4 Things Chipotle Mexican Grill Wants You to Know About Its Latest Norovirus Incident

Markets Motley Fool

If you're a customer of Chipotle Mexican Grill (NYSE: CMG) or an owner of its stock, then the company's executives have some things they want you to know about its latest food-safety incident. CEO Steve Ells and his executive team made four points, in particular, on a recent conference call with stock-market analysts that cut to the heart of its response.

Continue Reading Below

1. Cause of latest norovirus incident

There's been a lot of speculation of late about what may have caused the most recent norovirus outbreak at one of Chipotle's locations in Virginia, with commentators suggesting that it could have been caused by short-sellers or adversaries in the food industry. Not so, says Ells.

The incident was, instead, the result of a failure in the restaurant to comply with the company's procedures used to prevent norovirus. "We conducted a thorough investigation, and it revealed that our leadership there didn't strictly adhere to our company protocols," explained Ells. "We believe someone was working while sick."

Ells went on to say that "we took swift action and made it clear to the entire company that we have a zero-tolerance policy for not following these protocols."

2. Focus on customer experience

Continue Reading Below

A broader lesson that Chipotle has taken away from its troubles of late is that it needed to double down on improving the customer experience. "We were focused too much on building cultures that didn't drive the results we were expecting and too little on the operations fundamentals required to deliver an exceptional guest experience," said Ells.

In response, Ells has promised to "dramatically improve" the customer experience throughout its restaurants. He went on to explain:

This include[s] a new measurement and bonus system that rewards our managers and teams on a handful of easy to understand metrics, the majority of which are customer satisfaction oriented. We have increased the number of restaurants meeting our high operational standards, and have reduced general manager turnover. We have also recently implemented a new guest satisfaction survey, and are intensely focused on steadily improving our scores.

3. Strengthened leadership team

In addition to hiring a food-safety expert, Chipotle took another step last quarter to buttress its executive team, hiring a former Arby's executive, Scott Boatwright, to be the company's first-ever chief restaurant officer.

"Scott has a very strong vision for creating a compelling guest experience and he's already demonstrated that his expertise will dramatically improve operations inside our restaurants," Ells explained. "All our field leaders now report directly up to Scott and we are confident that we will continue to see strengthened operations in our restaurants under his leadership."

4. Comprehensive food-safety program

Last but not least, Chipotle wants customers and investors to know that it has spent the past year developing a robust food-safety program. The steps it has taken include, among other things:

  • Creating a new executive-level position to ensure food safety.
  • Forming an independent food-safety advisory council comprised of the nation's leading food-safety experts to oversee and advise on food-safety practices.
  • Implementing a HACCP food-safety program in all of its restaurants. The acronym stands for Hazard Analysis and Critical Control Point, and Chipotle claims to be the only major restaurant company to have such a program.
  • Implementing a third-party food-safety auditing system.
  • Requiring all managers to earn a rigorous food-safety certification.

The net results of these changes, says Ells, is that Chipotle now has one of the most advanced food-safety programs in the industry.

10 stocks we like better than Chipotle Mexican Grill
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the 10 best stocks for investors to buy right now... and Chipotle Mexican Grill wasn't one of them! That's right -- they think these 10 stocks are even better buys.

Click here to learn about these picks!

*Stock Advisor returns as of July 6, 2017

John Maxfield owns shares of Chipotle Mexican Grill. The Motley Fool owns shares of and recommends Chipotle Mexican Grill. The Motley Fool has a disclosure policy.