Fast Company Special Report: Chipotle Eats Itself

NEW YORK, Oct. 17, 2016 /PRNewswire/ -- The November issue of Fast Company takes an in-depth look at Chipotle ("Chipotle Eats Itself") —from last year's E. coli outbreak to the company's efforts to regain consumer trust in the aftermath of the food safety crisis, and what still stands in the way of a full recovery. 

The special report, written by Austin Carr, is the magazine's most extensive article in eight years. It is the culmination of seven months of due diligence–hundreds of hours of interviews from inside and around the company; thousands of pages of documents that were leaked to Fast Company; on-site reporting from farms to industrial kitchens; and revealing conversations with co-CEOs Steve Ells and Monty Moran as well as other top Chipotle leaders. 

Sales are down by double-digit percentages and the company's market value has sunk $10 billion from its peak. As Chipotle prepares to release its third quarter earnings on October 25, 2016, questions remain: Are customers giving the burrito chain another chance? Will revenue and profitably jump? Will same-store sales rebound? How long will it take for Chipotle to recover fully?

Even if Chipotle exhibits subtle signs of recovery (for example, marketing efforts have lead to an upswing in its "Chitopia" loyalty rewards program), the past twelve months have revealed deep-seated issues that the brand must address. According to Carr, "Chipotle has squandered an opportunity…Ellis and Moran have not yet seized this moment of crisis to rethink everything about Chipotle with the kind of daring, unexpected thinking that made it a beloved brand."

Excerpts from Carr's report follow. The full story can be found at https://www.fastcompany.com/3064068/chipotle-eats-itself. 

Chipotle Co-CEO Monty Moran on the E. coli crisis:

"Steve and I live for this company. We care deeply about our mission. For something like this to happen shook the foundations of our confidence…it causes one to question one's leadership." 

Moran on Chipotle's future success:

"Will we climb out of it and get back to our former greatness? I absolutely believe we will. But will that take a year or two or three or four? I don't know. The full recovery from this is going to take a long time."

Chipotle Co-CEO Steve Ells on whether Chipotle is still living up to its Food With Integrity mission and how the company's post-crisis procedure of precooking proteins in central kitchens fits in:

Ells tells Carr the term precooked is "misleading" and instead refers to it as "sous-vide," a French cooking term for immersing food, sealed in a bag, in a low-temperature water bath to heat it slowly and more evenly. "This technique was used by many chefs and still is because you can precisely control the characteristics of meat and achieve a certain kind of tenderness. I'd say the steak is [now] more tender. It actually improves it." 

Moran on whether the 9.9% stake in Chipotle recently amassed by activist investor William Ackman (Pershing Square) has altered the company's game plan:

"He thinks it's undervalued and feels we have a very strong brand that he personally likes. And so he's interested in being involved as an investor, I think, for a longer term."

Jack Hartung, Chipotle Chief Financial Officer on whether leading the Fight for $15 (raising the federal minimum wage to $15 per hour) could help reduce turnover, improve training and food safety, and better relations with low-level employees:

"The idea that $15 will solve things, I think it solves it temporarily."

Mark Crumpacker, Chipotle's chief creative and development officer, on whether the company was more vulnerable during the crisis due to its mission to provide Food With Integrity (even more so than Dole or Tesla after their recent crises):

"People buying products from Dole—it's a can or bottle of juice—it's not the same," he says, indicating that Tesla is also not in Chipotle's league in terms of brand affinity. "There's a Chipotle in every town, a lot of people have a connection to it, fond memories of going when they were in high school or taking their kids there. The outbreaks shattered that feeling for many customers." 

SOURCE Fast Company