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Chipotle execs say ‘confused’ customers will be back soon

Chipotle Mexican Grill’s executive team boosted Wall Street’s confidence in the company by characterizing the chain’s customers as confused and predicting they would all return by next year.

The occupants of the Denver-based chain’s C-Suite discussed public reaction and corporate responses to a string of Salmonella, E. coli and norovirus outbreaks linked to their restaurants on Jan. 13 at the annual ICR Conference in Florida. The invitation-only event is produced by ICR Inc., a New York City communications and advisory firm.

The executives’ reassurances buoyed Chipotle’s stock, keeping it above the $400 mark as of the end of business Jan. 14. The company’s value doubled in the past five years, its stock topping $750 in 2015. But the series of six confirmed foodborne illness outbreaks that sickened more than 500 people across 10 states left Chipotle’s stock value down by $6 billion at one point late in the year.

Chipotle founder and co-CEO Steve Ells

This photo of Chipotle founder and co-CEO Steve Ells accompanies his letter to customers, posted on the company’s website in December 2015.

Chipotle founder and co-CEO Steve Ells outlined a marketing plan expected to begin in mid-February that will include telling news media that the food safety problems and outbreaks “are over” and telling consumers the menu is as tasty as it ever was. The consumer campaign will not discuss food safety problems or the company’s responses to them, Ells and other top executives said.

In a prelude to the marketing campaign, all of the chain’s 2,000 locations will be closed for a few hours on Feb. 8 so Chipotle’s 60,000 employees can attend a company meeting that will include briefings on food safety policies and protocols that Ells described as “belt and suspenders redundancy” measures.

Although state and federal health officials linked the chain to six foodborne outbreaks from July through December in 2015, Chipotle’s executives referenced only the last two in their presentation at the financial conference.

“We really had two events,” Ells said, describing an E. coli outbreak “in the Pacific Northwest” that had “creeping dates” of illness onsets and a norovirus outbreak in Boston.

“Consumers have conflated those two things and are somewhat confused about what happened,” Ells said.

During a question and answer session, an unidentified conference attendee told the Chipotle execs they have appeared to lack humility. He said it seems like they are blaming consumers for the outbreaks and the company’s plummeting margins and stock values.

“We take full responsibility,” Ells said before describing the upcoming marketing plan. “Humility is an undercurrent to some of it.”

Ells presentation included general references to “extraordinary measures” the company has taken to ensure its food is safe to eat. He said the company’s food safety consultant said there is no way to be 100 percent risk free, but that changes to food handling and pathogen testing now in place should result in near-zero risk.

The founder also said he expects the federal government to soon declare the outbreaks are over.

That was news to Matthew Wise, who heads up the outbreak response team for the Centers for Disease Control and Prevention.

In an interview Jan. 13 with the Wall Street Journal, Wise said there haven’t been new reports of sick people in more than a month, but that the agency is being “more cautious about closing it (the outbreak)” because a cause has not been determined.

“It’s a conversation we’ll have over the coming weeks,” Wise told the Journal, adding that investigators are still looking at fresh produce and meat as possible causes. “This is one of those outbreaks that has been a real challenge. We can’t cross anything off the list.”

 

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