CHIPOTLE

:
5th Times the Charm?

MORGAN JOHNSON
Chipotle: A Leader in the Fast-Casual Food Space

Overview:
– Chipotle is a 23-year-old company
– WHO KNEW?
– Success has been halted by a series of FIVE food safety incidents (2015)
– This resulted in OVER 500 customers getting sick with illnesses including:
– Norovirus
– Salmonella
– E.coli
 Let’s Identify Other
Franchise's PR Crises
CRISIS #1:

– “Jan. 4, a young mother took

her two children to ____ _____ – Dairy Queen
in Zion, Ill., and noticed a part – Wendy’s
of her order was missing and
another part was wrong. When – Burger King
she asked for a refund, the – McDonald’s
franchise owner used the N-
– Subway
word in front of her and her
children, and told her to go – Starbucks
back where she came from.”
– www.prnewsonline.com
Dairy Queen
CRISIS #2

– This fast food joint recalled 12 – Dairy Queen

million drinking glasses tied – Wendy’s
into the new Shrek movie
because the paint on them – Burger King
contains the toxic metal – McDonald’s
cadmium. – Subway
– www.greenbiz.com
– Starbucks
McDonald’s
CRISIS #3

– “When [this franchise] released its

latest Holiday Cups, you sensed
that the chain was tired of
accusations that it was anti- – Dairy Queen
Christmas. Or even anti-Christian.”
– Wendy’s
– Which offended some people.
– Burger King
– “So the latest cups seemed to
feature every possibly Christmas – McDonald’s
trope in a cornutropia of happy – Subway
Christmas symbolism.”
– Starbucks
– “Yet simultaneously, [this franchise]
released a video featuring the {NEW}
cups. In it, a lesbian couple hold
hands.”
– Which ALSO offended people.
– www.inc.com
Starbucks
History of Chipotle:

– Started in 1993 by Steve Ells

– He borrowed $85,000 from his father for an initial investment
– While he studied art history in college, he later graduated from
the Culinary Institute of America, as a chef
– He proposed, “food can be served fast while maintaining high
nutritional value”
“FOOD WTH INTERGRITY”
Chippy’s Main Goal:
– Provide delicious and natural food to its customers while
maintaining respect for animals, farmers & the environment

IN ADDITION: :

• Chipotle positioned itself as an innovator in

marketing, with expertise in Corporate Social
Responsibility (CRS).

• Many of these CSR initiatives at Chipotle are

centered around providing locally sourced,
natural ingredients.
Chipotle Markets
Video: Scarecrow
– “The video depicts Chipotle as a small business dedicated to fresh
ingredients and devoid of corporate-style thinking that holds
quality over quantity. Chipotle directly attacks the negative food
practices within the industry while positioning itself as an innovator
in the natural food category.”
Advertising:

– Chris Arnold, Chipotle’s PR Director, states: “We always look to

engage with customers on social [media] in a way that is fun and
without taking ourselves too seriously.”

– Meaning Chipotle advertises through different events, videos,

contests, games, etc.
Risks Leading to Incidents:

– Since Chipotle sources up to 10% of its ingredients from local

farms , this makes it difficult to ensure proper handling.
– Food can be contaminated during any stage from
production to preparation.
– Raw food, especially from; meat, eggs, milk and shellfish,
pose the highest risk for contamination.
– That in mind, raw fruits and vegetables can be contaminated
by unsanitary water and/or fertilizer.
– Washing the fruits and vegetables can decrease but NOT
completely eliminate the risk of foodborne illness.
Figure 1
Chipotle’s FIRST Response

– “If there are opportunities to do better, we will push ourselves

to find them.
– He offered his “deepest sympathies… to those who have
been affected by this situation.”
Chipotle's SECOND Response:

– Two weeks after his original statement, Steve Ells released a second
statement, this time expressing a stronger sense of responsibility and
commitment to rectify its food safety issues and an official apology.
– “We take this incident very seriously because the safety of our food
and wellbeing of our customers is always our highest priority. We are
committed to taking any and all necessary actions to make sure
our food is as safe as possible, and we are working diligently with
the health agencies. We offer our sincerest apologies to those who
have been affected. We will leave no stone unturned to ensure the
safety of our food – from enhancing the safety and quality
assurance program for all of our fresh produce suppliers, to
examining all of our food safety procedures from farm to restaurant,
and expanding testing programs for produce, meat and dairy items
before they are sent to our restaurants.”
Understanding a Crisis: #1

– Its going to be stressful

– People at all levels of the organization need to be at their best, when
things are at their worst.
Understanding a Crisis: #2

– It’s disruptive
– Crisis strains the physical and emotional resources of those they affect.
Understanding a Crisis: #3 & #4

– Its dangerous, but it is predictable.

– Crises place an organization's reputation, financial resources,
products/services, employees, and survival at risk .
– However, crises don’t “JUST HAPPEN.” there are usually plenty of
warning signs of impending trouble.
Understanding a Crisis: #5-#7

– It’s public
– Often happen within FULL VIEW of important stakeholders (media,
regulators, consumers, investors, employees, etc.)
– The crisis response has a tremendous influence

– It’s escalating
– The wrong response or even ignoring the warning signs can spiral a crisis
out of control.
– It’s pivotal
– The resolution of a crisis is either positive or negative– or BOTH
Chipotle in a Crisis:

– The public didn’t hear much from Chipotle, until December 4th
& 5th, 2015.
– December 4th: Chipotle released a statement by Mansour
Samandpour (CEO of IEH Labs & Consulting Group) which
highlighted the safety protocols and programs he helped
specifically design for Chipotle.
– December 5th:
– Chipotle added a food safety section to the Chipotle website
– The food outbreak incidents were detailed and its plan to prevent
any outbreaks from happening again
Chipotle in a Crisis: con’t

– Chipotle’s website also included a link on its website so

affected customers can contact Chipotle.
– December 10th:
– Steve Ells appeared on NBC’s Today show, where he issued a
second apology:
– “I’m sorry for the people who got sick. They’re having a tough time and I
feel terrible about that...Health experts brought in by Chipotle believe
that changes enacted after the outbreak will put us 10 to 15 years
ahead of industry norms, and I believe this will be the safest restaurant to
eat at
R.A.C.E

– R: Chipotle researched the outbreaks & backtracked onto to

address the public with the unfortunate crisis
– A: Chipotle followed through on their promise to become a
leader in food safety
– C: on January 21st, 2016: all health- related information from its
website had been removed. However ,on February 9th,
Chipotle updated its website with a new “Food Safety” page,
which included four main sections: food preparation safety
procedures, a new $10 million dollar initiative to support local
growers in meeting food safety standards, a summary of the
2015 health incidents, and a letter from its founder
– E: After a press release on 2/4/16, Chipotle stopped any further
responses or information regarding the outbreaks or new
procedures. The company returned to regular marketing and
promoting.
Recovery …or lack there of

– Chipotle took a hit in the stock market, customer traffic &

earnings
– This situation as unfortunately not improved with time.
– A year-past these five incidents, chipotle’s stock has only shown
minimal signs of recovery.
– Chipotle still reports significant declines in revenue and
comparable restaurant sales and transactions
Market Attempts to Recover:

– FREE FOOD
– January 2016; free burrito deal
– HOWEVER, $30 MILLION is credited to these giveaways
– Chipotle also tried promotions such as student essay
contests, a sustainability program, drone deliveries, etc.
Chipotle Messed Up:

– There was no key target audience, the free food giveaway tactics were for
the entire community
– It was generalized & impersonal and proved ineffective
– Although the CEO extended several sincere apologizes, Chipotle failed to
thank or express gratitude to its loyal and patient customers through such a
crisis
– Chipotle was also criticized the crisis communication tone
– They stayed with their traditional hip forward-thinking, and confident tone
– Social media
– Tweets varied from updates on food safety to light-hearted/inappropriate jokes
4 Phases Crisis Pattern; Steven Fink

– The Prodromal Crisis Stage

– The “warning” stage
– The Acute Crisis Stage
– “The Point of No Return”
– Recognize the onset of crisis
– The Chronic Crisis Stage
– “clean-up” phase
– Steps taken to resolve the crisis
– The Crisis Resolution Stage
– Things “return to normal”
– Even if it’s a new normal
Crisis Communication Planning

– This acts as a contingency plan that outlines an organization’s

various options for communicating with key stakeholders in the
event of a crisis
Key Considerations:
when communicating in a crisis
– Make friends before the crisis happens
– Candor goes a long way
– This means, the organization's willingness to admit to their mistake
– Be prepared
– Address stakeholder needs
– Speak with one voice
– Actions speak louder than words
– Be true to your values
Chipotle Now:

– “ While 80 percent of the 800 people the company surveyed

said they’re still fully aware of Chipotle’s food-safety issues,
people are cautiously returning, helped in part by the millions of
coupons that the company mailed to customers in March 2016.
– Still, analysts now predict it’ll be lucky if sales have rebounded
by 2018 from the company’s food-safety disaster. If that
weren’t bad enough, investment firm Wedbush Securities said
in a March 29 research note that even then, the chain might
not be profitable like it was back in its glory days.
– In addition, even if Chipotle’s sales rebound by 2018, the
company still faces higher operating costs from its expanded
food-safety measures.”
– www.apps.prsa.org.
Lessons Learned

– “Here are several lessons from Chipotle that any organization can
implement into its crisis management plan:
– Identify your organization’s most-likely crisis events and create a
quick response plan.
– Look carefully at localized problems to determine if they signal
something wider.
– Include PR professionals in all discussions of negative developments
to consider potential ramifications.
– Don’t blame the government or the news media for your
problems.”
– www.apps.prsa.org
Activity: KAHOOT

– Everyone go to: www.kahoot.it

– Enter the code
– Person who wins 1ST place receives a PRIZE!
References:
– Ascierto, Jerry. (2017, January 9). Dairy Queen the Latest Fast-Food Brand in Social Media Crosshairs.
PR News. Retrieved from: http://www.prnewsonline.com/dairy-queen-crisis
– GreenerDesign Staff. (2010, June 4). McDonald’s Recalls 12 Million Toxic Shrek Cups. Greenbiz.
Retrieved from: https://www.greenbiz.com/news/2010/06/04/mcdonalds-recalls-12-million-toxic-
shrek-cups
– Guth, David W. & Marsh, Charles. (2005).Adventures in Public Relations: Case Studies and Critical
Thinking. United States. Pearson.
– Matyszczyk, Chris. Oh, no. Starbucks’ New Holiday Cups are Starting to Offend People After All (And
How). Inc. Retrieved from: https://www.inc.com/chris-matyszczyk/oh-no-starbucks-new-holiday-
cups-are-about-to-start-offending-people-after-all-and-how.html
– Scudder, Virgil. (2016, April 26). In the C-Suite: Chipotle Mexican Grill’s Rise, Fall and Road to
Recovery. My PRSA. Retrieved from:
http://apps.prsa.org/Intelligence/TheStrategist/Articles/view/11483/1125/In_the_C_Suite_Chipotle_M
exican_Grill_s_Rise_Fall#.WrKHMBPwbdJ
– Figure 1:
https://www.google.com/search?q=chipotle+outbreaks+timeline&rlz=1C5CHFA_enUS715US715&so
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h=635#imgrc=Xdn4DhgwL2GThM: