Fast casualty: Chipotle's year of reckoning
The company that touted "Food with Integrity" has an ongoing PR crisis
It's just as I remember it. The world's first Chipotle Mexican Grill on East Evans Avenue in Denver, the former Dolly Madison Ice Cream shop where founder and co-CEO Steve Ells launched his burrito empire in 1993.
The place is a point of civic pride. I'd say I've eaten 100 burritos at this very Chipotle, and I always point it out to visiting friends. Today there are more than 2,000 locations – but this was the first.
I realized when I was assigned this story that I hadn't eaten at this or any other Chipotle for at least six months.
It's time to go back.
After a string of E. coli, salmonella, and norovirus cases at Chipotle locations across the country in late 2015 – and a subsequent federal criminal investigation – same-store sales plunged 30 percent after years of defying gravity.
So did the stock price: After flirting with $750 last fall, it crashed to earth with a resounding thud, dropping by nearly 40 percent to $460 as of early April. Some analysts are bearish, and bracing investors for further losses.
The collapse has been that much more spectacular because of the company's "Food with Integrity" pitch. Late-night hosts have had a field day with it. Perhaps because Chipotle moved the goalposts for the entire industry, the backlash to its failings has been especially severe.
In response, Chipotle unveiled new protocols, gave away free burritos and guacamole and replaced AOR Edelman with Burson-Marsteller as its PR agency of record as it readies an unprecedented push into traditional advertising.
"I think the kinds of things they're doing are well thought-out and will be effective," says John Imbergamo, a Denver-based restaurant publicist and consultant who's done business as The Imbergamo Group for more than 25 years. "One thing you want to do is populate the restaurants. People don't like to eat in restaurants that aren't busy."
Thus, he sees Chipotle's recent giveaways as a good move. "There's nothing more effective than giving away free food," says Imbergamo, while noting that it's not cheap to dole out freebie guacamole tubs and burritos: "When you multiply that by 2,000 stores, that's a pretty big number."
But getting regulars to return is a key to long-term recovery, he adds. "In the world of fast casual, loyalty is kind of a big deal. If you're a regular Chipotle-goer, that's golden to them."
The company also needs to amp up attempts to win new converts, he notes. "They haven't felt the need to advertise to any great extent to this point. This has changed that position," Imbergamo says. "We all have a list of five or 10 places and we tend to choose from that list in our heads. Once a restaurant's off that list, it's hard to get back on it. In marketing parlance, this is awareness. Advertising is a top driver of awareness."
Gil Rudawsky, vice president of Denver's GroundFloor Media, heads up the firm's crisis communications practice. In the 1990s and 2000s, he covered Chipotle as an editor at the Rocky Mountain News. "They used to be the golden company," he says.
But it's a different decade now. Rudawsky relates a story of a recent lunch break. "I wanted soft tacos," he says. "I consciously thought, 'I could go to Chipotle, but there's a Qdoba just another block away' – acknowledging Qdoba could have the same issues."
So he walked the extra block. His list of lunch spots had changed. It's a subtle shift in consumer selection that makes all the difference in the restaurant industry.
Rudawsky says Chipotle's not the first organization to deal with foodborne illnesses – Jack in the Box and Rocky Ford melon growers come to mind – but the back-to-back nature of outbreaks in late 2015 were "the perfect storm."
"I think they’re going to be a better company for it, but they can't just put window dressing on it," he adds. "They just need to keep communicating with the staff and the public about food safety. They need to keep moving with that. It's not one and done. . . . It's that steady drumbeat of 'This is what we're doing, this is what we're doing.'"
Another tip from Rudawsky: "Don't stop innovating. You can go into bunker mode and spend all your time responding to bad news." He points to the trademarking of "Better Burger" in late March and a new drinks menu the company is piloting in Denver.
Mack Reynolds, partner-in-charge at Sikich Marketing & Public Relations in Chicago, has handled PR crises ranging from medical malpractice to foodborne illnesses over the course of his career. Chipotle's predicament "is an issue, but not an insurmountable problem for them," he says. "When your stock and trade is great ingredients, fresh ingredients, and natural foods, you take a big hit if your food isn't good for people."
Reynolds cites his "golden rule" of crisis communications. "Tell your audience as fast as you can and move immediately to fix the problem," he says. "You want to do right by your customers. That is the most important thing. If you do right by your customers, they'll return."
Ells "shouldn't make a promise he can't keep," he says of statements from the founder that he would "make sure this won't happen again" after the outbreaks. "I wouldn't go that far." A better promise: "We're going to make Chipotle a shining star of food safety."
Working with third parties like IEH Laboratories to improve safety protocols "can only help," Reynolds adds. A report card that puts the process improvements into layman's terms would likewise improve Chipotle's image.
"Other restaurants have suffered from foodborne illnesses in the past," he adds. "You can rebound. It just takes time." Reynolds says he thinks it will take a full year for sales to rebound to pre-crisis levels.
Kris Kitto covered politics in Washington, D.C., before going into public relations and crisis communications with The Bawmann Group in Denver. "I feel like I covered the weekly scandal," he says. "It comes pretty naturally to me to handle crisis communications."
In this context, Kitto is empathetic. "I feel for [Chipotle's] communications team. I'm sure it's felt relentless . . . like a pile-on," he says. "The stakes are really high, so it's like a pressure cooker."
His advice? "When a story is beating you down, you kill it with availability. I did see a lot of, 'No comment.' I cringe when I see a 'No comment.' I counsel clients to treat every media call as an opportunity."
(Despite devout transparency in the past, Chipotle officials declined an interview request for this story.)
"If you think it's done, that doesn't mean it's done," Kitto says. "At this point, most of the general public is still associating Chipotle with foodborne illness. You don't want to look like you're tiptoeing around this. Be open and answer every last question about this for as long as you need to."
There's no moving forward until "you regain trust from the consumer," he contends, and giveaways aren't a long-term solution. "I think people can see through the free burrito promotion."
Kitto says the recent hiring of Dr. James Marsden as the company's food safety czar represents another tool in Chipotle's crisis-PR belt. "Let's hear more from him as well," he says. "Get his face out there so people can associate a human with the solution to the problem.
"I would consider this still to be the acute phase," he adds. "There's a long game for a company that's been around since 1993. In the end, I think the company's brand equity will save them, but they still should be in rapid-response phase. They went 75 percent, not the full 100 percent. They still need to ride out the wave."
Kitto recalls that he was in seventh or eighth grade at Denver Christian School just down the street from the original Chipotle on East Evans when it opened.
"It's almost like it was part of my childhood," he says. "I can't tell you the last time I ate Chipotle but I have this huge brand loyalty to them. I remember the day when I was 13, and a friend came back and said, 'We found these huge burritos!'"
His last words on the matter: "Tap into that brand loyalty."
Back at the world's first Chipotle, I'm expecting a ghost town, but the lunch rush is in full swing, just as I remember it. The parking lot is full and the line is out the door.
And my burrito likewise lives up to my memories. I drench it with green Tabasco and greedily gobble it down.