Inside Chipotle’s Contamination Crisis
Smugness and happy talk about sustainability aren’t working
anymore.
By Susan Berfield | December 22, 2015
Photographs by Ted Cavanaugh
Chris Collins is a 32-year-old Web developer and photographer who lives in Oregon, just outside Portland. He and his wife are conscientious about their food: They eat organic, local produce and ethically raised animals. Collins liked to have a meal at Chipotle once a week. On Friday evening, Oct. 23, he ordered his regular chicken bowl at his usual Chipotle in Lake Oswego. His dinner was made of 21 ingredients, including toasted cumin, sautéed garlic, fresh organic cilantro, finely diced tomatoes, two kinds of onion, romaine lettuce, and kosher salt. It tasted as good as always.
Chris Collins is a 32-year-old Web developer and photographer who lives in Oregon, just outside Portland. He and his wife are conscientious about their food: They eat organic, local produce and ethically raised animals. Collins liked to have a meal at Chipotle once a week. On Friday evening, Oct. 23, he ordered his regular chicken bowl at his usual Chipotle in Lake Oswego. His dinner was made of 21 ingredients, including toasted cumin, sautéed garlic, fresh organic cilantro, finely diced tomatoes, two kinds of onion, romaine lettuce, and kosher salt. It tasted as good as always.
By the
next night, Collins’s body was aching and his stomach was upset. Then he began
experiencing cramping and diarrhea. His stomach bloated. “Moving gave me
excruciating pain,” he says, “and anytime I ate or drank it got worse.” His
diarrhea turned bloody. “All I was doing was pooping blood. It was incredibly
scary.” After five days, he went to an urgent-care clinic near his home; the
nurse sent him to an emergency room. He feared he might have colon cancer.
On
Halloween, the ER doctor called him at home: Collins had Shiga-toxin-producing
E. coli 026, and he’d likely gotten it from one of those 21 ingredients in
his meal at Chipotle. (This was later confirmed by public-health officials.)
The doctor warned him that kidney failure was possible; intensive treatment,
including dialysis, could be necessary. His kidneys held up, but it took an
additional five days for the worst of Collins’s symptoms to ease and nearly six
weeks for him to recover. He still doesn’t have as much physical strength as he
used to, and he feels emotionally shaky, too. “Before, I was doing the P90X
workouts. For a long time after, I couldn’t even walk a few blocks,” he says.
“It made me feel old and weak and anxious.” On Nov. 6, Collins sued
Chipotle, seeking unspecified damages.
Collins
was among 53 people in nine states who were sickened with the same strain
of E. coli; 46 had eaten at Chipotle in the week before they fell ill. Twenty
got sick enough to be hospitalized, according to the Centers for Disease
Control and Prevention. “I trusted they were providing me with ‘food with
integrity,’ ”
Collins says, sarcastically repeating the company motto. “We fell
for their branding.” Chipotle’s public stance during the outbreak irritated him, too. The
company closed all 43 of its restaurants in Oregon and Washington in early November to
try to identify the source of the E. coli and sanitize the spaces. Notices
on restaurant doors generally referred to problems with the supply chain or
equipment. But local media reported that at least one restaurant in Portland
put up a note that said, “Don’t panic … order
should be restored to the universe in the very near future.” “That
felt so snarky,” Collins says. “People could die from this, and they were so smug.”
For a
long time, smug worked pretty well for Chipotle Mexican Grill. It’s grown into a chain of more than
1,900 locations, thanks in part to marketing—including short
animated films about the evils of industrial agriculture—that reminds customers
that its fresh ingredients and naturally raised meat are better than rivals’
and better for the world. The implication: If you eat Chipotle, you’re doing
the right thing, and maybe you’re better, too. It helped the company, charging
about $7 for a burrito, reach a market valuation of nearly $24 billion.
Its executives seemed to have done the impossible and made a national fast-food
chain feel healthy.
Fewer
people associate Chipotle with “healthy” now. Three months before Collins was
infected with E. coli, five people fell ill eating at a Seattle-area
restaurant. By the time local health officials had confirmed a link, the
outbreak was over, so no one said anything. In August, 234 customers and
employees contracted norovirus at a Chipotle in Simi Valley, Calif., where
another worker was infected. Salmonella-tainted tomatoes at 22 outlets in
Minnesota sickened 64 people in August and September; nine had to be
hospitalized. Norovirus struck again in late November: More than
140 Boston College students picked up the highly contagious virus from a
nearby Chipotle, including half of the men’s basketball team. An additional
16 students and three health-care staff picked it up from the victims. The
source? A sick worker who wasn’t sent home although Chipotle began offering
paid sick leave in June. In the second week of December, when Chipotle should
have been on highest alert, a Seattle restaurant had to be briefly shut down
after a health inspection found that cooked meat on the takeout line wasn’t
being kept at a high enough temperature. And in the most recent case, on
Dec. 21, the CDC announced it was investigating an outbreak of what seems
to be a different and rare version of E. coli 026 that’s sickened five
people in two states who ate at Chipotle in mid-November. The company says it
had expected to see additional cases. It still doesn’t know which
ingredients made people ill.
Almost 500 people around the
country have become sick from Chipotle food since July,
according to public-health officials. And those are just the ones who went to a
doctor, gave a stool sample, and were properly diagnosed. Food-safety experts
say they believe with any outbreak the total number of people affected is at
least 10 times the reported number. The CDC estimates that 48 million
Americans get sick from contaminated food every year.
At
Chipotle, three different pathogens caused the five known outbreaks. That
wasn’t inevitable or coincidental. “There’s a problem within the company,” says
Michael Doyle, the director of the center for food safety at the University of
Georgia. Chipotle has gotten big selling food that’s unprocessed, free of
antibiotics and GMOs, sometimes organic, sometimes local. “Blah, blah, blah,”
says Doug Powell, a retired food-safety professor and the publisher of
barfblog.com. “They were paying attention to all that stuff, but they weren’t
paying attention to microbial safety.” Whatever its provenance, if food is
contaminated it can still make us sick—or even kill. Millennials may
discriminate when they eat, but bacteria are agnostic.
“Food
with integrity,” a promise to Chipotle’s customers and a rebuke to its
competitors, has become the source of much schadenfreude among both. Chipotle’s
stock has lost about 30 percent of its value since August. Sales at
established stores dropped 16 percent in November, and executives expect a
decline of 8 percent to 11 percent in comparable-store sales for the
last three months of the year. That would be the first quarterly decline for
Chipotle as a public company.
Steve
Ells, Chipotle’s founder and co-chief executive, went on the Today show
on Dec. 10, apologized to everyone who’d fallen ill, and announced a
comprehensive food-safety program that he said would far exceed industry norms.
He didn’t address why a company that had challenged quality standards with such
gusto hadn’t taken on safety standards as well. Chipotle has said it will shift
more food preparation out of restaurants and into centralized kitchens—that is,
it will do things more like the fast-food chains it’s long mocked. Ells’s
company has always urged customers to think
about its supply chain. Well, now they are.
Six
weeks after the first E. coli victims in the Pacific Northwest got sick
and about a week after Ells’s Today appearance, Chipotle placed a
full-page ad, signed by him, in newspapers across the country. “The fact that
anyone has become ill eating at Chipotle is completely unacceptable to me, and
I am deeply sorry,” he wrote. “As a result, we are committed to becoming known
as the leader in food safety, just as we are known for using the very best
ingredients in a fast-food setting.” Ells was in Seattle by then. During
interviews he carefully followed the new standard thinking on corporate crisis
management: Overapologize and then pivot to the cheery future.
On
Dec. 17, speaking by phone in New York, he’s still on message, describing
the Seattle restaurants he visited as clean and organized. “I ate delicious
food there,” he says. “Traffic was slow, but we’re ready for people to come
back. There is no E. coli in Chipotle. ” To hear Ells tell it, the company is witnessing an outbreak of
excitement. He says the chain’s suppliers are excited to participate in the new safety
programs; employees at headquarters in Denver are excited to contribute however
they can; it’s “a very, very exciting time for us to be pushing the boundaries”
on food safety. “We’re embracing this as an opportunity.”
Ells
studied art history in college, trained as a chef at the Culinary Institute of
America, and opened the first Chipotle in Denver in 1993 with a loan from his
father. He set up a model—open kitchen, fresh ingredients, real cooking in the
back, and an assembly line in front, allowing customization and speed—that’s
become its own industry standard. Chipotle grew from 489 restaurants and
revenue of $628 million in 2006, when it went public, to about 1,800
restaurants and $4.1 billion in revenue in 2014. Net profit increased
60 percent from 2012 to 2014. Ells and his co-CEO, Montgomery Moran,
together earned more than $140 million in total compensation during that
time. And Michael Pollan, the good-food arbiter, said that Chipotle was his
favorite fast-food chain and that he didn’t have a second.
The
company was influenced in ways it doesn’t always admit by the biggest, most
industrialized chain of them all: McDonald’s. The company invested about
$340 million in Chipotle from 1998, when it had 13 restaurants in
Colorado, until 2006, when the two parted ways. McDonald’s taught Chipotle
supply-chain economics. Chipotle often derides fast-food chains and their
factory farms, enlisting the likes of Willie Nelson to make plaintive music
videos about crop chemicals and steroidal cattle. But Ells respects McDonald’s
size. In an interview with Bloomberg in 2014, he said Chipotle could one day be
“bigger than McDonald’s in the U.S. I mean, that’s not an unreasonable way to
think about this.”
The
companies shared distribution centers and processing facilities, and in some
cases they still do. Chipotle calls these facilities commissaries. They’ll play
an increasingly important role as more food prep is shifted to these
centralized kitchens. When I ask who else uses them, Ells, leery of invoking
the competition, says: “I don’t know if I know their other customers. I can see
what you could make of this. It’s nothing.”
Chipotle,
like any chain its size, has infrastructure it doesn’t always want to fully
reveal. McDonald’s has a System. Chipotle does, too. It has about
100 suppliers for its 64 ingredients. That doesn’t include local
farms—those within 350 miles of a restaurant—which at peak season supply
only 10 percent of its produce.
Executives
will identify a few suppliers: Chipotle has for 15 years bought pork for
its carnitas from Niman Ranch, where pigs are raised outdoors or in pens that
are “deeply bedded.” The company website features Tom Kearns, a Wisconsin dairy
farmer, as a symbol of its support for family farms. But most suppliers go
unnamed. Why? “This is not something we generally provide,” Chipotle spokesman
Chris Arnold said in an e-mail.
Nor
does Chipotle generally provide the names of its distributors or commissaries.
But it will confirm them if asked. Chipotle’s pork and beef are braised at OSI
Group and Ed Miniat Inc., outside Chicago; Ready Foods in Denver cooks its
beans and makes its red and green salsas. The companies don’t talk about their
other clients, but on its website, OSI calls itself “a global leader in
supplying value-added protein items” and other foods to large brands. John
Knight, a restaurant consultant who worked with Chipotle from 2009 to 2011,
describes these commissaries as high-end. “Chipotle uses the ones that do food
for cruise ships and casinos,” he says. “They’re not making hospital, school,
or jail food.” Ells, ever wary of protecting Chipotle’s image, notes that he
taught the chefs in these commissaries to cook food the way he would.
MILLENNIALS
DISCRIMINATE; BACTERIA ARE AGNOSTIC
The
source, or sources, of E. coli were somewhere in that supply chain.
Because restaurants from Oregon to New York served contaminated food, the problem most likely originated
with one of Chipotle’s big suppliers, not one of the local farms.
E. coli is spread through human and animal feces. The harmful microbes can
be transmitted to crops in irrigation water, or if animals are allowed to
defecate in the fields, or if manure isn’t properly treated. Cooking food long
enough at high enough temperatures or properly sanitizing it kills
E. coli. Hard-to-clean produce that’s eaten raw is considered high-risk.
At Chipotle that’s the tomatoes, lettuce, and cilantro—in other words, the same
stuff that gives Chipotle its fresh-tasting advantage.
The CDC
says Chipotle has been very cooperative in the E. coli investigation, but
that the company is having trouble telling the agency which batches of
ingredients went to which stores at which times. “The system they have is not
able to solve the problem we have at hand. It’s not granular enough,” says Ian
Williams, chief of the CDC’s outbreak response and prevention branch. He notes
that “traceability from the farm to the point of service” should be improved
throughout the food industry. In recent years, the agency has been able to find
the contaminated ingredients in fewer than half of all multistate outbreaks.
Without a conclusion to the investigation, some customers’ unease about
returning to Chipotle could be prolonged. Ells prefers to see the uncertainty
as another opportunity. “The silver lining is that it has forced us—not forced
us, caused us—to take a rigorous look at every ingredient.” Couldn’t Chipotle
have done that anyway? “Yes, that’s true.”
Data: Centers for Disease Control and
Prevention; National Institutes of Health; New York Times; BillMarler.com
The
spread of norovirus in Simi Valley and Boston was caused by breaches of
protocol, Ells says. Those protocols were established at Chipotle in 2008 after
a norovirus outbreak sickened 500 people near Kent State University, in
Ohio. Norovirus, which is highly contagious, is the leading cause of illness
from contaminated foods, affecting as many as 21 million people in the
U.S. every year. Its symptoms, including diarrhea, vomiting, and stomach pain,
usually last a couple of days. It’s a problem on cruise ships and in other
enclosed places; in Britain it’s known as the winter vomiting bug. The Boston
College outbreak occurred as students were preparing for finals. Health
services helped care for the sick students, and the dining hall staff prepared
special meal packs for them. The facilities crews disinfected every common area
on campus.
In late
October, Chipotle hired Mansour Samadpour,
head of IEH Laboratories & Consulting Group in Seattle, to put together a
more aggressive food-safety plan, which they hope will bring the risk of
contamination to near zero. Samadpour describes his lab as a privately financed
public-health organization. “Being in compliance with industry standards is
less than 5 percent of what companies need to do to make food safe,” he
says. “Company after company finds that out after they have events.”
Samadpour
recommended changes at every step of Chipotle’s system. More food will be
prepared ahead of time, out of sight at commissaries, and transported to
19 distribution centers and then to more than 1,900 restaurants.
Samadpour calls it an “industrial-strength plan,” a term Ells and other
executives use, too. This won’t turn Chipotle into McDonald’s, but it could
make for some awkward marketing. “They’re sort of in a bind,” says Christopher
Muller, a professor of hospitality at Boston University. “They want to have
this local, fresh image, and making food in a commissary and shipping it all
over the country takes away from that.”
Before
it’s harvested, produce will be screened for pathogens in small batches using
what Chipotle calls high-resolution DNA-based tests. Meeting these higher
standards will be expensive for smaller farms: There’s the cost of the testing
itself and of discarding rejected vegetables and herbs. “Will everybody be able
to afford it right away? No,” Ells says. “Will we help? We will. Is it going to
work everywhere? Maybe not.” Chipotle’s chief financial officer, Jack Hartung,
is more direct. “We like the local program, we think it’s important, but with
what’s just happened we have to make sure food safety is absolutely our highest
priority,” he says. “If it’s testing and safety vs. taking a step backward on
local, we would do that and hope it would be temporary.”
If
produce passes the initial tests, it will be sent to the commissaries, where it
will be washed, sanitized, and retested. The commissaries, rather than the
restaurants, will be responsible for cleaning and packaging the cilantro,
shredding the lettuce, and dicing the tomatoes.
A
single Chipotle restaurant uses about five cases of tomatoes a day. Employees
used to dice the tomatoes by hand in the restaurants. When that became too
demanding a task, Ells introduced food processors, but he wasn’t happy with the
results. He moved the dicing to a centralized kitchen. He won’t say where. Two
years ago, Chipotle bought food processors that could dice tomatoes in its
kitchens just as well as the commissaries could and better retain their flavor.
But now, post-E. coli, the tomatoes will again arrive at the restaurants diced,
packaged, and tested for pathogens. “If you ate the tomato on its own, could
you tell the difference? Maybe,” Ells says. “But I challenge you to tell the
difference in a burrito.” Ells says the tomatoes themselves will be the same, but
the cuts will be cleaner and more consistent. Still, he says, “it is my desire
that one day we can do it in-house again. There’s no method of testing that
makes that possible now.”
Commissaries
have been preparing a portion of Chipotle’s meat from the early days. It was
never practical or efficient to braise meat in Chipotle’s small kitchens. The
barbacoa and carnitas are vacuum-packed and cooked sous vide, in a
temperature-regulated bath. Then they’re sent to regional distribution centers
and on to the restaurants. Steak and chicken arrive raw in the restaurants and
are marinated in an adobe rub, then grilled. The new protocols require changes
to how the meat is marinated to prevent cross-contamination.
In the
restaurants, workers will add cilantro to higher-temperature rice. “That’s a
kill step,” Samadpour says. They’ll blanch avocados, onions, jalapeños, lemons,
and limes for 5 to 10 seconds in boiling water. That will destroy any
microbes on the surface. Lemon and lime juice will be added earlier to the salsa
and guacamole to reduce the microbe count. “And guess what?” Ells asks. “It
turns the salsa a brighter red and gives a sweeter taste.” Any suggestion that
these tweaks might together cause a noticeable change in taste for the worse is
dismissed. “It’s the genius of ‘and,’ ” Ells says. “We’re doing both: great ingredients and the safest place.”
Hartung, the CFO, has his own way of conveying that idea: “We want
to have our cake and eat it, too.”
The Chipotle assembly line is a marvel of efficiency, and Ells often speaks of it in a way that would make a McDonald’s executive proud. “We all think about the Chipotle line. ... How do you do it faster?” he said in his 2014 interview with Bloomberg. “Throughput is something that we always will have to think about. Faster, faster, faster, faster.” Throughput is the unappetizing way fast-food restaurants talk about serving their customers when their customers aren’t listening. On the most efficient Chipotle lines, customers get their food in less than two minutes, says Knight, the restaurant consultant. Most other fast-casual chains take from four to six minutes. Arnold, Chipotle’s spokesman, says fast locations “process more than 300 transactions per hour during peak hours.”
The Chipotle assembly line is a marvel of efficiency, and Ells often speaks of it in a way that would make a McDonald’s executive proud. “We all think about the Chipotle line. ... How do you do it faster?” he said in his 2014 interview with Bloomberg. “Throughput is something that we always will have to think about. Faster, faster, faster, faster.” Throughput is the unappetizing way fast-food restaurants talk about serving their customers when their customers aren’t listening. On the most efficient Chipotle lines, customers get their food in less than two minutes, says Knight, the restaurant consultant. Most other fast-casual chains take from four to six minutes. Arnold, Chipotle’s spokesman, says fast locations “process more than 300 transactions per hour during peak hours.”
An
alarm goes off every hour in every Chipotle restaurant, to remind workers to
wash their hands and put on new latex gloves. But three former managers, who
asked to remain anonymous to speak openly about their former employer, said the
alarm was often ignored when the restaurants were busy. Field managers came by
every month or so, and for a few days afterward employees observed the
hand-washing rule, says a former manager, who worked in a restaurant outside
San Francisco. Then they’d slack off again. He also notes that Chipotle put
more emphasis on the safe handling of meat than produce. Another former
manager, from Arizona, says Chipotle assumed the speed and skill of seasoned
culinary workers, while her restaurant was staffed mostly by young employees on
their first job. Arnold says new employees aren’t expected to work as
efficiently as more experienced ones.
Chipotle
opened 192 restaurants in 2014 and expected to open 215 to 225 in 2015. The
company held its first National Career Day on Sept. 9. The goal was to
hire 4,000 employees, increasing its staff by 7 percent. That sounds like
a public-relations coup and a human resources nightmare. Were some of
Chipotle’s safety problems a result of growing too fast? “I can understand
linking the two, but I don’t think the growth rate is the cause of the
problem,” Hartung says. “The standard procedures worked for a long time. We hadn’t
had outbreaks since 2009. We’re not going back and saying let’s train them to
do better. We’re training them to do something different.”
No one
at Chipotle has publicly estimated the cost of the safety programs it’s putting
in place. “Very, very expensive,” is as close as Ells comes. “Right now we’re
not trying to make this cost-effective. We’re just doing it,” Hartung says.
“We’re likely to do it very inefficiently.” When asked at an investor
conference if he’d consider raising prices or decreasing portions to cover some
of the expense, he said: “That would be tacky.” He did note, though, that
eventually Chipotle might raise prices, and “instead of investing that in food
integrity, we might have to invest that in food safety.” In the meantime, he says
profits and the profit margin will be messy. The company is also facing at
least seven lawsuits, the most recent filed by a mother whose son was infected
with norovirus in Boston. He’s still recovering. Chipotle says it
doesn’t comment on pending legal actions, but in incidents such as these its
aim is to make things right with customers.
Chipotle
isn’t giving any estimates for 2016 at all, except to say that 220 to 235
restaurant openings will proceed. When I ask Ells if they’ve considered scaling
back, he says: “Not at all. It never entered our minds.”
Chipotle
was already experiencing slower growth in established stores. Comparable-store
sales rose 16.8 percent in 2014; during the first nine months of 2015,
that figure was 5.5 percent. Hartung says there have been surges and slowdowns
before. “Nothing signaled to us that we were at a peak,” he says. “We were just
taking a pause.” Yet it’s natural for a company that’s been around for two
decades to shift to more modest growth.
It’s
worth noting that, contaminated food aside, Chipotle is on the right side of
fresh food trends, while its more old-school rivals stumble. But the company’s
pause could be extended. Mark Crumpacker, the chief creative and development
officer, saysChipotle has seen a drop-off among
its least frequent customers and its most frequent. “That’s more worrying,” he
says. Chipotle may have lost some customers altogether. “A small percentage may
never come back, or it may take years.”
Confidence
has taken the company far. It may have gotten Chipotle into this mess; it may
help get it out. Crumpacker says he has plans for advertising next year on
radio, in print, online, and through direct mail. “It won’t be, ‘Come to the
safest place to eat,’ ” he says.
“Hopefully, it will be humorous to the extent that’s appropriate.” But he knows
how great the challenge is. “There’s nothing worse from a trust perspective.
This is not the kind of problem that you market your way out of.”
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