After three major food-related illness outbreaks in one year associated with Chipotle, is it any wonder the chain reports they expect earnings and stocks prices to be down — by as much as 24%? And the illnesses were just one negative factor hitting the company during 2015. It began in January with a problem from one of their major food suppliers and their treatment of animals. So during much of 2015, pork was missing from the menu in most outlets.
The restaurant made a name for themselves by selling non-GMO products, claiming to be 100% GMO-free. But earlier this year they were named in a lawsuit because some of their products are believed to have GMOs, including some of the meats and soft drinks. And finally, there is a group based in Washington DC and supported by other restaurants, though no one knows which ones for sure, taking out such ads as “You can’t spell Chipotle without E.coli.”
Through all of these negatives, the company has been proactive and open with customers and those working to improve their efforts as a company. They’ve closed 43 of their locations in Oregon and Washington following the latest outbreak even though only 8 of those locations had incidents directly tied to them. They did much the same in other outbreaks during the year.
Outside analysts and the company both believe sales will continue to be sluggish through the end of the year and are predicting a much lower dividend for shareholders. The stock price dropped, but the company’s board authorized the buyback of common stock, with a total aggregate purchase price of $300 million, not including commissions.
With so much negative happening during the year, can PR actually turn the tide? As mentioned, the company has been proactive in their efforts to keep the public informed and safe, as well as investors up to speed. Those are good things they’ve been doing. Many people have also weighed in with their thoughts on social media — some declare the whole situation a winner since it means they now stand in line for their favorite meal for only 5 minutes instead of 30. Some, in areas where closures have occurred, report eagerly awaiting the reopening of their favorite eating establishment.
PR helps, having a great product helps, being consumer-friendly and open helps. What could have destroyed many companies, seems to be causing a slow down for Chipotle, but one it seems likely they will bounce back from in 2016 — unless more closures come unexpectedly that is.