In Wake of Outbreaks, Chipotle Must Focus on Supply Chain
Chipotle is about to be in court for its third major food safety issue in two months.
William D. Marler, the high-profile food-safety lawyer who’s sued the food industry for more than $600 million in various food-safety suits is filing his first of “about a dozen” suits against the company today.
He said the dozen retaining clients seem to have good cases.
“From what the people have told me they’ve been told by the health department they’re culture positive for this rare strain of E. coli called E. coli O26,” said Marler.
He said during his 20 years of food-safety litigation, Chipotle stands out for the recent food-safety issues including a salmonella case in Minnesota, a norovirus outbreak in California and now this E. coli outbreak in Washington and Oregon.
“I’ve been doing this for a long time and I cannot think of another restaurant chain that had those kind of problems in that length of time,” said Marler. “Everything is an ‘isolated incident,’ but there just happened to be three of them in the last 40 days that all involved Chipotle. If I were the CEO of Chipotle, it would give me pause.”
Marler estimates the full scale of the outbreak isn’t realized yet, saying that 40 to 50 people may be sickened in total. Ten were hospitalized.
Chipotle’s stock has taken a 7% hit, shaving $46 off the stock price. And it could see another hit as litigation goes forward. Marler said the company is facing some major payouts whether it settles or goes to court.
“Chipotle is facing damages in the millions of dollars, not in the tens of millions of dollars, but certainly not in the thousands of dollars,” said Marler.
Luckily for both Chipotle and sickened customers, E. coli O26 tends to be less severe than other strains, like E. coli O157:H7 that sickened and killed Jack in the Box diners in 1993. But still, the outbreak signifies a systematic issue.
“I worry a little bit about companies like Chipotle because they remind me a little bit of companies like Odwalla or Whole Foods that are focused on this feel-good quality stuff—which isn’t bad,” said Marler. “But you still have to make sure the food being produced at your restaurant or your grocery store doesn’t have a fecal pathogen that will kill your customer.”
He did say that the locally sourced commodities may be Chipotle’s saving grace. The outbreak was localized to a relatively small number of Chipotle’s restaurants because the tainted product was likely only used in Washington and Oregon. Still, the outbreak shines a light on such sourcing practices.
“I commend them for doing that because I think it is a good thing, but sometimes I think people fail to pay attention to the fact that just because it’s local, just because it’s organic, just because it’s non-GMO, doesn’t necessarily mean it’s pathogen free,” said Marler. “Bacteria doesn’t care if you’re a mass-produced giant corporation or you’re a smaller producer. Bacteria doesn’t care where it gets into the food system, their job is to get into the food system and make us sick.”
Ultimately, Marler said, the issue is a supply-chain problem, a common failing point where big chains can squeeze themselves into a profitable but dangerous situation.
“In my experience in dealing with these cases over the last two decades, a lot of times what happens is you get these big chains make a contract with their supplier and it all becomes an issue of squeezing down on price, which is understandable, but you’re only as safe as the products coming into your restaurants,” said Marler. “I think they need to redouble their efforts at focusing on their supply chain and what they can do to partner with their supply chain so it’s a unified thing as opposed to what many of these partnerships become: an adversarial relationship.”
Marler praised Chipotle’s partnership with two food-safety consultants including IEH Laboratories and Consulting Group—though he wondered why it hadn’t done so sooner.
“I think they need to say, ‘We’re never going to let this happen again,’” said Marler. “There are a lot of examples of companies including Jack in the Box that turned a bad, bad, bad situation into something positive.”
Beyond healthier customers, meaningful action could mean less time spent in court with Marler.
“The proof is in the fact that Jack in the Box has never had a major foodborne illness outbreak since 1993,” said Marler. “And I’ve never sued them. That, to me, is high praise.”