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OM in the News: Chipotle’s Battle for Quality Control

February 12, 2016
At lunchtime, people peered into a Chipotle in Washington, one of the stores that closed on Monday.

At lunchtime Monday, people peered into a closed Chipotle

Chipotle Mexican Grill closed its more than 2,000 restaurants for 4 hours this past Monday to hold a “virtual” town hall meeting with its employees about steps it said it was taking to improve food safety and regain consumers’ trust. The firm also announced a $10 million program to help small farmers who are Chipotle suppliers shoulder the costs of putting in place the company’s new food safety system, which will require them to do more rigorous testing.

Chipotle has experienced 6 food safety failures involving norovirus, salmonella and E. coli since July, with more than 500 customers reporting that they fell ill afterward, reports The New York Times (Feb. 9, 2016). But “it’s going to take significant meaningful action that goes beyond telling employees to be more careful and, unfortunately, some time before consumers start to believe it,” says an industry expert. The best example of a company regaining consumer trust was of Tylenol in 1982 when 7 people died after taking medicine that had been tampered with. Johnson & Johnson moved quickly to recall the product and establish ties with the police and the FDA. Tylenol’s market share crashed, but J&J introduced new tamper-proof packaging and heavily promoted the brand. Today, Tylenol is a best-selling over-the-counter analgesic.

The norovirus contaminations that caused the greatest number of illnesses were introduced to the restaurants by sick employees. Since the outbreaks, the company has instituted paid sick leave for employees in an effort to encourage them to stay home. A salmonella outbreak that sickened more than 60 people was linked to chopped tomatoes. The company now washes, dices and tests tomatoes in its central kitchens and then ships them in sealed bags to restaurants. As for the most serious contamination, 2 different types of E. coli that sickened 60 people after they ate in Chipotle restaurants in 14 states, neither Chipotle nor the C.D.C. had been able to determine the exact cause.

Classroom discussion questions:

  1. Why is Chipotle’s supply chain a major issue here?
  2. What other firms faced similar problems and what did they do to win back market share?
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2 Comments leave one →
  1. Frederick Van Bennekom permalink
    February 12, 2016 1:33 pm

    Barry, I think the Chipotle case can be used beyond SCM and used for quality. I may use this article along with a WSJ article for an exam article. I could see asking students to create a fishbone diagram to help identify the cause(s) of the trouble. I could see a Cost of Quality question too.

    Related to that, here’s an article from the Boston Globe about Panera — another good one for a COQ discussion.

    Fred >

  2. February 12, 2016 6:59 pm

    Fred,
    Thank you for the excellent idea. I especially like the concept of a fishbone. There are so many different issues they face.
    If you see any good articles I can pass along through the blog, please email me at brender@rollins.edu

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Andreas Wieland’s supply chain management blog for academics and managers

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