Chipotle Will Have A Tough Time Bouncing Back From Recent Woes

| by Nicholas Roberts
Inside a Chipotle restaurantInside a Chipotle restaurant

Every Chipotle restaurant around the United States closed temporarily on Feb. 8 so that managers could get their employees caught up with the horrendous food poisoning scandals which took place in several states, and to introduce new food safety measures.

The health scare at Chipotle's restaurant led to financial and legal woes for the company.  After trading at record highs in 2015, the company's stock price has plummeted by around 40 percent and the company is currently under federal criminal investigation, Wired reports.

The combination of events, along with the resources which the company will need to address them, raises the question of whether or not Chipotle is going to be a viable company in the long term.

Chipotle desperately needs to win back the trust of customers.  Same-store sales have plummeted since the outbreak of norovirus in 13 different states, and the restaurant is already known for its not-so-cheap menu pricing.

The company's first plan to win back customers is simple: free burritos.  The company will send out mobile coupons to customers who text "raincheck" to 888-222, according to Wired.  While this will definitely get some customers back into restaurants, it's hard to imagine it converting everyone; there will surely still be those who'll never return for fear of tainted food.

The other move Chipotle has announced -- this one in order to prevent the same kind of outbreak in the future -- is a $10 million investment in the company's suppliers and farms in order to make sure they can meet and afford the company's food safety requirements.  The company hopes it will minimize risks in its supply chain which may have led to the outbreaks. They no longer dice tomatoes in-house, either, says CNBC. 

When examining these plans, one may notice a trend: Regardless of stock-price plummets, the company is forced to spend more money on legal battles, while at the same time trying to woo customers back in with free food, not to mention spending more money to make sure its suppliers are up to speed with the company's standards.  All of that adds up to a lot of money spent in the short-term, with an unclear vision of what the future holds for the restaurant chain.

Whatever the outcome, Chipotle has a long slog ahead.  Another outbreak may devastate the company altogether, as it would erode any trust that still exists following recent incidents, forcing more spending in a second attempt to save itself.

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Sources: Wired, CNBC / Photo Credit: Wikimedia Commons

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