Closing of a Boston Chipotle store latest in a series of setbacks for fast casual chain.
Months after E. coli outbreaks and a norovirus incident forced Chipotle Mexican Grill to revamp its food safety measures and retrain its employees, the chain continues to struggle.
A Boston-area Chipotle was recently closed for cleaning after four employers called in sick with suspected cases of norovirus. While no customers got ill, the closure raises concerns that the chain still faces an uphill battle to win back its client base and restore deflated sales.
The Denver chain saw sales drop 26% in February, the third consecutive month of decline. Sales had started to bounce back in early March, but dipped following news about the Boston employees.
Chipotle, for its part, has said the incident demonstrates that its new safety protocols are working as planned and any drop in sales is temporary. The issue only became news after a parent of one of the affected employees went to the media.
Still, recovery is taking much longer than the company anticipated. Officials are forecasting a loss of $1 or more per share in the first quarter, and new food safety and promotional measures are costing more than predicted.
The company has announced it will spend up to $10 million to help suppliers produce safer food and to implement new food safety measures. It also has launched a marketing campaign that includes sending customers free burrito coupons via mobile phone or snail mail.
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Some food safety experts have criticized the chain for not addressing the underlying causes of the problem. The fact that investigators could not pinpoint the source of contamination to a single ingredient gives the appearance that the chain had multiple opportunities to cross-contaminate different menu items, Trevor Suslow, an extension research specialist in the University of California Davis’ plant sciences division, told the Los Angeles Times.
The recent Boston restaurant closure is the latest in a string of bad news for Chipotle.
In Pennsylvania, a judge recently ruled against the chain for firing an employee after he tweeted a negative comment about the low pay and working conditions. The judge said Chipotle’s social media policy prohibiting such comments violated labor laws, and he ordered the chain to rehire the employee and pay him lost wages.
In Southern California, a former Chipotle employee filed suit against the company saying she and other female employees were sexually harassed by managers who also used security cameras to look at the cleavage of attractive customers. She’s seeking unspecified damages for wrongful termination, sexual harassment, retaliation and discrimination while working at a Woodland Hills Chipotle from December 2013 until her Feb. 10 firing.
Then last week, shares of Chipotle dropped sharply after a Jefferies analyst downgraded the company’s rating to “underperform,” saying the chain’s recovery from the food safety crisis will take much longer than initially thought. The analyst blamed the decline on fickle millennial customers who are loyal to brands with integrity but jump ship for other concepts when that integrity is shaken.
