by Michael Layne, President, Marx Layne & Company
A complex journey of farming, fishing and raising of livestock; processing and distribution networks; and the human “touch” brings a rich bounty and variety of food to American tables, whether in our homes, a college or hospital cafeteria, or at one of our 1 million restaurants.
These restaurants, from quick service to casual to fine dining, are an important part of the American lifestyle‑and economy. According to the National Restaurant Association, these 1 million restaurants generate nearly $710 billion in annual revenues, about $2 billion daily, which works out to about 4 percent of U.S. gross domestic product.
Perhaps even more telling, the industry expects to create 1.7 million new jobs by the year 2025. Today’s 14 million restaurant industry employees represent a healthy 10 percent of the overall U.S. work force.
So intertwined with the ritual and celebration of eating, from a quick restaurant lunch to that elegant dinner at our town’s “best”, is that ever-present specter of food safety.
With the hundreds of millions of meals served daily in the United States, it is clear that our food delivery system is overwhelmingly safe. From opening a can of tuna fish at home, taking home fresh produce from increasingly popular local farmer’s markets, or dining out at one of those 1 million restaurants.
Still, real breakdowns do occur. Regarding reported foodborne illnesses in the U.S. for 2014, the Centers for Disease Control notes nearly 900 outbreaks causing more than 13,000 illnesses, or about 14 illnesses per episode. In all, these outbreaks resulted in about 700 hospitalizations and 20 deaths, primarily affecting infants, the elderly and infirmed. Many more incidents, where a pathogenic organism is involved, likely go unreported. But to put things into perspective, the CDC also reported that there has been a significant drop in foodborne illnesses dating back to 1997 up until 2014.
Moreover, “bad things can happen to good people.” The possibilities recently hit home with one of the nation’s most popular and successful casual dining concepts, Chipotle Mexican Grill, Inc. Foodies responded to Chipotle’s emphasis on fresh preparation and sourcing of quality ingredients, making the firm a darling of Wall Street. In all, Chipotle has more than 2,000 locations, with upwards of 200 restaurants being added each year, and more than 50,000 employees. In 2015, Forbes ranked Chipotle as the world’s 24th Most Innovative Company.
The issues were widespread. In August 2015, more than 40 Chipotle customers in Minnesota were infected with Salmonella and more than 200 customers in California were struck by norovirus. Then, in October and November, E. coli affected more than 50 people in 11 states. In December, 136 individuals fell ill to a norovirus after eating at a Chipotle near the campus of Boston College and there were other, smaller E. coli incidents. At the time, the Boston episode was attributed to a sick employee according to local health officials.
A restaurateurs’ worst nightmare unfolded. One’s name on the nightly news, night after night. The need to close selected restaurants to investigate and review food handling practices. Falling store sales. A falling stock price. A tarnished brand identity. A lot was and remains at stake.
In so many public relations crises, we find that companies are slow to recognize the urgency of the situation; the affront to previously loyal customers; the stress imposed on staff now facing suspicions of “bad” behavior. Oftentimes, heedful of potential litigation or criminal charges, companies are afraid to apologize or acknowledge fault. We won’t mention names.
Fortunately, here, Chipotle has responded positively in words and deeds:
- The firm closed affected locations and conducted an extensive investigation of what might have gone wrong, as well as a thorough review and reset of all food safety procedures and protocols.
- Chipotle founder and co-CEO Steve Ellis formally apologized to customers during an interview on NBC’s “Today” program. Ellis also posted a lengthy Letter to Customers on the firm’s web site.
- The firm was active on social media, keeping customers informed of the situation, while reiterating both the firm’s commitment to quality and pledge to do even better. This included a Food Safety Update and FAQ on the firm’s website.
- Chipotle closed all locations for a day to review food safety company-wide.
In short, Chipotle got out in front of the crisis, communicated forthrightly to appropriate audiences, and understood and took advantage of today’s instant communications. The goals were clear: safer food and restore the tarnished brand.
The firm’s financials did take a hit, at least in the short-term. The once high-flying stock’s share price dropped. The firm reported decreases in revenue of 6.8 percent and comparable store sales of 14.6 percent for the fourth quarter of 2015 compared to the fourth quarter of the previous year. Interestingly, the CDC has completed its investigation of the E. coli outbreaks without identifying the cause, which likely reflects the complexity of our modern food chain.
The company is still facing potential lawsuits and, in January 2016, received notice of a federal criminal probe of the California norovirus cases. But, for now, the worst seems to be over.
I suspect those in the food industry who are reading this article, collectively, can identify with Chipotle’s misfortunes. An employee might have slipped up. Or an aggressive reporter might have misinterpreted a health department sanitation report. Or in a contemplative moment, you might have broken into a cold sweat just thinking about the processor down the block, the five-star hotel up the road or the restaurant chain on the corner and thought that it could just have easily been you.
As Chipotle found out, carelessness—yours or a vendor’s—could wipe out years of hard work, goodwill and cleanliness.
As we counsel our clients in the food, beverage and hospitality industries, the key is to have a preventive crisis communications plan in place. Should the unfortunate happen, you can respond promptly, with clarity and confidence.