Monday, January 4, 2016

How Chipotle Can Have Their Food with Integrity and Eat it Too

This article from The Wall Street Journal sums things up pretty well I think, A Chipotle Education.

“In other words, Mr. Ells promises to bring his restaurants into the 20th century. One reason large chains dice foodstuffs in a central kitchen is to avoid contamination. And while Chipotle derides “factory farming”—last year the company put out a comedy series about the “utterly unsustainable world of industrial agriculture”—such economies of scale exist to deliver safer food at a lower price....Chipotle’s anti-GMO and locavore advertising has been part of a commercial strategy to differentiate from competitors and make a buck. Perhaps no longer: On Tuesday the stock tumbled below $500 for the first time since May 2014, with the price down about 25% for the year. Sales are expected to drop precipitously this quarter. The market is a brutal teacher when customers and investors realize a company isn’t practicing what it preaches.

-The Wall Street Journal, Dec 22, 2015

I also recommend Jayson Lusk's take on this:

"Marketing aside, there is a real trade-off to be made between selling "clean", fresh, food sourced from small-local vendors and food safety.  There are likely some taste benefits with fresh, unfrozen food and there is nothing inherently wrong with being willing to pay a bit more for wares from smaller more local providers.  But, choosing these options may make ensuring food safety a bit more challenging." 

I think there is a possible way out for Chipotle. As suggested in the WSJ article, rebrand with a PR campaign promising to bring Chipotle into the 21st century, with a commitment to strict food safety standards (maybe talk about some high tech apps that help better manage food sources,safety, food handling etc. to address the recent issues) but also embracing modern food supply chains and technologies including GMOs. Maintain a commitment to 'local' food sources where possible, but make this very much a specialty offering brought to market under only the strictest standards. Or instead, maybe redirect the 'local' aspect of food through community investments and promotions of local producers and sponsorship of farmers markets etc. vs actually incorporating them into their direct supply chain. Or, highlight key suppliers and their practices, concentrate on the people vs. the geography. McDonald's is doing something like this, but Chipotle could really get the message out there. Maybe in the future, the beef or lettuce in your Chipotle burrito won't come from the farm a mile down the road, but emphasize the real people behind the food, and note, they are 'local' to someone somewhere.

Finally, issue a statement indicating the change in direction:

We at Chipotle have undergone exhaustive research and investment in order to make our products better, safer, and more sustainable than ever before. After consulting with our customers, suppliers, and leading scientists, we are revamping our supply chains and product technologies in ways like never before. etc..

They can go on to explain perhaps how incorporation of GMOs will lead to reduced emissions and pesticide use and improve biodiversity, how optimized animal feeding operations maximize animal welfare and minimize air quality issues etc. They can be as specific or nuanced as need be, there are plenty of PR people to figure it out. But the improved perceptions, cost savings from supply chain improvements etc. might even give Chipotle the opportunity to offer something better at an even lower price!

There are plenty of producers, industry experts, researchers, and agvocates out there that might be willing to help, if only, instead of demonizing the industry that supports it, Chipotle open mindedly embraces it with a spirit of genuine integrity. 

Of course this is all somewhat tongue-in-cheek, but I think the unfolding of events at Chipotle should give other food products and services firms a little pause about how they want to front their product in the face of the science and economics involved. Acknowledging these trade offs certainly could provide some insight to truly sustainable strategies going forward.

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