It’s the super happy holiday version of Food Safety Talk. Don and Ben chat about Christmas movies, gambling as children and other holiday traditions. Making appearances in the guys’ discussion are Twitter and posting great questions of regulators about poor recall notices; cooling and holding cous cous and regulatory interpretations of time as a public health control; norovirus outbreaks at schools; and, Chipotle’s food safety culture.
A shake-up is happening at the at the top of our ever-favorite, Chipotle. Co-chief executive Montgomery Moran is out while the other co-chief Steve Ells, the perfectionist and touch-for-doneness guru remains.
The food safety crises that have battered the once high-flying Chipotle Mexican Grill over the last year are now taking a toll on its executive suite.
Montgomery F. Moran, a co-chief executive who has long presided over the company’s operations, will step down early next year, the company announced Monday morning. It also said it would be changing the board.
“We all agreed that one C.E.O. will serve the company better,” Steve Ells, Chipotle’s founder and other co-chief executive, said in a telephone interview. “The board decided that one C.E.O. would be me, and I’m looking forward to a continued friendship with Monty.” The company declined to make Mr. Moran available for comment.
Shares have fallen more than 30 percent in the last year. Late Monday morning, after the executive change was announced, shares were up about 3 percent, to about $380 a share.
Chipotle is also dealing with an activist investor in William A. Ackman, whose Pershing Square Capital Management disclosed in September that it owned a 9.9 percent stake in Chipotle. Chipotle and Pershing Square have described their interactions as “cordial” and productive. Pershing Square declined to comment on Monday.
Mr. Ells said Mr. Moran’s departure was not at Pershing Square’s behest. But other investors have been clamoring for change.
Last week, Chipotle executives said that in part because of an extensive new food safety program the company had instituted over the last year, the amount of time it took customers to get through the assembly line as their meal was made had increased. Spot checks by executives and the company’s auditing team found used napkins left on tables, smudged windows and doors, and messy condiment stations. Some customers using the Chipotle app to order were told their meal would not be ready for 45 minutes to an hour.
Such issues largely fell under Mr. Moran’s supervision, but will now fall to Mr. Ells, a self-described perfectionist who founded the company in 1993 with a loan from his father.
Chipotle, one of our favorite barfblog topics, is in the news again as CEO Steve Ells appeared on the Today Show to talk woes associated with recovery from 2015’s multiple outbreaks. Ells says the slow recovery is because their service sucks now. I dunno.
I like to get my real and fake news on the Internet and consume digital stuff so I checked out the Newsy video of Ells walking through a Chipotle kitchen (below, exactly as shown).
At 10 seconds the guy who wrote, “We deployed robust, industry leading new food safety procedures in our restaurants including new handling procedures for produce, citrus and meats as well as comprehensive sanitizing protocols” pokes at a piece of meat on the grill, I’m guessing to check for doneness, with his bare hands.
Steve, a good food safety culture starts at the top. Model safe practices for your staff, mix in a thermometer and some gloves.
According to Motley Fool, top execs at Chipotle made more money than lots of other food CEOs.
Even after their compensations were cut in half last year, its co-CEOs Steve Ells and Monty Moran earned nearly $14 million each.
Ells’ and Moran’s compensation packages are particularly egregious in the wake of its food safety crisis, which began last year with an E. coli outbreak at a number of its restaurants in the Pacific Northwest.
To a certain extent, it’s to be expected that a company like Chipotle would have something like this happen at some point in its corporate existence. After all, it’s happened at virtually every other major food company in the United States, be it fast food chains such as McDonalds, Taco Bell, or Jack in the Box or grocery stores such as Wal-Mart, Whole Foods, or Costco.
But what’s important to appreciate is that Chipotle left itself especially vulnerable to food borne illness outbreaks. As Austin Carr points out in an incredibly detailed review of Chiptole’s crisis for Fast Company magazine, while the chain served the equivalent of the population of Philadelphia on a daily basis prior to outbreaks, it had only four people assigned to its quality assurance team, tasked with tracking the quality of ingredients sourced from suppliers.
I have a cousin who has carried on the family tradition and makes a living growing asparagus.
The family biz has gotten into all sorts of asparagus by-products and the farm has a large, devoted crowd of customers.
He proclaims his stuff is GMO-free.
Without going into the nuances of that statement, I said to him a few years ago while visiting, what happens if a super-great genetically engineered asparagus comes out that is beneficial to your farm, your income, and your customers?
He was too busy thinking about the present, and that’s fine.
But consumers’ attitudes can change in a heartbeat – or an outbreak.
Chipotle, the purveyors of all things natural, hormone-free, sustainable, GMO-free, dolphin-free and free from whatever apparently wasn’t free from the bacteria and viruses that make people sick.
And when food folks go out on an adjective adventure to make a buck, they sometimes get burned by the realities of biology.
The Denver-based company reported third-quarter net income of $7.8 million, a dramatic fall from $144.9 million a year ago. Per-share earnings totaled 27 cents, compared with $4.59 a year ago. That was well short of the $1.60 estimated by analysts polled by S&P Global Market Intelligence.
Revenue sank 14.8% year-over-year to $1 billion during the quarter despite even though the fast-casual dining chain opened 54 new restaurants with only one closing.
To me, the amazing thing is that people still spend $1 billion a year at calorie-laden faux Mexican food.
Shares of Chipotle fell 2% in after-hours trading to $397.56. The stock has fallen about 38% in the last 12 months.
Chipotle restaurants are clearly struggling from the food safety issue that sickened customers last year and forced the temporary closure of some restaurants. Comparable restaurant sales — or sales of restaurants that have been opened at least a year — tumbled 21.9%. Comparable restaurant sales are estimated to fall again “in the low single-digits” in the fourth quarter, it said.
The company’s management is more optimistic for 2017, partly due to the lower base of comparison. Comparable restaurant sales will increase “in the high single digits,” it estimated Monday. And the company will open 195 to 210 new restaurants next year, after opening more than 220 this year. Per-share earnings next year will be $10, it estimated.
“We are earning back our customers’ trust, and our research demonstrates that people are feeling better about our brand, and the quality of our food,” Steve Ells, founder, chairman and co-CEO of Chipotle, said in a statement.
YouGov BrandIndex, a firm that tracks a brand’s reputation, regularly asks this survey question: Is Chipotle high or low quality? Before all the bad food outbreaks, Chipotle scored a very healthy 25 (on a scale of -100 to +100) for quality. It plunged to -5 by February. It has recovered to 9 recently, but that’s still far from where it was.
Translation: Customers don’t see Chipotle as the golden brand it was before the E. coli outbreak.
Fast Company has a series of articles about the rise and fall and … of Chipotle.
The core of the food safety stories seems to be that Chipotle milks its consumers, so has endless money to spend telling those consumers why it’s safe to eat at Chipotle without backing things up.
The protagonists in this opera involving a lot of barf and a dabble of cocaine, are former professor Mansour Samadpour of IEH Laboratories in Seattle, and Jim Marsden, a meat guy and former professor at Kansas State University.
I was a colleague of Marsden, worked for IEH for three months, and can fully agree with this statement regarding the merits of either’s approach to food safety at Chipotle: “If you’re in a courtroom and you listen to both sides of the argument, it’s hard to say that anyone is 100% correct. It’s all wrapped up in a lot of academic infighting and politics.”
Marsden and Mansour both know a lot of science. They know shit about consumers. History is filled with great hockey players who go on to be lousy coaches, or scientists who stray from their base of expertise and make fools of themselves. But that’s for Chipotle to figure out.
For a company that’s supposed to be supplying ethical ingredients (whatever that means) for over-priced shit, they seem to have picked the wrong argument.
What’s it going to take for customers to barf less?
Mark Crumpacker, the chief creative officer and marketing lead at Chipotle, said “It’s great to be back” upon returning to the restaurant chain after a three-month leave of absence involving foodborne outbreaks, plummeting share value, and cocaine.
Since returning, Crumpacker’s team has launched a new ad campaign, in partnership with Austin-based agency GSD&M, highlighting the “royal treatment” Chipotle gives its ingredients.
That imagery alone is fairly drug-induced, and any notion that Chipotle is nothing but a business squeezing what it can out of suppliers while marketing overpriced shit is delusional.
“Obviously our marketing is built on this idea of fresh, high-quality ingredients,” Crumpacker says. “So [the food-safety issues were] sort of like the ultimate insult to that position.”
Because there is nothing in fresh, high-quality ingredients that says safe: Adjectives are the language of hucksters (these are the greatest make-you-fat burritos, ever. They’re really great).
Crumpacker was central in helping the Mexican fast-casual chain foster a glossy aura around its brand, which became synonymous with fresh ingredients and an ethical value set.
Like Keith Richards and Eric Clapton, I so much enjoyed their work when they were high.
The story also says Chiptole hired Burson-Marsteller, the crisis-management PR firm the bottom-feeders of PR hacks that has supported Chipotle since the outbreaks (for a cost, paid for by all you yuppies).
Anyone who hires B-M is corporate mainstream, not some hippies selling ethical burritos, whatever that means.
Was it ever safe to eat at Chipotle given their gross negligence of microbial food safety issues and vast embrace of marketing hucksterism.
Co-CEO Steve Ells says, “Justifiably, people really question our trust. You lose that trust. For how long? We’re working really, really hard to get that trust back.”
Multiple industry experts tell me that Chipotle did not take food safety seriously enough or invest sufficient resources into quality assurance (QA). “When this [outbreak] first broke, the leadership at Chipotle, and I include Steve and [co-CEO] Monty [Moran], were completely sideswiped and didn’t know what the hell they were doing,” says one source familiar with Chipotle’s food-safety measures. “They had not really considered food safety at the level that they should have.”
The question is not how bad Chipotle fucked up and how a chain of such size and profits bamboozle the American public, the question is who will be next? And will anyone pay attention when some voice in the forest says in 2007, these Chipotle types are not focused on food safety?
Before its E. coli incidents, a slew of sources tell me that the food safety and QA team overseeing the company’s entire supply chain included just four people, a low number for a chain of Chipotle’s scale and complexity. The company also split its safety teams, which some suggest created arbitrary divisions of responsibility within the organization. Heidi Wederquist, then Chipotle’s director of QA and food safety, oversaw supply-chain issues, but had little visibility into restaurant operations. Conversely, Tim Spong, who knew Moran in college and served as outside counsel for Chipotle before joining the company, managed safety, security, and risk at the restaurant level. “There is no way a team that small could properly manage all the food coming into that system,” says one former analyst at the company, who now works for a chain much smaller than Chipotle but with a QA team that’s twice its size. Chipotle spokesperson Chris Arnold disputes the visibility claims but confirms the rest, adding that the team was “strengthened” with additional hires after February 2016 and that the two groups have now been merged under Spong’s leadership. (Additionally, Jason Von Rohr, Chipotle’s executive director of supply chain, who was responsible for sourcing all of Chipotle’s ingredients, departed shortly after the E. coli outbreaks. Multiple sources indicate he had been planning to leave Chipotle and his departure was not a result of the outbreaks. He has since joined Amazon.)
Thanks for the org.chart.
All those people who paid a premium to barf thank you for the org.chart.
Originally, Chipotle followed the guidance of food-safety scientist Mansour Samadpour, who runs the Seattle-based consultancy IEH Laboratories. He’d initially focused the company’s food-safety program on a mix of supply-chain testing and what are called “interventions” or “kill steps,” which work to eliminate pathogens from ingredients. For example, he introduced blanching produce to Chipotle, a kill step whereby Chipotle workers put lemons, limes, onions, avocados, and jalapeños into 185-degree water for five seconds before preparing them for customers.
When Chipotle hired James Marsden in February 2016 to be its director of food safety, he shifted the company to adopt more of these interventions, while winding down Samadpour’s testing system. He expanded the company’s blanching system, for example, to include bell peppers.
One of Marsden’s first acts was to create an ordered list of the riskiest ingredients on the restaurant’s menu. At the top of his list? Chipotle’s beef. Though there likely wasn’t one smoking gun that caused the outbreaks, in terms of particular ingredients, sources indicate Chipotle had narrowed its investigation to a select few items, including onions, cilantro, and beef. Cross-contamination was likely, but because the company’s E. coli outbreaks were limited to around 60 infected people, some food-safety sources suggest it was more than likely Chipotle’s beef was the original culprit that carried the E. coli, since it is a cooked item (unlike, say, cilantro), which may have reduced how widespread the outbreak could have been.
Or, familiarity breeds contempt, and Marsden would be most familiar with beef.
Likewise, the company, which briefly moved the preparation and sanitation of lettuce to its central kitchens after the outbreaks, has since returned heads of romaine to its stores. How can it do this without risking another outbreak? For the lettuce at least, Chris Arnold, the Chipotle spokesperson, says the company has introduced a new “multi-step washing process” to reduce the risk of pathogens. Marsden boasted to me how Chipotle’s lettuce is safer now because it implemented what’s called “harvest testing,” meaning that it is tested in the field before being shipped to suppliers. But this is a baseline standard in the industry; the company was already doing harvest testing before the crisis.
And those bugs are hard to wash off.
A bunch of us figured out on-farm food safety 20 years ago, to prevent, as much as possible, bugs getting on things like lettuce.
No mention of that.
But lettuce ain’t beef.
Marsden has also unveiled his own testing system, to replace the solution initially implemented by Samadpour, the outside consultant from IEH Laboratories (who has since stopped working with Chipotle). This new system centers on “routinely” verifying the efficacy of Chipotle’s intervention requirements. Rather than having suppliers take and test more frequent samples of raw beef, for example, they can now test at far fewer intervals because the meat is precooked; they’re primarily doing this to ensure that kill steps, such as the sous-vide process of cooking steak, are working properly.
The company has suggested that it is now “doing more testing than we have ever done,” as Arnold tells me. Upfront, this new testing system requires resource-intensive validation studies, to ensure that the entire system is functioning correctly. But after these studies are performed, the company’s food will undergo substantially less food testing than it was under Samadpour. As with Samadpour’s testing program, there are complicated pros and cons to Marsden’s system, but as one neutral food-safety observer says, “If you’re in a courtroom and you listen to both sides of the argument, it’s hard to say that anyone is 100% correct. It’s all wrapped up in a lot of academic infighting and politics.”
This infighting is not purely academic. According to four sources familiar with the situation, Heidi Wederquist, Chipotle’s director of QA and food safety, disagreed with the direction of the company’s program. She has since departed Chipotle to join Samadpour’s IEH Laboratories. Her second in command, Chipotle’s former QA manager, followed her to IEH as well. (Arnold says he cannot comment on the reason for Wederquist’s departure. Wederquist did not respond to multiple requests for comment on this matter.)
Following the outbreaks, Steve Ells, Chipotle’s founder and co-CEO, indicated to the public that the company would soon be 10 to 15 years ahead of the restaurant industry in terms of food safety.
More unsubstantiated bragging.
The program Marsden developed, centered on interventions, is a strong system, industry experts say, but it’s not exactly revolutionary. Kill steps are common in the restaurant industry, as is the type of testing Marsden adopted. If anything, this new food-safety system has raised questions about how fresh Chipotle’s food remains today.
The efficacy of Chipotle’s food-safety system is still left, to an extent, up to its crew workers, who are expected to properly wash items such as its lettuce; properly blanch much of its produce; properly handle and cook raw chicken; and properly follow in-restaurant hygiene protocols, such as hand washing, temperature logs, and other food audits. These 60,000 crew workers make an average of $10 an hour and the average Chipotle restaurant sees its headcount turn over at least once a year.
I just registered for an Ice Hockey Australia Level 2 coaching course.
The course is rarely offered, and there’s only a couple of level 2 coaches in Queensland. It will take 25 hours of training to complete.
That’s on top of the 16 hours I put in for Coach 1 in Australia, and recertification every two years.
It’s similar to the Intermediate Level Coach status I had in Canada back in 2001, which was required to coach a rep or travel team.
It’s a lot of time, sitting in a classroom, and on the ice.
I view it as my church, my community service.
So when Chipotle makes a big deal saying all of its managers will be trained in food safety the ServSafe way, I shrug, and ask, why weren’t they before?
How far was Chipotle’s head up its own moralistic ass that it paid more attention to food porn – like hormones and GE foods – than to food safety, the things that make people barf?
Great, you’re going to require training. Anyone ask if the training is any good? Third-party audits? Nice soundbite but they’re just a paycheck. Handwashing every thirty minutes? McDonald’s have been doing that for decades (you’d think Chipotle would have picked that up when they were partnered with McDonald’s, but no, there was food porn to peddle).
The Chipotle announcement reads like a moralistic lecture, and that no one had discovered food safety before.
Some scientists may question such tactics, saying they have been supplanted by newer methods. But Dr. James Marsden, Chipotle’s new executive director of food safety, who had recently retired from teaching at Kansas State University (and the father of the actor James Marsden, best known as Cyclops in the “X Men” film series) said he was confident in them.
“We’re doing research and are going to publish papers on what we’re doing, so people can see for themselves that it works,” he said.
That’s all good, but they’re still moralistic assholes who expect people to pay a premium for their food sermons (journos, contact me for Marsden stories).
In a video that the Mexican burrito chain unveiled on Wednesday, a contrite Ells admits that last year, the fast-casual restaurant chain “failed to live up to our own food safety standards, and in so doing, we let our customers down. At that time, I made a promise to all of our customers that we would elevate our food safety program.”
Contrite is not the word I would use.
Looking to revalue Chipotle’s share price is more accurate.
Chipotle initially blamed the Centers for Disease Control and Australian beef for its woes. Today, it blamed social media.
“No one has ever had this kind of a food safety crisis in the era of social media,” Mr. Ells said.
I could list hundreds, beginning with E. coli O157 in spinach in 2006, you arrogant poser.
“Jack In The Box,” — a burger chain where more than 700 people got sick in 1993 after eating E. coli contaminated meat — “never had to deal with Facebook and Twitter,” he said.
When I coach, I’m always telling kids, and adults, stop blaming the refs, go score a goal, stop whinging.
What is fresh? Australian beef in the U.S.?
Is this guy stealing from Trump’s playbook?
It’s slogans and hucksterism.
Which Americans seem to go for.
And Mr. Ells, since you seem content on lecturing Americans about food safety, while blaming others, here’s a history lesson.
In the Fall of 1994, Intel computer chips became scrutinized by the computer geeks, and then the public.
Intel had delayed responding to allegations, and Wall Street analysts at the time said it was the result of a corporate culture accustomed to handling technical issues rather than addressing customers’ hopes and fears.
On Monday, Nov. 12, 1994, the International Business Machines Corp. abruptly announced that its own researchers had determined that the Pentium flaw would lead to division errors much more frequently than Intel said. IBM said it was suspending shipments of personal computers containing the Pentium chip
Mr. Grove was stunned. The head of IBM’s PC division, Richard Thoman, had given no advance warning. A fax from Thoman arrived at Intel’s HQ on Monday morning after the IBM announcement, saying he had been unable to find Grove’s number during the weekend. Mr. Grove, whose number is listed, called directory assistance twice to ask for his own number to ensure he was listed.
After the IBM announcement, the number of calls to Santa Clara overwhelmed the capacity of AT&T’s West Coast long-distance telephone switching centres, blocking calls. Intel stock fell 6.5 per cent
Only then, Mr. Grove said, did he begin to realize that an engineer’s approach was inappropriate for a consumer problem.
Intel took out full-page ads, apologized, and did better.
That was in months, not a year.
Mr. Ells, you can claim you’re in uncharted territory, that no one has experienced the woes like you have, that fresh is a meaningful term.
But it’s just a repeat.
Customers may expect you to have the humility to admit such failings when driven by the hubris of your own beliefs.
But hey, anyone who can get Americans to believe that 1,000 calorie burritos are healthy can do anything you damn well please.
And customers will bow down.
Investors. I wouldn’t touch it. But I said that in 2007.
Chipotle can hire all the food safety bigshots it likes, but it has no story, no narrative, to get past its five outbreaks in six months; and no amount of freebies are going to fix that.
Chipotle news is playing on the background of Mr. Robot. That’s prophetic.
Google parent company Alphabet is teaming up with Chipotle to test drone delivery for Virginia Tech students, according to a report from Bloomberg. The pilot program marks a turning point for Alphabet’s Project Wing division, giving the team ample room to experiment with airborne burrito deliveries in one of the first commercial programs of its kind to be greenlit by the US Federal Aviation Authority. The drones, which will be hybrid aircraft that can both fly and hover in place, will make deliveries coordinated by a Chipotle food truck on campus.
The news Chipotle probably wanted highlighted was that it has reportedly quietly settled nearly 100 claims over the last six months out of court, probably so the company won’t remind the public that they were so recently plagued by rampant food poisoning. The terms of the settlements are all confidential, but the claims were all filed by people whose ailments were verified by medical professionals. An attorney representing some of the plaintiffs called Chipotle’s move “textbook appropriate,” adding, “They’ve taken responsibility.”
“In 25 years of doing foodborne illness cases, I’ve never had a client ask for coupons for the restaurant they had gotten sick at,” said William Marler, an attorney with Seattle-based Marler Clark who represented 97 Chipotle customers. “In fact, some (clients) had gone back to the restaurant and they would call me and say, ‘Do you think it’s bad that I went back and got a burrito?’”
The company’s stock traded at $430.70 on Friday, down 1.3 percent, and lower than its 52-week high of $757 last October.
Brenna Houck of Eater, citing the Washington Business Journal, reports a U.S. District Court jury in Washington, D.C., awarded Doris Garcia Hernandez $550,000 in compensatory and punitive damages this week after finding her former manager had discriminated against for being pregnant.
Based on the filing, back in 2011, Hernandez informed her manager — referred to only as “David” — that she was pregnant. Following the disclosure, she claims he began restricting her water and bathroom breaks. Hernandez alleges that her boss required her to “announce” to other staff members when she needed to use the restroom and he would then “approve her bathroom breaks so that he could cover her work position for her.” The manager also refused her requests to leave work and attend her prenatal doctor’s appointment. Hernandez chose to leave anyway and was publicly fired in front of other employees and customers the following day.
According to the U.S. Equal Employment Opportunity Commission, “the Pregnancy Discrimination Act (PDA) forbids discrimination based on pregnancy when it comes to any aspect of employment, including hiring, firing, pay, job assignments, promotions, layoff, training, fringe benefits, such as leave and health insurance, and any other term or condition of employment.” Likewise, “if a woman is temporarily unable to perform her job due to a medical condition related to pregnancy or childbirth, the employer or other covered entity must treat her in the same way as it treats any other temporarily disabled employee.”
Unfortunately, pregnancy discrimination is common in the restaurant industry and Chipotle has been sued before for similar cases. In February, a federal grand jury in Cincinnati, Ohio, ruled in favor of three former managers who sued the company for gender discrimination citing sexist behavior and unfair firing due to pregnancy.
The Motley Fool writes that Chipotle Mexican Grill’s (NYSE:CMG) food safety crisis has been over for six months. But you wouldn’t know it from the company’s sales results. During the recently ended second quarter, Chipotle’s comparable restaurant sales plunged 23.6%.
The company can probably blame social media for its slow recovery. The rapid spread of information — and in some cases, misinformation — via social media has made Chipotle’s late 2015 E. coli outbreak much worse for the company than it otherwise would have been.
Social media increased awareness of Chipotle’s food safety problems in the first place, and Chipotle’s food safety issues continued to be the butt of jokes on social media long after the initial outbreak.
In my case, Chipotle was the brunt of social media jokes and taunting going back to 2007.
The lesson for executives in the restaurant industry is clear: The right time to address food safety weaknesses is now. Waiting for food safety lapses to make customers sick is a recipe for disaster.
Linda Ronstadt’s version might be more popular, but the original, by songwriter Warren Zevon, is darker and more apt.