Chipotle: CDC and Media Tactics Have Added to E. Coli Hype

Chain Plans Ads, Interviews, Direct Mail Once It Has an All-Clear From the CDC

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Chipotle Mexican Grill is preparing to move past its ties to a recent E. coli outbreak as soon as it can, even as an outbreak of what looks to be another illness added more pressure to the "Food With Integrity" company's reputation.

According to local news reports from Boston, 80 students from Boston College have reported gastrointestinal symptoms after eating at a nearby Chipotle restaurant over the weekend. A Chipotle executive on Tuesday said the Boston issue was erroneously reported as E. coli, and probably is "the common flu or norovirus."

The executive, part of a group speaking at the Bernstein Consumer Summit, said some of the confusion regarding the latest issue lies in how the U.S. Centers for Disease Control and Prevention has been issuing updates on the E. coli outbreak.

"It's been fueled by the sort of unusual and even unorthodox way the CDC has chosen to announce cases related to the original outbreak in the Northwest," the executive said.

Updates from the CDC have not announced new cases, but rather cases that were reported to the CDC by various reporting agencies. The Chipotle executive suggested that news reports sometimes have made it seem as though the outbreak expanded, even though all of the E. coli cases that have been reported occurred within a window of Oct. 24 to Nov. 7.

"Because the media likes to write sensational headlines you'll probably see, you know, when somebody sneezes … 'Ah, it's E. coli from Chipotle' for a little bit of time," he added.

It was not immediately clear which executive made those comments, as four members of the company's management team were announced as speakers at the event: Chairman and Co-CEO Steve Ells; Chief Creative and Development Officer Mark Crumpacker; Chief Financial Officer John Hartung; and Co-CEO Monty Moran. Audio of the investors event was available to the public via a webcast.

The company has started to plan its outreach for once it can move beyond reports about the E. coli issue, yet still does not know when the CDC will declare the incident resolved.

Chipotle said after it has an all-clear from the CDC, it plans to issue full-page open letters in newspapers, as well as some "critically placed interviews" to tell consumers the issue is over and the steps it has taken and to invite them back into the restaurants. Its plans also include more traditional marketing than it has done before and increased use of direct mail, which could include offers such as a buy one, get one coupon.

Other communication plans include social media outreach, a way the company has long communicated with its biggest fans. Chipotle stopped sending its sometimes humorous tweets out to the public when the issue began, with no tweets from Oct. 31 through Nov. 8. It has been responding with direct tweets in recent days but its last mass message from @ChipotleTweets appears to have been posted on Dec. 3 -- the day before additional E.Coli cases were confirmed by the CDC and the company issued its sales outlook.

Despite all of the attention and the sharp decline in sales following the outbreak, Chipotle said it has been studying consumer feedback about E. coli since Nov. 1 and has found only 57% of its customers know about the issue.

The company issued its first press release about the E. coli outbreak two days later, on Nov. 3. Updates since then included a financial filing issued the afternoon of Friday, Dec. 4, in which it outlined how steep its sales declines have been and rescinded its sales forecast for 2016.

The company has made changes to its food safety protocols. Among them, it is now dicing tomatoes and chopping cilantro in commissaries, where the produce is sanitized and hermetically sealed before being delivered to restaurants. A similar procedure is being used for lettuce, while items such as avocados and jalapenos are still prepared in the restaurants, the company said.

At this point, Chipotle does not plan to raise prices due to the higher food safety costs. It left open the possibility of such price increases starting in 2017, after it has let the costs crimp its margins and worked on improving its efficiencies. The company said it would not decrease portion sizes to help offset the higher costs, but did say it is standardizing preparation methods on its second line, which handles orders for catering as well as orders placed online for pickup or delivery via services such as Postmates.

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