Chipotle Mexican Grill Update: Can Restaurant Recover After Boston E. Coli Outbreak?
In the last ten years, Chipotle Mexican Grill reigned supreme in the American food industry. Its successful business model was built on the concept of providing fresh, healthy, and usually locally sourced food ingredients which arguably made it one of the fastest growing restaurant chains in the US.
However, Chipotle is currently enmeshed in a deep crisis which could potentially spell the end of a glorious era. As the E.Coli saga continues, the embattled burrito maker appears to be fighting for its very survival in the food industry characterized by cutthroat competition.
Various financial institutions continue to downgrade their investment ratings for Chipotle as fear spreads among investors and consumers alike.
According to Midas Letter, 12% or $6 billion was creamed off from Chipotle's market cap as a result of underperform ratings from increasingly worried financial pundits and investors. The plunge is unlikely to go away sooner.
Likewise, the company's consumer perception index suffered a massive setback from a positive 9 in September to a negative 12.5 in December this year as reported by Forbes.
When Chipotle's IPO was launched in 2006, it was considered as a Wall Street darling because of its high stock value. But as its stock price continues to plummet in the present, its long-term future is now in question.
The food safety failure clearly lies in its faulty supply chain.
"There must be something seriously wrong with the supply chain. The question is how expensive will it be to fix it," told Howard Penney of Hedgeye Risk Management as quoted by CNN Money.
To allay consumer fears over food safety, the company's top echelons promised Chipotle patrons that they will strive to improve food safety standards at its multiple suppliers and restaurant branches.
"The procedures we're putting in place today are so above industry norms that we are going to be the safest place to eat," said Chipotle founder and CEO Steve Ells as directly quoted in an Albany Daily Star article.