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Chipotle Supply Chain Breaks The Brand Promise

Did you get your free Chipotle burrito? By the looks of my local Chipotle this weekend, the Chipotle offer may have eased doubts about its food quality.

After making headlines from the hundreds of consumers across 13 states who were sickened after eating food from Chipotle, with a stock that’s trading 40 percent lower than its record high last year and a looming federal criminal investigation, pundits are wondering how the fast casual chain that built its brand on high quality will recover.

Despite commentaries on crisis communications, brand loyalty, etc., at its core, this is a story that rarely hits the mainstream. Because when it works, no one thinks about. When it doesn’t, it could literally sink your brand.

What is it?

It’s the supply chain.

Built on the premise of serving fresh, local food that it is ethically grown and sourced, Chipotle couldn’t identify the source[s] of the contaminated ingredients that went to stores at specific times. With this outsourced supply chain comes more complexity. And the more complex the supply chain, the greater the risk. Since Chipotle lacked end-to-end visibility (from sourcing to store delivery) in the supply chain, the contamination spread.

This reveals a broader problem. According to Supply Chain Operations Network provider E2open, only 9% of global organizations can assess the impact of a supply chain error within hours, and almost 50% of companies say they lack visibility beyond first-tier partners

Real-time data, traceability and communications fall short in most organizations because of the continued reliance on phone, email, spreadsheets and EDI. 

As the Chipotle example illustrates, what was originally one small ripple in the supply chain has the potential to literally sink a brand.

While organizations, including Chipotle, work on optimizing their supply chains, here are some best practices, and some critiques, we have seen from their brand repair efforts.

The Ad Campaign

Chipotle has let it be known that they will be releasing the largest ad campaign in their company’s history in the coming weeks. The most surprising part about this campaign- it won’t talk about food borne illness.

I know what you are thinking, “but TopRight, this goes against the common idea that brands should own up to their mistakes- look at Dominos and how they turned sales around after a very honest ad campaign about their food quality.”

Exactly – sometimes the best practice is to ignore best practices. Their supply chain issue has gotten enough attention – drawing more attention to their mistake isn’t going to help clean up the mess. They need to get back to their core message, which is that they deliver fresh, quality ingredients fast.

Free Burritos

After closing their stores for lunch this past Monday to provide company training, Chipotle made a surprising move offering free burritos to customers who texted in to get a coupon. Unfortunate for the Bethesda, Md. lawyer who received hundreds of texts to his 888-2222 number (888-222 was Chipotle’s), with the word “raincheck” to claim a free burrito when stores re-opened on Tuesday.

The fact that they only recently were cleared by the CDC doesn’t inspire my confidence, but if no one gets sick from the free burrito offer, the brand is making progress toward quelling food safety concerns.

Thoughts?

Supply Chain may be “left of sexy” to most consumers and businesses, but with the “Amazon Effect” taking place, we want what we want – and we want to have transparency to ease our conscience about quality issues, conflict free labor, and sustainability.

Is it possible to have fresh, locally sourced food on a large scale? What can Chipotle do to win back the trust of consumers?

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