Chipotle, you’ve definitely have local reputation issues. “Food with integrity.” I think not, considering the fact that 141 Boston College students — comprising some members of the basketball team — are sick after eating at a Chipotle restaurant near their campus. The perpetrator this time: norovirus. The latest reputation fiasco comes at a time when Chipotle is still dealing with the fallout of an E. coli outbreak at quite a few restaurants that made 52 people sick in nine states in October and November. Also this year was a salmonella outbreak. No wonder Chipotle is in an impaired reputation control mode.
Chipotles social media knockdown
Chipotle has gone from cherished fast food joint to humorous anecdotes.
Here’s a sampler of social media posts about Chipotle this week.
- The hashtag trending on Facebook & Twitter: #Chipotlecoli
- On Instagram a user stated, “Been eating Chipotle every day praying I get E.coli. That lawsuit would be clutch to pay off my student loans.”
- Another woman on Instagram said, “E.coli time!!!!” with a photo of a Chipotle burrito bowl.
- One user tweeted, “Write the saddest story you can think of… ate lunch at Chipotle”
Howard Penney, managing director of Hedgeye Risk Management, an investment research firm specified, “They can’t go on TV and say ‘food with integrity’ anymore. Their whole advertising model is thrown out the window.” The fact that Chipotle has greater Instagram followers than chains like Panera, Wendy’s and Subway could backfire as even the loyal fans share their concerns.
Sluggish response & Bad PR creates Negative Reputation
No one has perished from any outbreak, but the company’s supply chain is looking deeply flawed. Penney criticized Chipotle’s managers for its slow and seemingly deaf reaction, calling it the worst he had seen in his entire twenty year career stating, “It’s gone right at the heart of the brand. If you’re hitting a Millennial male athlete, forget it. You can’t imagine a worse target audience.”
Comparisons are being made to Whole Foods being outed for methodically overcharging for pre-packaged food.
Stock prices plummet
The company’s current reputation — and falling stock — have been made clear.
Chipotle finally put out a statement offering its “sincerest apologies” to customers who got sick. CEO Steve Ells went on NBC’s “Today” show to reiterate the establishment is making changes by stating, “The procedures we’re putting in place today are so above industry norms that we are going to be the safest place to eat.”
Nevertheless, Chipotle stock has nosedived almost 30% to $550, this from an all-time high of nearly $759 a share. Chipotle was besieged even before the food safety issues. Wall Street analysts have been slashing their forecasts. Many say that their stock will fall even further with Deutsche Bank predicting the stock could fall to $480 a share.
Jason West of Credit Suisse penned in a research note “The customer reaction to E. coli headlines (which initially emerged on Nov. 1 and then recurred on Nov. 20) was more severe than expected.”
Will customers stay absent?
Wall Street analysts have been trying to evaluate how many people will stay away. CNNMoney saw the shortest lines ever at lunchtime when they stopped by Chipotles near Columbus Circle in New York City.
Sharon Zackfia, an analyst at William Blair, found that new customers and heavy users are the most likely to reconsider ingesting anything on Chipotles menu. This comes from a survey she conducted in November of 800 adults. But others think Chipotle will be able to bounce back from this. “Historically, these types of food safety events have had a relatively minor impact on long-term sales and EPS forecasts,” states West of Credit Suisse.
Even with tweets trash talking Chipotle, there were also devoted fans like Penn State football player DaeSean Hamilton who tweeted Monday, “Chipotle needs to get their act together so I can eat it again.”
Will Chipotle put its food safety issues, as well as its negative reputation, behind it? Please comment below and enter in your business information to research your Local Reputation Score.