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Can Chipotle Recover From Food Safety, Drug Scandals?

Chipotle has had a rough year.  After an E. coli outbreak in 2015 that affected hundreds of customers in different states, the company has been punished with a double-digit stock price fall.

The circumstances forced a rethink about the company's marketing strategy, with the restaurant chain ultimately deciding to pursue a temporary loyalty plan that rewards frequent customers with free food, according to The New York Times.  This was slated to begin on July 1.

But then something else happened: Mark Crumpacker, the company's creative and development executive, was charged with drug possession and was later named as a frequent purchaser of cocaine from a New York delivery service.

This has prompted worries that competitors will try to knock Chipotle off the pedestal of "fast casual" dining, such as Moe's Southwest Grill or the NYC-based Dos Toros Taqueria, which have both released advertisements at certain stores that seem to make reference to Chipotle's increasingly spotty reputation for food safety.

Trade publications are also unsure about Chipotle's future. "The investment community is highly skeptical at the moment," said Nation's Restaurant News editor Jonathan Maze.

Chipotle is trying other ways to try to get customers to come again in larger numbers.  This includes adding chorizo sausage to its menu and the creation of a short animated film titled "A Love Story." The short movie depicts two entrepreneurs who set up rival juice stands and get caught up in a competition, which leads each of them to degrade the quality of their offerings with cheaper and worse ingredients.

Fast casual dining, once seen as a major growth area in the restaurant industry, has begun to attract a more skeptical look as a whole in recent months.

"Investors were just throwing money at these companies, and it’s now really very much a ‘show-me story’ when it comes to fast casual chains," according to Maze.

Sources: The New York Times, The Denver Post / Photo credit: Chipotle/Facebook

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