreaks), describing the end results (sick customers), contributing factors (company behavior), and then identifying the root causes.
The lack of proper training for line employees, failure to wash hands properly, vulnerable production processes during service, and questionable vendor management/oversight are what I have identified as root causes for the continued foodborne illness outbreaks at Chipotle and what may be the cause of the lower stock price that the company is dealing with today. All of these issues have combined for the perfect storm…sick customers, a lack of investor confidence, and the public wondering if they should give Chipotle another opportunity for their fast food dollars.
Looking back over Chipotles long history of foodborne illness outbreaks, I see that as far back as 2008, the Company had a number of foodborne illnesses occur across the United States, most notably in San Diego, CA.
Additional outbreaks included the following:
• Ohio, 2008, 500 people eating at a Kent State Chipotle reported getting sick
• California, 2008, 20 guests reported getting sick at Chipotle
• 2009, six states reported foodborne illnesses effecting 29
• Minnesota and California, 2015, over 161 reports of foodborne illnesses
• Massachusetts, 2015, 80 Boston College Students report getting sick
• 2017 Virginia 130 people were effected; possible norovirus outbreak
• Ohio, 2018, 700 guests report foodborne illnesses
So how did Chipotle address these food safety issues? Some of their food safety corrective measures included shifting some production normally done in-house to a centralized commissary for better safety control. They also have an alarm that goes off to remind employees to wash their hands. The sites undergo twice weekly visits from district managers, and processed vegetables are dipped into boiling water for at least 10 seconds to remove surface bacteria that can cause foodborne illnesses. A massive retraining effort was announced in August 2018 in response to the most recent foodborne illness outbreak. Chipotle also took a look at the vendors who supply all their locations with fresh produce, meat, poultry, and dairy products, and made changes if necessary. There was also a leadership change at the top in February 2018, when Steve Ells, founder and CEO since 1993 was replaced by Brian Niccol, former CEO of Taco Bell, deemed by his peers as a “turnaround expert.” On the surface, it looked like Chipotle made the appropriate changes in leadership and processes to address the continued occurrences of foodborne illnesses at the company. But were those changes enough?
Chipotle has been ranked #14 (Fast Food Segment) way behind its main competitors, Panera Bread (Ranked #11) and Taco Bell (Ranked #6). More importantly, this ranking appears to be a result of the many foodborne illness outbreaks, hence the struggle to regain consumer confidence has been a challenge. Apparently, Chipotle is still experiencing blow-back from the foodborne illnesses of the past, and they just don’t seem to be able to get a handle on food safety. So here we are, yet again with another, very public, foodborne illness outbreak at Chipotle. As of this writing, Chipotle has over 2,408 restaurants worldwide. It’s quite possible that the preventative/corrective measures were not enough, or were not sustainable overtime due to the sheer volume of locations that need to be monitored for food safety continuously requiring manpower and resources. Although Chipotle did not contribute to this article, I felt that perhaps a deep-dive into what I have identified as root causes will provide a starting point in identifying safety gaps in the existing food safety program at Chipotle. More importantly, a solid comprehensive and continuous food safety training program will empower line staff to recognize visual cues that could point to possible food safety breaches in their production environment. Here are the areas I believe Chipotle is the most vulnerable in terms of food safety.
Root Cause #1: Chipotle Employees
In a perfect world, any competent restaurant manager will tell anyone who will listen that food safety training should be on-going and continuous. However, turnover puts a serious dent in that very lofty ideal. As a matter of fact, according to Upserve Restaurant Insider and the Bureau of Labor Statistics, “the turnover rate in the fast food industry is 150% as of 2015, the highest since researchers began recording this data since 1995.” Factor in new technology and keeping employees off the mobile devices, and you have a perfect recipe for not making training a priority. Ask any fast food restaurant manager where training lines up in the never-ending list of daily responsibilities. Between opening and closing duties, cash handling/banking, register(s) reconciliation, receiving deliveries, placing orders to vendors, inventory control, physical plant maintenance (inside and out), preventive maintenance on big ticket items, transmitting weekly numbers to corporate, serving the customers, and any of the myriad duties that need to be performed daily, providing food safety training is a challenge for the best of managers. Now factor in turnover. You see where I am going here? Turnover, time, and technology are the biggest enemies of any organizations best intentions in terms of making food safety a priority. Restaurant professionals know that none of this is information is new. It’s just a day in the life of a restaurant manager…every day. So how is it that some fast food organizations do so much better than Chipotle when it comes to food safety? Although Chipotle’s process is much different than their competitors (everything is made to order according to customers’ requests), it may be a good idea to look at the “best practices” of its competitors and measure financial losses of foodborne illness outbreaks against spending company resources for foodborne illness prevention.
Root Cause #2 Proper Handwashing Procedures
According to the University of Rhode Island’s College of the Environment and Life Sciences, prevention starts by washing your hands for at least 20 seconds and drying your hands on a disposable towel. Great start right? Well, the National Restaurant Association Servsafe Food Program really gives explicit directions on how to wash your hands to prevent the contamination of food, which leads to foodborne illness. By the way, Servsafe is the gold standard for food safety training certification nationwide. As for handwashing, Servsafe cites 12 instances in which restaurant employees should wash their hands before handling food. Most importantly, the temperature of the water for washing hands (with soapy water) should be at least 100 °F/38 °C. It’s also important to note that the use of a sanitizing solution is not a substitute for handwashing in a foodservice/restaurant environment.
Root Cause #3 Production for Service
In the Chipotle production for service system, are the hot foods being held in a steam table with the water temperature over 180 °F? Are the cold foods being held below 40 °F? How are the most vulnerable foods (the foods most susceptible to contamination) positioned appropriately on the assembly line? In terms of food safety, an organization must minimize and mitigate any opportunity for their customers to contact a foodborne illness. If that means revisiting a process and possibly changing what makes the organization unique in terms of a product, branding, or even a marketing strategy, that may be a price that has to be paid by the organization and considered as a cost of doing business. Simply put, placing customer safety (through investment of resources for training) above profits for investors. A long-term strategy for food safety will surely evidence itself in three ways: The customer service relationship between Chipotle and its customers will improve, and traffic may return if skeptical potential customers know the organization deems food safety priority. Second, corporate social responsibility, which is a big deal in the millennial and Gen Z worlds, can be exploited by a good public relations firm as Chipotle attempts to change negative public perceptions about food safety. Lastly, the true indicator of public perception: bottom-line results.
Root Cause #4 Chipotle Vendors
Vendors that supply products to Chipotle should be highly scrutinized. They should all be certified according to Hazard Analysis and Critical Control Points (HACCP). According to the U.S. Food and Drug Administration, HACCP is a “management system in which food safety is addressed through the analysis and control of biological, chemical and physical hazards, from raw material production, procurement and handling, to manufacturing, distribution and consumption of the finished product.” Only vendors (who are usually third-party providers) that can meet those requirements should be considered. Site visits by the corporate purchasing team will keep them on their toes and can be a part of the company’s prevention and sustainability strategy. We have all heard of contaminated spinach, tomatoes, and lettuces that have made their way into the supply chain. Additionally, if Chipotle wants to source ingredients outside of the country, they have to understand that the food consumption requirements in this country are very rigorous. Inspect before you buy and visit the overseas plants and storage facilities to make sure they meet U.S. standards. Cost should not be the only consideration. There could be an opportunity to buy directly from farmers who grow the fresh produce used every day at Chipotle, who may be interested in entering into some sort of agreement with the organization, and who will give the organization greater control over its supply chain. This particular strategy will make investigations (if necessary) less cumbersome and complicated.
Chipotle should also consider the best practices of their competitors in terms of sustainability, and they should develop a productive collaborative approach with those involved with supply chain food safety.
The Chipotle line staff, the people who do the work every day, are the most important piece in the food safety agenda for the company and should be the major focus of any sustainable re-training effort if Chipotle is to reduce or eliminate foodborne illness outbreaks.
I’ve already touched on how tenuous it is for the in-house manager to navigate the day-to-day food safety concerns. Now factor in what should be continuous food safety training with call outs, employees coming to work sick (and possibly not being sent home), and not exercising proper hygiene (clean uniforms every day, daily showers removing your apron before visiting the restroom). These factors may be why these outbreaks keep happening to Chipotle and could happen to any organization that does not make food safety a priority. Going a step further, every single Chipotle employee from the top down should know the difference between aerobic and anaerobic bacteria. Every single Chipotle employee should know why children and the elderly are highly susceptible to foodborne illness. Every single Chipotle employee should know what anisakiasis is and what it can do to the human body if ingested. In other words, every single Chipotle employee should be Servsafe certified. Period. If your business is food, you should know how to serve food safely. Education about foodborne pathogens and the potential harm they can cause customers must be a priority in this corporate-wide re-training effort if it is to be successful.
According to the U.S. National Library of Medicine, National Institute of Health, “the estimated cost of food safety incidents for the economy of the United States is around $7 billion per year which comes from notifying customers, removing food from shelves, and paying damages as a result of lawsuits.” Corporate resources from Chipotle would be better spent proactively developing and maintaining a safe food environment for its customers, rather than reacting to apparent lapses in food safety training, over and over again.
A foodborne illness can cause your kidneys to fail, affect your vision, cause paralysis, and may result in death. The long term effects of a foodborne illness could cause reactive arthritis, irritable bowel syndrome, and Guillian-Barre syndrome.
The net results of these outbreaks are a corporate image that keeps getting hammered, the loss of market share to its competitors, continuing to pay damages, and quite possibly endangering future profits for the company. There are already former Chipotle customers who will never return. A word of caution: If serving food is your business, make food safety a priority, or it will cost you.
Gwendolyn Capers-Wilson is a Hospitality Consultant and Event Planner with over 20 years in the Hospitality Industry. Her operational management experience with Marriott International, Aramark, Sodexo, and her Servsafe certification from the National Restaurant Association qualifies her as a subject matter expert on food safety. Gwendolyn has her M.B.A. from Johnson & Wales University with a concentration in hospitality and is currently the CEO of Capers-Wilson Hospitality Consultants.