What Chipotle’s food safety mess can teach all brands.

In 1993, Steve Ells started turning his dream of owning a fancy restaurant into a reality by opening a simple, small, 800 square foot Mexican food place in Denver.

Steve had been fascinated by food since he was a kid. After college he attended the Culinary Institute of America in NY to hone the basic, classic French cooking methods. After he graduated he worked with Jeremiah Towers at Stars Restaurant and started to have serious thoughts of owning his own restaurant.

Knowing that so many restaurants fail, Steve’s first place was not designed to meet his vision of the fancy restaurant he dreamed of some day owning. Instead, it was a starter restaurant designed to be a cash cow to fund the fancy one in the near future.

Fast forward: Steve the passionate entrepreneur borrowed $85,000 from his dad to start his modest business and soon his little taco and burrito joint was really cooking.

Beyond his wildest dreams, today that tiny place in Denver called Chipotle has 2,000 other locations, 50,000 employees, a market cap of $1.2B, and unfortunately a bit of a headache from the food safety nightmare they’ve been living with these past 8 months.

Since July the restaurant group has had it’s brand shaken after a series of food-related illnesses that made hundreds of customers sick and put the company and its food safety practices in international news headlines. After many articles and reports, it was determined that one of the culprits was traced to a sick employee who was allowed to work on the day of an outbreak in Boston

The brand’s black eye has reportedly impacted sales and the stock price. In December, sales declined by 30% and stock prices have fallen by more than 40%. It’s no surprize that competitors have taken full advantage of this grim situation with national ads ridiculing Chipotle, social media pokes, and direct slams against the chain’s actions to turnaround the mess.

On Monday, Chipotle closed all of its restaurants for 4 hours to update the employees on the company’s food safety plans and the plan moving forward.

Here are few takeaways from Chipotle’s latest chapter.

  • No restaurant brand is immune from hitting a pothole.
    The crisis can come from a wide range of events; an accident, a food safety issue, or even an employee behaving badly.
  • Today bad news can spread with lightning speed.
    Brand and restaurants that have no crisis plan in place are at greater risk of succumbing to catastrophic consequences.
  • Quick and regular employee communication and training is key.
    After a crisis, keeping the troops informed and assured that management is taking the appropriate steps to manage the situation is not only good for business, but also for retaining your team.
  • Sick employees should not be working.
    Everyone loses here. A sick employee puts food handling in jeopardy and risks infecting others.
  • Know your suppliers and their safety standards.
    The cheapest price will not feel so cheap when your brand is dragged through the mud by pubic opinion.

For more ideas on how to prepare your restaurant in case of a crisis and additional cases studies on brands that went bad and then came back to glory, check out my book, Brand Turnarounds (McGraw-Hill).

Have you experienced a brand crisis? If so, please share what you learned or comment on Chipolte.