Chipotle romaine lettuce e coli

Running Head: PROJECT VI – TEAM # 2 – 2015 E. COLI OUTBREAK / CHIPOTLE 1

PROJECT VI – TEAM # 2 – 2015 E. COLI OUTBREAK / CHIPOTLE 2

Team # 2

2015 E. Coli Outbreak / Chipotle

Project VI

Explanation of the Issue

Sean Thomas Lavrisa

UMGC – FALL 2020

Dr. Donna Madison-Bell

Abstract / General Case Info

“In late 2015, Chipotle Mexican Grill experienced a large-scale food safety crisis. The company’s restaurants were identified as the source of an E. Coli outbreak that affected 14 states and led to more than 20 hospitalizations. Known for its “Food with Integrity” initiative, and having experienced a decade of explosive growth, the company’s livelihood was being threatened by the design of its own supply chain. Customers were scared, and the issue had attracted the attention of investors, regulators, and the national news media; Chipotle needed to respond” (Banda, et. al 2016). “As of January 27, 2016, the CDC reports a total of 55 people infected with the outbreak strain of STEC (Shiga toxin producing E. coli) O26 from a total of 11 states in the larger outbreak: California (3), Delaware (1), Illinois (1), Kentucky (1), Maryland (1), Minnesota (2), New York (1), Ohio (3), Oregon (13), Pennsylvania (2), and Washington (27). There have been 21 reported hospitalizations. The majority of these cases were reported from Oregon and Washington during October 2015” (Center for Food Safety and Applied Nutrition, 2016). “After a much-publicized closing of all of its stores on February 8, 2016, and numerous changes to its food sourcing and preparation practices, Chipotle tried to win back customers with dramatically increased advertising and free food promotions. However, on April 26, the chain announced its first-ever quarterly loss as a public company. Same-store sales for the first quarter were 29.7% lower than in the previous year. Operating margins fell from 27.5% to 6.8% over the same period, and the company's share price was down 41% from its summer 2015 high” (Walker & Merkley, 2017). “Chipotle is working with Seattle-based IEH Laboratories and Consulting Group to help identify opportunities to enhance food safety practices throughout its operations—from the farms that supply its food to the restaurants that prepare and serve it. Chipotle and IEH have created an enhanced safety program that includes: (1) Implementing high-resolution (DNA) testing of all fresh produce to ensure food quality and safety before shipping it to restaurants (2) Initiating end-of-shelf-life testing where ingredient samples are checked to ensure quality specifications are maintained through an ingredient’s shelf life (3) Pursuing continuous improvements throughout the supply chain using test result data to measure the performance of vendors and suppliers (4) Enhancing internal training to ensure employees understand the standards for food safety and handling” (Food Engineering, 2016). “Prosecutors alleged that four norovirus outbreaks were caused by employees showing up to work sick, in violation of company policy, and by food products being stored at the wrong temperatures. Managers at the company's restaurants failed on a number of occasions to notify Chipotle's safety group at its headquarters when an employee had been vomiting at work, according to prosecutors. Instead, the safety analysts would find out only after contacting the restaurant because it had received a complaint from a sick customer. As a result, there were days of delay before the restaurants were sanitized. Chipotle Mexican Grill Inc. will pay a $25 million criminal fine to resolve allegations by federal prosecutors that its food sickened more than 1,100 people across the U.S. from 2015 to 2018” (Pettersson, 2020).

2015 E. Coli Outbreak / Chipotle

Explanation of The Issue

Why is it that a household fast-food name like Chipotle Mexican Grill now faces the largest ever fine imposed in a food-safety case, a $25 million criminal fine, to resolve allegations at a federal level that its food “sickened more than 1,100 people across the U.S from 2015 to 2018”? (Pettersson, 2020). By any measure or statistic, Chipotle was the diamond in the rough when it comes a success story within the realm of fast-food; Chipotle Mexican Grill (CMG) grew from one dining location in 1993 to over 2,000 by 2016 – “Its stock appreciated more than 1000% in ten years following its IPO” from 2006 through 2016 (Walker & Merkley, 2017).

Before one examines the failures of this company, it would be wise to assess the strengths that lead to this unprecedented success and these factors are as follows: (1) Simple menu priced based on the choice of meat alone, (2) High-quality, fresh ingredients from small to medium sized regional suppliers as opposed to national suppliers which lead to the company picking up the slogan “food with integrity” in 2001, (3) Fast, personalized food where the customer gets exactly what they want, (4) No franchises, all CMG restaurants were company owned allowing them full control over how business was executed, (5) Committed employees, in 2016 approximately 60,000 people worked for Chipotle and were paid at above market rates resulting in employee turnover that was lower than the industry average, and (6) a McDonald’s partnership which was then followed by majority control only a year later, this began in 1998 when the McDonald’s Corporation purchased a small stake and quickly purchased majority CMG positions outright (Walker & Merkley, 2017).

In the United States of America, the U.S. Department of Agriculture (USDA) and the Food and Drug Administration (FDA) regulate and put into place numerous safety protocols to prevent food-borne illnesses; For example, the USDA developed Hazard Analysis and Critical Control Point (HACCP), “a management system in which food safety is addressed through the analysis and control of biological, chemical, and physical hazards from raw material production, procurement, and handling, to manufacturing, distribution, and consumption of the finished product” (U.S. Department of Agriculture, 2016). CMG had a very specific issue in this case through protocol violation with a large E. coli outbreak specifically that began in 2015.

“E. coli are found as normal flora in the gastrointestinal tracts of mammals and are the most common facultative anaerobes in the human intestinal tract. The traits that transform these benign inhabitants into disease-causing pathogens are called virulence factors…The treatment of extraintestinal E. coli infection, and some intestinal infections, depends upon the use of one or more effective antibiotics. Resistance is a rapidly growing problem and can be controlled only through reduction of the inappropriate use of antibiotics and the development of new agents…Breakouts of E. coli still occur with regularity all over the world. In the United States, the Centers for Disease Control and Prevention (CDC) tracks these outbreaks and the efforts to curb them” (Hawley, 2019).

E. coli is both highly contagious and very common; “It could be transmitted by water used to irrigate crops, or by manure that was not properly treated. Produce that was hard to clean and eaten raw, such as lettuce, tomatoes, and cilantro, are at high risk for E. coli contamination” (Walker & Merkley, 2017). Cooking to correct temperatures and properly sanitizing cooking and prepping surfaces killed E. coli; both restaurants and food producers typically combine multiple approaches within their arsenal in their combat against E. coli to include washing hands, preventing cross-contamination between food items, and storing food at proper temperatures (Berfield, 2015).

CMG’s public food safety problems began in August 2015 when “salmonella from tomatoes sickened more than 60 people at 28 Chipotle restaurants in Minnesota and Wisconsin. That same month, 82 customers and 17 employees fell ill with norovirus infections at a Chipotle restaurant in Simi Valley, California” (Walker & Merkley, 2017). In December of 2015, the CDC updated it’s count of total cases to 52 and then the illnesses exploded further; seven more states reported cases in that same month linked to CMG before on February 1, 2016, when the CDC announced that the outbreak was over (Walker & Merkley, 2017). Although the true reason for this outbreak was never identified in its entirety, according to the Oregon Public Health Division, vegetables were more likely the culprit as opposed to meat “We’ve looked at every food item there, including meat, and it seems like the common denominator is produce” (Jargon, 2015).

Although CMG never provided a public statement on the total cost of its new safety programs, they stated that their goal was not a cost-effective approach, but rather one that focused on and invested in food safety; the company’s chief creative and development officer said, “There’s nothing worse from a trust perspective. This is not the kind of problem that you market your way out of.” (Berfield, 2015). On February 8th, 2016 Chipotle closed all of its stores for several hours to train employees on new food safety measures, they are as follows:

(1) “Cheese will arrive at restaurants already shredded. Tomatoes and cilantro, which are particularly vulnerable to bacteria, will be washed, chopped, and tested in a central kitchen. Similar processes will be used for beef, romaine lettuce, and bell peppers, (2) In the restaurant, lemons, limes, jalapenos, onions, and avocados will be blanched (plunged into boiling water before being submerged in ice water to stop cooking) for five to ten seconds before serving to reduce germs on their skins, (3) Employees who are sick or have vomited will be asked to stay home for five days after their symptoms have disappeared. Employees will be paid for those days, (4) Suppliers will run “DNA-based tests” on small batches of ingredients before shipping them to restaurants, and (5) A $10 million Local Grower initiative will be initiated to help small suppliers meet the new standards” (Walker & Merkley, 2017).

References

Banda, S., Sadler, E., Wise, B. & O’Rourke, J. S., (2016). Chipotle Mexican grill, Inc.: Supply chain in crisis (B). In SAGE Business Cases. 2020. 10.4135/9781526406798

Berfield, S. (2015). Inside Chipotle’s Contamination Crisis., https://www.bloomberg.com/features/2015-chipotle-food-safety-crisis/

Center for Food Safety and Applied Nutrition. (2016). FDA Investigates an Outbreak linked to Chipotle Mexican Grill. https://www.fda.gov/food/outbreaks-foodborne-illness/fda-investigates-multistate-outbreak-e-coli-o26-infections-linked-chipotle-mexican-grill-restaurants

Food Engineering, (2016). Two E. coli outbreaks in the last quarter of 2015. Food Engineering, 88(1), 13–14.

Hawley, H. B., M. D. (2019). E. Coli infection. Magill’s Medical Guide (Online Edition).

Jargon, J. (2015) Chipotle Grapples with E. coli Outbreak. Wall Street Journal, November 2015. http://www.wsj.com.ezproxy.umgc.edu/articles/chipotle-grapples-with-e-coli-outbreak-1446506975.

Pettersson, E. (2020). Chipotle to Pay $25 Million Criminal Fine for Food Poisoning. Bloomberg.Com, N.PAG.

U.S. Food and Drug Administration, (2016) Hazard Analysis Critical Control Point (HACCP). http://www.fda.gov/Food/GuidanceRegulation/HACCP.

Walker, R. & Merkley, G., (2017). Chipotle Mexican Grill: Food with Integrity? In SAGE Business Cases. 2020. 10.4135/9781526430663