How Cipotle Mexican Grill Made a Serious Mistake by Not Managing A Corporate Crisis.
As this article points out, Chipotle's sales have not rebounded significantly from the E. coli outbreak that caused many restaurants to close and negatively impacted the food chain's image and reputation. Two independent studies of Chipotle customers were recently undertaken and the results are far from encouraging.
Most recently, the Mexican food chain missed analysts’ expectations as it struggles to lure back customers following its E. coli outbreak last year. Chipotle reported earnings per share of 87 cents on revenue of $998.4 million. Its same-store sales plunged 23.6%.
This should not be surprising since Chipotle did not adequately address the crisis. Remaining silent and hoping the E. coli outbreak would eventually fade from customers' memories was not an effective way to manage a crisis...especially a potentially deadly one. It has also proven costly to the company.
Having a competent and effective Crisis Management Team in place before a crisis hits, is essential. Yet, many companies overlook the importance of having a well functioning CMT in place. Companies that have a CMT in place are better able to professionally and proactively address the issue facing them. These companies also tend to rebound faster than those that simply try to ignore the problem or allow the media to control the story.
Setting up a Crisis Management Team is not terribly difficult. Key members of corporate management should be on the CMT, as I pointed out in my article, "The Late Night Phone Call No CEO Ever Wants to Receive." This article lists the corporate department executives who should be on the team as well as their respective roles throughout the crisis.
It is possible, and plausible, that the personal problems of Chipotle's CMO were partly responsible for the company's lackluster response to the E. coli outbreak. But, it seems the company took little or no steps to have a CMT in place to begin with.
At present, Chipotle is offering coupons and discounted alcoholic beverages as an incentive to woo back customers. Apparently, the company cannot tell if these incentives are helping rebuild the business. The company is reportedly exploring the possibility of opening a number of burger restaurants, as they attempt to regain their footing. The scrambling to regain their footing is even extending to changes in the boardroom.
Much of this could have been avoided had corporate management prepared for this eventuality.
President and Founder, GPS Customer Strategies
7yVery good article. I took issue with one statement ("Setting up a Crisis Management Team is not terribly difficult") and offered an alternate view. "Why Crisis Management is Harder than it Looks" https://lnkd.in/dAvXAzC
Public Relations and Public Affairs Consultant
7yIt's not jus the plan that is important. Companies need to practice and drill for a crisis in order to identify -in advance-gaps in their crisis processes and in their communications.
Strategy | Finance | Retail & Supply Chain Professional
7yAlso b/c no root cause was ever identified.