Food poisoning has been Chipotle Mexican Grill Inc.’s (NYSE: CMG) Achilles’ heel for years. The problem has closed stores and prompted consumers to eat elsewhere. It also has affected earnings and driven down the company’s share price.
Chipotle recently announced it will train all its workers in food safety. It is shocking that it took so long.
The press quoted CEO Brian Niccol:
Chipotle has a zero-tolerance policy for any violations of our stringent food safety standards and we are committed to doing all we can to ensure it does not happen again. Once we identified this incident, we acted quickly to close the Powell restaurant and implemented our food safety response protocols that include total replacement of all food inventory and complete cleaning and sanitization of the restaurant.
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The most recent incident happened outside Columbus, Ohio, and hit over 600 people, another food poisoning black eye for Chipotle. Niccol became as CEO in early March, replacing founder Steve Ells, whose lax management was blamed for the earlier string of food poisoning incidents that did their most damage in 2015. However, the problem stretches back several years before that.
Investors and employees should have expected that, as Niccol overhauls the company’s menu and marketing, food safety would be just as important. While training will not eliminate the problem, it is a powerful prophylactic.
After a Niccol-powered rally, which has taken Chipotle shares up 62% this year, the stock sold off on the Columbus incident, and the announcement of training did not impress anyone.
Other fast-food restaurants may have food-poisoning issues. However, at Chipotle the problem has happened over and over. The new training comes a little late.
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