Chipotle’s Latest Foodborne Illness Outbreak: Expect Sales Hit
An E. coli outbreak in Washington and Oregon was reported over the weekend. Authorities say there were 19 cases in Washington and three in Oregon where Chipotle customers were sickened and as many as eight hospitalized. The company closed 43 restaurants in Seattle and Portland in response.
The Seattle and Portland E-coli cases come on the heels of a number of Chipotle foodborne illness cases reported in Minnesota and California. In the Minnesota case, salmonella was linked to tomatoes that were served in Chipotle restaurants. According to a lawsuit in the Minnesota case, “a total of 64 illnesses and 22 locations were tied to this outbreak. The Minnesota Department of Health (MDH) has reported that 9 individuals have been hospitalized due to the severity of their symptoms.”
And, at a Chipotle in Simi Valley, California, more than 80 customers and 18 employees were sickened by a norovirus in August.
In January 1993, an E. coli outbreak occurred at a number of Seattle-area Jack in the Box restaurants, and over 400 people were sickened and four young children died as a result. The culprit was contaminated meat. Later, it was determined the hamburger patties were tainted with the E. coli bacteria, and that Jack in the Box had undercooked the meat. Jack in the Box paid out $44.5 million to cover the settlements in 1993, and sued its meat supplier to recover. According to the company’s 10-K, Jack in the Box company store same store sales declined 22.2% in the first quarter after the outbreak, and it took a number of years for the chain to regain its reputation.
In 2003, over 650 confirmed cases of hepatitis A were linked to consumption of green onions imported from Mexico at a Pittsburgh area Chi-Chi’s restaurant. The Mexican restaurant concept, already in bankruptcy because of high debt levels and uneconomic leases, never recovered. The company was liquidated.
If you ask a restaurant CEO what keeps them up at night, most would tell you it is the fear of foodborne illness in one of their restaurants. The top brass at Chipotle has now had three high-profile cases in the past three months. It will be interesting to see how Chipotle handles the public relations aspect of this latest foodborne illness case.
Longer term, the chain must deal with its procurement and food safety issues, especially if it intends to keep branding itself “food with integrity.”