Executive Summary
Introduction
Discussion and Analyses
Market Analysis
Financial Performance
Product profiles
Customer Profiles
Communication Practices
Conclusions
Recommendations
References
Chipotle Health Issues E. coli Outbreak
Executive Summary
The loss of organizational trust within the market can render a business volatile. A case involving food contamination in Chipotle Restaurants led to the infection of 55 people. The company loss its credibility to function properly and closed some of its branches after the loss of revenue and decreasing value of shares. This report has evaluated some of the issues that has affected the company in order to establish a reliable solution for future expansion and recovery. In this regard, it was identified that source of contamination was not identified. In this regard, the company left a gap in knowledge of how the infection arose and spread in a similar way as another involving Salmonella in a previous period. These two incidences led to the failure and struggle of the company as people were not willing to purchase food products from. It was concluded that the establishment of the source of the contamination and clarity about the issue was fundamental for future business prevalence.
Introduction
This evaluation targets to unveil various strategic issues and managerial tactics when delivering products and services to customers. It addresses a problem within one company by reviewing reliable resources for information and progress of the problem identified within such a company. After developing the analysis, this report was written in order to record the issues, problems, outcomes, and the way forward of the Chipotle Mexican Grill. This company was connected to an outbreak of E. coli where the media induced a strong relevance of the company in inflicting the 52 people into the vices. The patients affected by this outbreak were reported to have taken meals in the grill before falling sick as per the Center for Disease Control and Prevention (CDC) and FDA. These two entities indicated that the infections had spread into 11 states with Washington and Oregon being the most affected. The strain of E. coli O26 had infected the patients whereas another strain of STEC O26 had infected 5 individuals from Kansas, Oklahoma and North Dakota. The investigation report informed that there were DNA correlations between the affected individuals. In respect to this problem, the Chipotle Mexican Grill closed forty-three restaurants in Oregon and Washington which were later reopened in close consultations with the relevance organizations investigating the case. However, the case remained as sections of organizational breakdown due to the associated stigma where people are not willing to trust the credibility of their food. In essence, Chipotle’s pain is still being felt due to this transgression due to market shifting, loyalty failure, lack of trust, and victims suing them for damages. However, the most issue affecting the firm involves the return of their stock price that was rendered volatile after the food safety issue. In perspective, the closure of the 43 restaurants alone had led to the loss of $80 million. As the stock depreciates, the sales were also lowering by day and proving that their recovery could take longer than other companies like Kentucky Fried Chicken case. The survey conducted with the patients showed that most had eaten a meal at the Chipotle Mexican Grill in a week’s time before the sickness. From these details, the departments of health decided to conduct epidemiologic studies in order to evaluate the food that was eaten by the sick and normal people from the restaurant. However, these studies did not verify the presence of contamination within the food samples researched. It was hard to determine the exact ingredient that could have been contaminated especially when considering that the food is made from many ingredients. The failure to identify the STEC O26 strain within the food was another critical issue since the problem was neither identified nor resolved. More so, the distribution records did not also leave any information about how the strains made food compromised. Essentially, counting on the fact that food industries ought to make their food safer to human consumption the trust and credibility of this company may take a longer time to recover. This report analyzes the status of Chipotle Mexican Grill of market, finance, product profile, customer profile, and communication issues in respect to the E. coli food contamination case.
Discussion and Analyses
It is vital to determine the current issues affecting the company after the E. coli attack. The following subtopic will discussed the prevailing state of the firm after the announcement of the Shiga strain of E. coli. It informs about how the market has changed, how the firm is performing financially, how their products are being profiled, what type of clients they are receiving, as well as their present communication tactics.
Market Analysis
Companies must retain their credibility and trust in order to boost their business models and prevent deterioration of their brand. The brand of Chipotle has been associated to various stigmas and lack of trust that have affected their reliability in food production. While trying to revive the trust and protect its credibility and value of human life, Chipotle closed 43 restaurants voluntarily. It announced that there will be a massive cleanup and replacement of ingredients in order to exempt any possible contaminations. After the stock loss estimated to about 25% over the last 2 months, the company revised its price to $560. The company’s key target is to regain the client confidence in their products. The Q4 sales were weak leading to a reduction of 6.8% in revenue for one year.
The graph shows that there has been declining sales from October 2015 when the contamination was reported and linked to the company. A plan has been developed to market the firms’ products by instilling confidence among the population and reassuring them about the food safety in the future. However, the existing companies have been receiving increased revenue since they have been preferred by most clients in respect to the associated danger. It has been argued that clients are not willing to take chances with their food choices and preferences especially because there are other competing firms offering the same products and services. They, therefore, prefer to select the companies that are not tied to the vices since there are few risks involved. In this regard, the markets share of the Chipotle went down as the new spread across the globe. Furthermore, the uncertainty about the cause and source of the contamination were not identified. This attribute also instilled a great fear among the customers since they were not assured that such an occurrence cannot appear in the future. In perspective, if the company found the source of the infection, then it would have been possible to assure clients that the source was identified and completely resolved. Even though the company would have paid for the losses associated to suing, its reputation and clarity would have boosted its market share in the future. Currently, the company is facing and continuous disloyalty and lack of trust as well as the unwillingness of clients to visit their restaurants (Hunter, Denman-Vilale, Garzon, Allen, & Schumann 2007).
Financial Performance
The shares of Chipotle fell by 5% leading to the closure of several restaurants in Oregon and Seattle. The company fell by $31.71 leading to the removal of 1 billion dollars from its market value where the stock had went down by 6.5%. The firm was also associated to an earlier contamination of Salmonella where tomatoes were tainted with it. the financial analysis as per the presentation in the appendix show that the final quarter of the year 2015 has low revenue. The profits of the last three month were highly affected by the announcement of Shiga strain. All the financial details are presented in the appendix inclusive of the profitability, financial health, and efficiency among others.
The graph shown above also shows the performance of the company over the recent years. It shows that the company had been progressing in terms of financial improvement until the year 2014. In the year 2014, the market cap was at $21238 which fell in the year 2015 to 14676. The company has been having a continuous growth over the years before 2015.
Product Profiles
Chipotle has developed branches worldwide to present and sell its products using all of its outlet restaurants. Since the company deals with the sale of food products, its targets have been diverse depending on the interests and likes of clients. Their products are many as presented in the list below
Communication Practices
The way of releasing information to the public was the actual cause of the panic and losses of the company. The company should have made internal and stringent investigations in order to determine the causes of the infection and advice clients not to take their meals within a specified period. It could have achieved this by closing the stores immediately and informing the public that there are internal audits. The authorities would then be used to inform and caution the public about the illnesses associated to E. coli.
Conclusions
It is important to leave no gaps that can compromise the credibility of a food company. This case has shown that the contamination and lack of reliable explanation and solution has led the firm into a crisis. All firms must, therefore, protect clients and avoid dissatisfying them in an open market. Chipotle lost its client to other competing firms within the locality. In case of such a vice, a company must devise strategies to curb the information penetration and solve the issue fast in order to prevent losses.
Recommendations
Chipotle should devise a way to find and explain how the infection arose and why certain people became infected. This action would influence the confidence of client by assuring about their credibility and willingness to avoid such cases in the future. Moreover, the company should establish a connection between the legal authorities in order to assure clients about the safety of food. Furthermore, it should develop an approach to market its products heavily in order to reach new and confirm that people are using their food continuously without issues of infections.
Reference
Chipotle Mexican Grill Inc Class A (2016). Retrieved from http://financials.morningstar.com/ratios/r.html?t=CMG
Hunter, A., Denman-Vilale, S., Garzon, L., Allen, P., & Schumann L. (2007). Global infections: Recognition, Management, and Prevention. The Nurse Practitioner, 1(3), 35-41.
Kavitha A. Davidson (29 August 2013). The most efficient health care system in the world. Publisher. New York Times 15.3 (1999): 738-750.
Long, N. J., & Moore, H. L. (2013). Sociality: New directions. New York: Berghahn Books.
Navas-Walter, C., Proctor, S., Jessica C. (2011). Income, poverty, and health insurance in the United States: 2010. U.S. Census Bureau: Current Population Reports, P60-239. Washington, DC: U.S. Government
Appendix
(Chipotle Mexican Grill Inc Class A, 2016).
