Tag Archives: Chipotle Mexican Grill

Learning Business From Burgers

This Foodie Friday brings news that the folks at Chipotle are doubling down. As you’re probably aware unless you’ve been under a rock for the last few months, Chipotle has had some serious issues with E.coli outbreaks in a number of their stores across the country. I wrote about this problem a few months back so we won’t review the details here. Suffice it to say that it has been a disaster for the chain and sales have plummeted.

Español: Restaurant Chipottle Mexican Grill in...

(Photo credit: Wikipedia)

In the wake of that, the chain has decided to open another chain. This one will serve burgers and has launched the first outlet in Ohio, calling it Tasty Made. It will serve the same sort of fare as McDonalds, Burger King, and any number of other chains: burgers, fries, and shakes. They intend, however, to put the Chipotle spin on them, as explained in this article:

The company said the new restaurant chain will use “high-quality ingredients that are grown and raised with respect for the animals, the land, and the farmers who produce them.” The company said the new restaurant chain will use “high-quality ingredients that are grown and raised with respect for the animals, the land, and the farmers who produce them.”

That’s the same philosophy as the main Chipotle chain and it had been serving them well until the bacteria breakout hit. Now one could rightly wonder why they’d be thinking about a couple of things. First, why burgers? It would seem as if the field is pretty well saturated and there is even a high-end competitor – Shake Shack – that seems to be in the space already. Second, why now?

I often remind clients that eBay wasn’t the first online auction site, Amazon wasn’t the first online retailer, and that the iPod wasn’t the first mp3 player. They just did things better. We’ve all heard the line about building a better mousetrap and that’s what Chipotle did in their original incarnation. There isn’t anything wrong with their model although obviously, the recent execution leaves quite a bit to be desired. None of us should be afraid to get into a crowded space if, and only if, we really do have a product that is obviously better to the consumer.

Why now? Why not. Their model works and they need to do something to jump start revenues since the flagship brand isn’t recovering quickly. They have other infrastructure already in place for marketing, real estate, systems, and distribution. In fact, they have a couple of other ideas (pizza!) in the works as well. I’ve found that if we wait until conditions are perfect, we’ll generally be waiting a long time.

Our love of a good burger isn’t going anywhere. Let’s see if Tasty Made does. No matter what, it’s will be interesting to learn from them.

Leave a comment

Filed under food, Thinking Aloud

Cheering Chipotle

I have a question for you this Foodie Friday. Are you paying attention to what’s going on with Chipotle? You should be because I believe the events of the last few months will be studied for years as a terrific example of how to handle what really could have been a crisis that threatened the chain’s entire existence. Lucky us: we get to watch it unfold in real-time!

Español: Restaurant Chipottle Mexican Grill in...

(Photo credit: Wikipedia)

In case you’re not aware, there was an E. coli outbreak at Chipotle stores in the Pacific Northwest. The outbreak widened to include nine states in which 53 people reported being ill. On the other coast, more than 140 people became sick with norovirus in the Boston area after eating at a Chipotle. Most restaurants take a hit when a single person becomes sick because inevitably that person tells the world via social media. A couple of hundred illnesses, the involvement of the CDC, and the mandatory shutting down of restaurants is well beyond your basic bad day at the office.

The good news is that zero customers have reported getting sick from E. Coli since late November and the crisis seems to have abated. What’s been fascinating to watch is how Chipotle management has been handling this. The stock tanked, understandably. Did they deny anything was wrong or blame suppliers? Nope. They have been incredibly transparent and proactive. As one article reported:

The first step of Chipotle’s food safety plan is to analyze every ingredient and all of the restaurant procedures in a “farm-to-fork” risk assessment. High-resolution sampling and new sanitation protocols will prevent contaminants such as E. coli from entering the restaurants. Chipotle is sampling all of its ingredients using DNA-based tests to ensure the quality of its ingredients.

They are also shutting down the entire chain in February so that management can tell employees everything they know about the E. coli outbreak and what they’re doing to ensure it doesn’t recur. They’ll review food safety as procedures as well. And if that’s not enough, they’ll be giving away free food.

This is a chain that built up an enormous amount of goodwill among its customers through its food. They position themselves as using responsibly farmed ingredients and as a healthy, inexpensive alternative to fast food. Any business can learn why keeping customers happy and making deposits in the goodwill checkbook is so critical as you see how customers are reacting during this crisis. They know there has been a problem but the goodwill will get them back in the stores once the crisis has passed.  Another key point has been to recapture consumer trust by being as transparent as this management team has been.  Finally, being proactive and fixing things is way better than just “letting the crisis pass”.

I’ll be back at Chipotle.  You?

Leave a comment

Filed under food, Helpful Hints