Chipotle Grapples With E. Coli Outbreak
November 02 2015 - 07:30PM
Dow Jones News
An E. coli outbreak linked to Chipotle Mexican Grill Inc.
restaurants in two states is another setback for a company whose
long success marketing healthful fare has recently hit slower
growth and increased competition.
Nineteen people in Washington reported becoming sick after
eating at Chipotle, along with another three in Oregon, state
health authorities said on Saturday. No deaths had been reported,
but eight people were hospitalized.
The current outbreak follows a salmonella outbreak involving
tomatoes served at Chipotles in Minnesota in August and September
in which more than 60 people reported getting sick.
While the source of the contamination in the latest outbreak
hasn't yet been identified, some food-safety experts say the two
episodes point up the challenges facing purveyors of fresh food
like Chipotle, which has cultivated a loyal following based on its
use of preservative-free, locally grown fare. Although other large
restaurant chains have experienced foodborne-disease outbreaks,
companies whose menus comprise mostly fresh produce grown by
relatively small farmers may be more vulnerable, those experts
say.
"A company like McDonald's tends to work with large-scale
suppliers that have resources of their own to do the types of
assessments" that can detect dangerous pathogens, said Craig
Hedberg, professor of environmental health sciences at the
University of Minnesota School of Public Health. "But if you're
working with small, independent farmers, it requires a lot of
effort to validate them."
Chipotle has acknowledged in regulatory filings that it could
face higher risk of foodborne illnesses because of its use of fresh
produce and meats from multiple suppliers cooked with traditional
methods rather than automation.
The advantage for a company like Chipotle, which says it sources
some ingredients from fields within 350 miles of its restaurants,
is that any outbreaks that do occur can potentially be contained to
a relatively small area. As of Monday, eight restaurants in the
Seattle and Portland areas had been implicated in the E. coli
outbreak, though Chipotle said it closed all 43 restaurants in
those markets out of an "abundance of caution." The salmonella
outbreak in Minnesota involved 27 restaurants there, plus one in
Wisconsin. Chipotle has approximately 1,900 restaurants
nationwide.
Other chains have faced bigger outbreaks. An E. coli outbreak at
Jack in the Box in 1993 sickened more than 700 people and killed
four who ate contaminated hamburger patties at 73 restaurants in
four states. More than 70 people in four states reported becoming
ill after eating E. coli-contaminated lettuce served at Yum Brands
Inc.'s Taco Bell restaurants in 2006.
Large restaurant chains including McDonald's Corp., Taco Bell,
and Subway have been announcing plans to remove artificial
ingredients. As more restaurant and food companies remove
preservatives from their products, foodborne illnesses may become
more common, said Michael Doyle, director of the Center for Food
Safety at the University of Georgia.
Mr. Doyle said he's noticed an increase in packaged-food recalls
involving products that don't contain preservatives such as
benzoate and sorbate, which can control the growth of harmful
bacteria including botulism and salmonella.
"The more we as consumers demand fresh foods that contain less
preservatives, the greater the potential risk of harmful microbes
being present," Mr. Doyle said.
The move away from artificial ingredients and toward more fresh
produce has been at least partly influenced by Chipotle, whose
sales and stock price soared for years on its wholesome image. As
rivals have begun emulating Chipotle, though, the burrito chain's
sales growth has slowed.
Shares of Chipotle fell 2.5% to $624 on Monday.
If the E. coli outbreak remains relatively restricted and the
restaurants don't stay closed for long, analysts say Chipotle's
business likely won't suffer too much from the episode. The
restaurants Chipotle closed account for just 2.2% of its total.
"Foodborne outbreaks are not unusual for the fast-food restaurant
industry and the impact of previous incidences has proven fleeting
for restaurants generally and Chipotle specifically," Sanford
Bernstein analyst Sara Senatore said in a note to investors.
Still, repeated incidents could dent Chipotle's image. The
company in August also had an outbreak of norovirus sicken 80
customers and 13 employees in Southern California. A Chipotle
spokesman said that incident wasn't tied to food but that the cause
wasn't determined.
After the salmonella cases were reported in Minnesota, Chipotle
switched tomato suppliers. A Minnesota health department spokesman
said the investigation into the source of those tomatoes is
ongoing.
Write to Julie Jargon at julie.jargon@wsj.com
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(END) Dow Jones Newswires
November 02, 2015 19:15 ET (00:15 GMT)
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