Chipotle Eats Itself

[Ubiquitous]

Chipotle Mexican Grill was a sizzling business with a red-hot stock
until an E. coli outbreak derailed its future. Can a mission-based
company make gobs of money and still save the world?

Chipotle’s annual shareholder meeting on May 11 was set to be a
doozy. Angry activists and investors were poised to unload on the
restaurant chain’s co-CEOs, Steve Ells and Monty Moran.

Just two weeks prior, Chipotle had reported a $26.4 million
quarterly loss—its first in a decade as a public company—following a
high-profile E. coli outbreak and several subsequent food-safety
incidents. Nearly one-third of restaurant sales had disappeared, and
the stock had sunk by 30%. An attempt to shake up the company’s
board of directors was almost certain, reports said. Its "failures,"
as one major investment adviser had phrased it, "damaged the brand
and erased billions in shareowner value." Ten billion dollars since
its peak, to be precise.








I arrive at Denver’s Grand Hyatt hotel shortly before 8 a.m. The
meeting space, a windowless conference room, is surprisingly small
and awkwardly intimate, with just three rows of nine chairs facing a
cloth-draped table. Apparently, this is standard for Chipotle’s
annual meetings, as is the fact that the proceedings are closed to
the press. (I find my way inside by showing that a mutual fund in my
401(k) includes Chipotle shares.) As board member Kimbal Musk
strides to the front row, he surveys the tiny room and jokes to
another director about how this setting pales in comparison to the
elaborate events that his brother, Elon, throws for Tesla’s
shareholder meetings.



Chipotle Eats Itself: A Special Report

Chapter 1:
The Outbreak
Chapter 2:
Fresh Troubles
Chapter 3:
Panic In The Kitchen
Chapter 4:
A Marketer's Dilemma
Chapter 5:
Farm-To-Table Casualties
Chapter 6:
"Smoke And Mirrors"
Chapter 7:
Is This Classic Cooking?
Chapter 8:
People Who Matter
Chapter 9:
The Reckoning

Ells and Moran march in minutes later and take their seats at the
table. "Good morning," Ells says, coffee in hand. Moran quickly runs
through the agenda and other formalities. He soon opens the floor to
questions. One of Chipotle’s harshest critics, CtW Investment
Group’s Michael Pryce-Jones, stands and berates the company’s CEOs
for nearly two minutes. "You’ve gone from a beloved brand to one
that’s been unprecedentedly abandoned," he scolds. Comparing their
recent blunders with Volkswagen’s emissions scandal and BP’s
Deepwater Horizon oil spill, he implores the board to "seriously
consider resignations."

The two CEOs remain stone-faced. Moran replies, "I think the best
plan of action for us at this point is to focus like a laser on the
things that have made Chipotle so popular over the years, most
notably running terrific restaurants with great food and great
customer service." He tries to move on to another question, but
Pryce-Jones interjects to press his case again. Moran shoots him a
grave look and cuts him off, saying: "That’s the answer."

The tongue-lashings continue. A codirector of the Food Chain Workers
Alliance, an advocacy group for restaurant-industry and supply
laborers, calls Chipotle’s leadership "nonresponsive" and demands
better treatment of the people who provide its food. There are
complaints about executive salaries—Ells and Moran together took
home $57 million in compensation in 2014, more than the total pay
packages of the CEOs of Apple, McDonald’s, Nike, and Goldman Sachs
combined—and the lack of diversity among its directors. Chipotle’s
board is all-white, with a median tenure of 17 years.




Many of these appeals are not new. Some of the people here are
perennials at Chipotle meetings, arguing similar agenda points year
after year. Today, though, they’re delivered with renewed vigor—as
if this time, after all it has been through, maybe Chipotle will
finally listen.








After 37 minutes, Ells ends the meeting. No one resigns. There are
no changes to the board. Most votes had already been cast before the
meeting, and the majority of investors supported management’s
wishes. The only victory for dissatisfied shareholders? A resolution
that will give anyone who owns at least 3% of the company’s stock
the ability to nominate their own candidates to the board.

As I watch Ells smile for a photo (with one happy shareholder in
attendance) before he makes a hasty exit, there’s a sense that
Chipotle management just went through the motions at this meeting.
They certainly haven’t used the opportunity to try to win back
former supporters.

For years, enlightened restaurant-goers, shocked and horrified by
Fast Food Nation, pink slime, and the evils of Big Food, have felt
an almost religious pull to Chipotle’s "Food With Integrity"
mission—its commitment to fresh ingredients, ethical sourcing, and
disrupting the fast-food model—as if eating at a Chipotle could
nourish your soul as well as your body. The company grew from a
single storefront in Denver in 1993 to around 2,000 locations,
becoming the envy of the industry for its premium ethos (and
pricing), as well as innovations like its theatrical-yet-efficient
assembly-line service. Chipotle became a go-go growth stock. If you
had bought 100 shares at Chipotle’s 2006 IPO price, it would have
cost $2,200; by the time the stock peaked in 2015, just before the
outbreaks, that stake would have been worth $75,700, a 3,340%
increase.

The E. coli bacterial outbreak, which became national news as
reports of sickened individuals streamed in during the fall of 2015,
shattered everything. It wrought devastation far beyond the 60
people who fell ill. (Norovirus and salmonella incidents bookended
the E. coli poisonings and ultimately brought the total number of
customers affected to 500 people across 14 states, but Chipotle
feels those episodes were isolated cases.) An average Chipotle
serves 60 customers in 30 minutes. On any given day before the
crisis, Chipotle serviced the equivalent of the population of
Philadelphia. No one knows definitively which ingredients may have
been the culprit. But each burrito includes one ounce of romaine
lettuce. So, if those leafy greens carried the bacteria, that means
about five $2.50 heads of grocery-store lettuce erased more than $10
billion in market cap. Or if cilantro was the source, then about as
many cups of it as you’d find in a cookout-size batch of guacamole.

When a listeria outbreak caused by Dole’s packaged salads was linked
to four deaths last year, the public outcry was not nearly as
intense or sustained (despite an ongoing federal investigation).
When Tesla reported its first driver fatality while using its
Autopilot feature last June, it didn’t affect the company’s stock
price at all. Why were these deaths only blips for Dole’s and
Tesla’s reputations? By contrast, Chipotle spent a year in hell even
though no one died—and more than 265,000 Americans get sick annually
from illnesses linked to E. coli.

It’s understandable, perhaps, that some Chipotle insiders feel the
company has been unfairly judged—by health regulators, the media,
and its own customers. Yet Chipotle has had no choice but to grapple
with the reality that its prestige status has evaporated. And there
is no obvious road map for gaining it back.

Despite Ells and Moran’s posture in the shareholder meeting, this
crisis has rocked their faith. "Steve and I live for this company.
We are deeply about our mission," Moran says when we meet in late
June. "For something like this to happen shook the foundations of
our confidence... it causes one to question one’s leadership."








I spent seven months following the company’s efforts at recovery.
The journey took me from rural farms to industrial kitchens, from
the hotbeds of Chipotle’s outbreaks in Massachusetts to its fan
festival in Arizona, from a summit of food-safety experts in
Illinois to the company’s corporate offices in Colorado and New
York. I talked to scores of restaurant employees—and I ate more
burritos than I can count (never once getting sick). I interviewed
the co-CEOs, other top executives, current and former employees,
suppliers, and food-industry partners, and I reviewed more than
1,000 pages of internal documents. The story that emerges from all
this is provocative and unexpected, a tale of optimism, hubris, bad
luck, and missed opportunity.

Chipotle has said it won’t be satisfied until it’s regained all of
its lost sales and resumed its momentum. It has pledged to continue
to refashion the food system. As a longtime customer, I want to
believe them. Everyone wants to believe them. But as I learned,
what’s ailing Chipotle is more pervasive and insidious than any
foodborne illness. For Chipotle to win back all it has lost will
require a soul-cleansing broader than perhaps even Ells and Moran
realize.





An early E. coli victim gets a call from a health official: "Did you
say Chipotle?"
[Illustrations: Nicole Rifkin]

Chapter 1: The Outbreak

Searching for the culprit.

On October 19, 2015, Jared Hines, a 21-year-old college senior, went
to a Chipotle restaurant near downtown Seattle for dinner. He
ordered a chicken burrito with white cilantro-lime rice, black and
pinto beans, pico de gallo, corn salsa, cheese, and lettuce. He
scarfed it down and thought nothing more of it.

Four days later, pain seized his 6-foot-3, 160-pound body. A 101-
degree fever. Vomiting. Diarrhea. Then things got worse: "I had
blood pouring out of me from every orifice," he tells me.

His parents rushed him to the hospital, where doctors, assuming he
was reacting to a recent bout of mononucleosis, prescribed
antibiotics.

Hines remembers coming to in a hospital bed days later, surrounded
by his parents, his girlfriend, and a doctor who explained that he
was "rotting from the inside." Hines had contracted a strain of E.
coli, known as 026, which was spewing a harmful toxin into his body
and essentially shutting down his internal organs. The antibiotics
he’d been prescribed likely accelerated the toxin’s release. His
weight had dropped to 145 pounds. Kidney failure, even death, were
very real possibilities, the doctor said.









"It all caught us off guard," says co-CEO Steve Ells. "Nothing like
this had happened. The magnitude..."

A nurse arrived soon after to hand Hines a telephone. It was a local
health official asking where and what he had been eating. Hines,
still frail and depleted, wracked his brain to list off recent meals
and restaurants. Then the voice on the line perked up. "Did you say
Chipotle? We need you to remember your order right now."

Chipotle executives say they learned of the first E. coli cases from
health authorities on October 30. Soon, dozens of people showing
symptoms of E. coli poisoning were linked to eight restaurants in
Washington and Oregon. Because the company serves 1.5 million
customers per day across the country, they quickly realized that if
the outbreak was more widespread, it could be catastrophic. "It was
really frightening," says Moran, who remembers thinking, "My
goodness... was [this] really us?" Recalls Ells, "It all caught us
off guard. Nothing like this had happened. The magnitude..."

Over Halloween weekend, Moran and Ells made the decision to shut
down 43 restaurants in the Pacific Northwest in an effort to contain
the outbreak. Chipotle’s stock price, which had hit $757 just weeks
earlier but had been showing volatility surrounding a weak fall
earnings quarter, slid to $624 on Monday, November 2.

The company scrambled to get ahead of the crisis. It brought in
food-safety scientist Mansour Samadpour, who runs a Seattle-based
consultancy. He helped the company eventually run thousands of tests
on Chipotle’s food, searching for indicators that it had been
contaminated. Moran himself took Samadpour on dozens of unannounced
restaurant visits around the country to examine operations. "It was
just all hands on deck," says Chipotle CFO Jack Hartung.

To some restaurant workers, it felt like chaos. One manager recalls
receiving urgent word one day from superiors that their cilantro was
contaminated. "They told us not to put cilantro on anything and
throw it all away, in all the restaurants," this source says. "Then,
an hour later, they’re like, ‘False alarm! No need to do that.’"





Boxes of meat sit on a table inside a Chipotle Mexican Grill
restaurant on November 3, 2015 in Vancouver, Washington, one of the
stores closed in the Pacific Northwest in the immediate wake of an
E. coli outbreak. [Photo: Steve Dykes/Stringer/Getty Images]

Throughout November and December, Chipotle says its testing found no
traces of E. coli 026 within the restaurants or its food. Because
the bacteria’s effects are delayed, the tainted food was likely
already gone from Chipotle’s system not long after the first
illnesses were reported. To an audience of investors, Chipotle
blamed the Centers for Disease Control and Prevention (CDC) for
stirring up public alarm about an issue it felt was contained. "[The
panic has] been fueled by the sort of unusual and even unorthodox
way the CDC has chosen to announce cases related to the original
outbreak in the Northwest," Moran told attendees of the Sanford C.
Bernstein Consumer Summit on December 8. "They’re not announcing new
cases. They’re just simply announcing new reporting to them from
local health agencies." A CDC spokesperson says that this is
standard practice.

Chipotle says that not a single employee was infected, which led to
watercooler talk of Chipotle being a victim of corporate sabotage.
Many sources, even respected luminaries in the food industry, have
suggested to me that Monsanto, the agribusiness biotech giant that
became a target of Chipotle’s vociferous stance against genetically
modified foods, could have somehow engineered this crisis. (Ells has
dismissed this to colleagues in private as a "conspiracy theory." A
Monsanto spokesperson says, "There’s a lot of misinformation about
Monsanto online, and this conspiracy theory is an example of that.")








Both Chipotle’s and the CDC’s investigations were further
complicated by their struggle to isolate ingredients within the
meals that victims ate. Many of Chipotle’s menu offerings contain
the same ingredients and are often prepared in small kitchens, so
cross-contamination was likely. "The problem is you can’t find
someone who didn’t also eat the beef, or didn’t also eat the
lettuce," explains a senior CDC official. "The case went cold."



FoodLogiQ and The Companies Trying To Track Everything We Eat, From
Seed To Stomach


A big data approach to supply chain transparency could cut costs
and prevent another Chipotle-like outbreak. But the data doesn't
come cheap.
Years earlier, Chipotle had announced a partnership with a company
that makes a food traceability program, designed to assist with
exactly this type of investigation. The provider, FoodLogiQ,
purported that its software offered "real-time visibility of food"
at every point in the supply chain, akin to how a consumer can track
an Amazon package online. A 2014 case study of the Chipotle–
FoodLogiQ deal even touted how the system could locate the origin of
spoiled food within minutes. Despite these claims, Chipotle never
got around to implementing FoodLogiQ at its restaurants. (Chipotle
spokesperson Chris Arnold says the FoodLogiQ installation was a
multiyear process, which was on track and has since been completed;
he says its partial implementation did not impede the company’s
investigation.)

The CDC concluded its investigation February 1, declaring that the
"outbreaks appear to be over." It did not publicly identify a cause.
According to sources familiar with the inquiries, Chipotle narrowed
its focus to a select few items, including onions, cilantro, and the
beef it imports from Australia. Ells declines to share his theories
on what spread the E. coli. "It would be irresponsible for me to say
what thing might have caused it because we can’t say definitively,"
he explains. "Having a very scientific analysis of this is different
from having an opinion of what it might be."

But that didn’t mean Chipotle could afford to sit by and call the
outbreaks a fluke. With no single culprit, its entire food-prep
process came under scrutiny.





Chipotle relies on 60,000 mostly low-wage workers to properly
sanitize, dice, and cook ingredients, but turnover is high. "By the
time someone learns how to handle a knife and not stick their hand
in their ass before handling food, they have left," says one source.

Chapter 2: Fresh Troubles

Simplicity under the microscope.

Ells’s vision for Chipotle always prioritized fresh ingredients and
preparation. "When I created Chipotle in 1993," he has said, "I had
a very simple idea: Offer a simple menu of great food prepared fresh
each day, using many of the same cooking techniques as gourmet
restaurants. Then serve the food quickly." Walk into any Chipotle
and you’ll see that model humming. As many as 16 employees will be
staffing the line and kitchen. Customers queue up, sometimes
hundreds per hour, and choose among four meal items—burritos,
burrito bowls, tacos, and salads—and sides, all made from just 64
ingredients. (By contrast, a Big Mac alone contains more than 70.)




Ells, an epicurean who worked in the early 1990s under legendary
chef Jeremiah Tower, not only obsessed over culinary craft—he claims
he can tell the temperature of a Chipotle grill simply by eyeing the
smoke rising from it—but also every aspect of his customer
experience. Despite his slight build and introverted personality,
Ells can be demanding in his pursuit of exactitude and, according to
former colleagues, prone to Gordon Ramsay–esque outbursts. Once, on
a restaurant visit, Ells lost his cool when he heard how much racket
a set of new stools was making when dragged against the floor.
"They’re too damn noisy!" he yelled at his team, according to two
sources. "I never want to see one of these stools again!" It didn’t
matter that he’d approved their design, or that they’d already been
shipped to around 50 stores. (Arnold, the Chipotle spokesperson,
says, "I am not aware of this incident.")








As Chipotle has grown, its operation has evolved to be anything but
simple. The company purchases 185 million pounds of what it
considers responsibly raised beef, pork, and chicken annually. The
raw meat it prepares at its restaurants—as opposed to the highly
processed, often-frozen goods that other fast-food outlets serve—
must be handled and cooked properly, or else potentially harmful
pathogens will blossom. Much of Chipotle’s produce has traditionally
been prepared at its stores too. "We would go through millions of
pounds of cilantro! That’s such a dangerous item—so many nooks and
crannies where E. coli can hide," says one former Chipotle supply-
chain executive. "As much fresh produce as they deal with"—Chipotle
goes through more than 200,000 pounds of avocados daily—"in
retrospect, I can’t believe somebody didn’t raise a red flag. Did
their volume catch up to them?"

Before the crisis, the chain had relied on 60,000 mostly low-wage
workers (the average hourly pay is $10 per hour) to properly
sanitize, dice, and cook ingredients such as lettuce, avocados,
tomatoes, as well as raw chicken and steak. Chipotle has an annual
turnover rate of 130%, meaning the average store will replace its
entire head count at least once per year. "By the time someone
learns how to handle a knife and not stick their hand in their ass
before handling food, they have left," says a source familiar with
Chipotle’s food-safety program. Now consider that Chipotle opens
more than 200 new restaurants annually, or the equivalent of about
one every 48 hours. It once hired 4,000 new employees in a single
day.

Because of Ells’s high standards and insistence upon preparing pork
and some beef through time-consuming techniques such as braising,
Chipotle has had to employ the same third-party, industrial-scale
"central kitchens" that work with fast-food giants such as
McDonald’s and Subway. The term is sort of a euphemism Chipotle uses
for these outside partners, which help the company handle,
distribute, and even source some of its ingredients.

Before the E. coli outbreak, multiple sources tell me that this
blended operation—centralized and in-restaurant kitchens, with food
from scores of global suppliers being shipped to both—had just four
people assigned to quality assurance (QA), a low number for a chain
of Chipotle’s scale and complexity. (Arnold confirms this figure,
but says the team was "strengthened" with additional hires after
February 2016.) "The way the supply chain was set up, they had
hundreds of [suppliers] that were funneling in [raw meat and fresh
produce]," says one former analyst at the company, who now works for
a chain much smaller than Chipotle but with a QA team that’s twice
its size. "There is no way a team that small could properly manage
all the food coming into that system."

The kitchen theatrics that Ells has deftly used to promote his
food’s freshness to customers—the sizzling plancha, the tortilla
grill—obscured that it was less safe than conventional fast food.
The company had disclosed this fact to investors long before the
crisis. In its 2013 and 2014 annual reports, it acknowledged: "We
may be at a higher risk for foodborne-illness outbreaks than some
competitors due to our use of fresh produce and meats rather than
frozen, and our reliance on employees cooking with traditional
methods rather than automation."





With customers fleeing, Chipotle’s executives prioritized safety at
the expense of its food and service. "Customers thought we went to
iceberg lettuce," Moran says. "That broke our hearts."

Chapter 3: Panic In The Kitchen

Reactions, overreactions, and playing the blame game.

ln the months following the crisis, the company, advised by
Samadpour and also Dave Theno, the food-safety expert often credited
with saving Jack in the Box after its 1993 E. coli crisis, set about
overhauling Chipotle’s approach to food safety. But how would it
make improvements without resorting to automation like its rivals?
"If food is processed—like canned or frozen—you can reduce the risks
of pathogens," Ells tells me. Chipotle didn’t want to do that.








With customers fleeing (and some who remained, joking, "Can I have
my burrito without E. coli?"), Chipotle’s executives prioritized
safety at the expense of its food and service. "There was no
balance," Moran says, in reference to the company’s quick decision
to outsource some items to its central kitchens that it had long
prepared fresh in its restaurants. When I mention Moran’s comment to
Ells, he says, "We didn’t have a choice."

Samadpour assisted Chipotle in instituting a food-safety program
designed to keep pathogens out of the food chain altogether. It
included what Chipotle called "high-resolution DNA-based testing."
Chipotle evaluated samples of, say, raw beef for genetic markers
that it might be unsafe. For every 2,000 pounds of meat that went
through its system, Chipotle’s suppliers would take 60 subsamples,
at around six grams each, and send them to a lab for review. If they
passed this quality test—each of which cost roughly $35 and took
around 24 hours to complete—the meat would be routed to Chipotle’s
restaurants. For produce, this meant the preparation of ingredients
such as tomatoes, lettuce, and bell peppers had to be moved to
central kitchens, where they would be precut and washed, sampled for
testing, and "put in bags so they were ready to use [once shipped to
restaurants]," Moran says.

During this period, the company still relied on its Daily Food
Safety Checklist, a large document that predated the outbreaks,
which the company sent to restaurant managers. In a letter included
on the second page of the document, Moran said he expected managers
to fill it out "correctly and accurately every day." Moran, who has
been friends with Ells since Boulder High School and joined him at
the nearby University of Colorado, is a handsome and charismatic
outdoorsman with a firm handshake—"Mr. America," as one former
employee phrases it. After graduating from law school, he rose to
become the head of the Denver-based law firm Messner Reeves LLP in
his thirties before joining Chipotle, where he brings an attorney’s
focus on detail to these types of internal employee guides.





Monty Moran's prefatory letter in the Daily Food Safety Checklist
(inset) distributed to stores.

Following the outbreak, there was renewed emphasis on the
checklist’s requirements, such as hourly hand-washing in 100-degree
water for 20 seconds ("sing ‘Happy Birthday’ twice," the
instructions read) and crew audits, which entailed asking all
employees whether they showed symptoms of illness, including
vomiting or diarrhea. Additionally, the company now tasked general
managers with completing food-temperature logs every hour—that is,
ensuring the chicken and beans are properly cooked to an internal
temperature of 165 degrees. "All we did [after the outbreak] was
take temperatures," a former general manager bemoans.

Area managers, meanwhile, now had to conduct their own food-safety
audits weekly rather than every 45 days. In an email to managers
chastising them for not submitting their audits on time, Mike Duffy
and Gretchen Selfridge, who effectively act as co-COOs for all of
the company’s restaurants, wrote that "your only job right now is to
ensure all new procedures and food-safety practices are being
executed 100% of the time in 100% of your restaurants." With so much
time spent focused on these audits, one former restaurant manager
says, "Attention to service took a back seat and it became more
about how we protect ourselves from further incidents."

In spite of these measures, in early December, another outbreak hit
a restaurant, in Brighton, Massachusetts, near Boston College. Early
reports suggested E. coli poisoning may have been to blame, but it
turned out to be norovirus. (The outbreak ultimately infected 143
people.) Shortly thereafter, the CDC announced that five more people
had been infected with E. coli "and appear to be linked" to Chipotle
stores in Kansas, North Dakota, and Oklahoma. Although these cases
were unrelated to the larger E. coli incidents that initiated the
crisis, all consumers heard was that eating at Chipotle will make
you sick. The reports snowballed to create "the impression that, ‘Oh
man, this keeps happening,’?" Moran says. Same-store sales dropped
14.6% for the quarter versus this same period the previous year.




Chipotle's full-page newspaper ads in December 2015 tried to mollify
customers.

Executives blamed the press for fanning the controversy: Moran told
Wall Street analysts at the Bernstein conference, "Because the media
likes to write sensational headlines, we’ll probably see when
somebody sneezes that they’re going to say, ‘Ah, it’s E. coli from
Chipotle’ for a little bit of time. And so that’s unfortunate." In
an effort to reassure the public, the company took out full-page ads
in 61 newspapers to apologize and highlight new safety precautions,
including the company’s ongoing implementation of high-resolution
testing. Ells appeared on NBC’s Today show on December 10, where
host Matt Lauer grilled him about whether the chain had grown too
fast and "couldn’t keep control of things like sourcing and quality
control." Ells denied that was the case. "If you look at the quality
of our ingredients over time, we’ve made great strides in sourcing
better-quality food, meats without antibiotics or growth hormones,
more organics, more local and sustainably raised foods," he said.
"I’m deeply sorry this happened, but the procedures we’re putting in
place today are so above industry norms that we are going to be the
safest place to eat."








In January, not long before Chipotle’s stock dropped below $400, the
company sent managers a new "Food Safety Rollout Guide" to highlight
the changes that would be phased into Chipotle’s supply chain. The
week of January 4, the guide said, fresh oregano would be replaced
with a dried alternative. On January 11, the company introduced
blanching of produce: Chipotle’s lemons, limes, onions, avocados,
and jalapeños would now be plopped into 185-degree water for five
seconds—a so-called kill step that eliminates pathogens. By January
16, bags of the precut lettuce and bell peppers, now chopped at
central kitchens with samples tested in laboratories, arrived at all
Chipotle restaurants.

Internally, however, Ells and Moran soon began doubting the very
food-safety practices they were touting, namely the high-resolution
testing. They tell me that the taste of the lettuce and bell peppers
suffered markedly due to being prepared off-site. "The quality
wasn’t what it was," Moran says. "Customers thought we went to
iceberg lettuce. That broke our hearts."

Some involved with the company also felt the mechanics of adopting
the sampling regimen were too daunting. "We were practically testing
every piece of meat that came into the door!" recalls Chuck Nalon,
president of Ed Miniat, one of Chipotle’s largest centralized
kitchens. "We knew, and they did too, that this wasn’t our future."



In the short term, the high-resolution testing enabled the company
to better profile whether its suppliers were exhibiting acceptable
levels of bacterial control. This testing rejected a significant
amount of food in the company's supply chain, which resulted in the
suspension of a few suppliers. Chipotle confirms these actions.

When I ask Arnold whether the high-resolution testing revealed any
dangerous pathogens—such as, say, E. coli 026—at its suppliers, he
clarifies via email, "High-resolution testing doesn’t identify
pathogens." According to three food-safety experts, high-resolution
testing is capable of identifying specific pathogens; Chipotle,
however, implemented a system with a faster turnaround time that was
essentially a pass-fail version of this test. If a batch of beef
failed to pass Chipotle’s quality standards, the company only knew
that it failed, but not why. "[Faster testing] does make a
difference when you have fresh products," says one outside food-
safety expert who spoke only on the condition of anonymity. "You
don’t want it to go bad waiting around for the perfect test result."

According to two sources, one of the other upsides of Chipotle’s
pass-fail system was that it came with a different disclosure
requirement. "If you are preparing produce at the central-kitchen
level and you do a test whereby you determine the presence of...
salmonella or E. coli 026 or 0157, you are legally required to
report that to the FDA," says one industry expert who works with
Chipotle. Arnold affirms this distinction, and acknowledges the
pass-fail system did not require regulatory notifications, but he
stresses, "Did we select the high-resolution [pass-fail] testing
because of its lack of regulatory triggers? No."


"People took pride in cutting bell peppers and lettuce," says a
former general manager. "When we took that away, morale started
getting lower."

In early February, Ells and Moran hired Jim Marsden, a Kansas State
University meat scientist, as the company’s new executive director
of food safety. Marsden eventually rolled back Samadpour’s high-
resolution DNA-based testing. "I don’t think Steve or Monty or
anyone else had the slightest idea what the difference was [between
pass-fail and specific-pathogen testing]," Marsden says. "It sounds
all scientific—the word DNA sounds good. I think they just took the
recommendation from the consultant [Samadpour]." (Samadpour says he
cannot comment on this particular situation but generally disagrees
with Marsden’s assessment. "The testing method and choices of other
test systems are always discussed with clients, and they get to
choose which approach is the best for them," he explains.)








Marsden started shifting Chipotle’s focus to "interventions," safety
measures that assume contaminated food could sneak into the supply
chain. This approach involves instituting a series of kill steps to
prevent pathogens from reaching your fork. Samadpour had already
introduced produce blanching; Marsden set about exploring additional
safeguards.

Central kitchens took over precooking steak in March. It would now
be reheated at the restaurants. The company considered having its
chicken, which constitutes 55% of sales, precooked at these outside
facilities but concluded it wasn’t logistically feasible.

Some observers wondered if the company was overreacting, given that
it didn’t even know what caused the E. coli outbreak. Marsden,
though, saw this moment as a fresh start. "The opportunity is that
we fix everything—go through the entire list of ingredients and food
products and address all the possible vectors of contamination," he
says.

All the changes alarmed many employees. On a practical level, if
more preparation was happening in central kitchens, some feared
their labor would no longer be needed. They were not wrong. "We
started cutting their hours," says a former general manager. "People
took pride in cutting bell peppers and lettuce. When we took that
away, morale started getting lower." (Hartung, the CFO, tells me
that the company did not reduce its hours as much as it could have
given how steeply same-store sales declined.)


"'What’s the difference between Taco Bell and Chipotle?’ The
difference is you pay much less at Taco Bell."

"It’s not fresh anymore!" says a source familiar with Chipotle’s
food-safety program. "Sooner or later someone is going to say,
‘What’s the difference between Taco Bell and Chipotle?’ The
difference is you pay much less at Taco Bell. The tomatoes, the
lettuce—they’re all coming from the same place. Taco Bell is
[precooking] your meat and now Chipotle is too. There is no
distinction."

Chipotle leaders scoff at that notion. As Arnold puts it, "We do
share some suppliers with other large restaurant companies. That
does not mean we use the same ingredients or cooking methods."

Because Chipotle built its image around the high quality of its
food, its brand was now susceptible to questions of trust.
Convincing customers that Chipotle was still better than the rest—
and getting them back into restaurants—was the next big hurdle.












Chipotle fans enjoy the Cultivate Festival . . . until a storm hits.
One attendee tweets: "This is worse than E. coli poisoning."

Chapter 4: A Marketer’s Dilemma

Wooing back the faithful.

In the cutthroat fast-food industry, Chipotle has differentiated
itself by rejecting the traditional tactics of its rivals. Along
with investing heavily in the freshness of its ingredients, the
company avoided pandering to its audience with limited-time stunts
like the McRib or KFC’s chicken-encased Double Down sandwich. Other
chains peddle Happy Meals and PlayPlaces, dollar menus, and
blockbuster-movie tie-ins. Chipotle never even gave in to number-
coded meal items ("I’ll have the No. 3, please").

The mastermind behind all this was Chipotle’s chief marketing
officer, Mark Crumpacker, yet another college friend of Ells’s.
Crumpacker, who ran a branding agency before joining Chipotle in
2009, was careful not to let these types of gimmicky initiatives
drive the company’s direction and identity. "It’s the crack of
marketing," he told Fast Company in 2012. "Once you’re on it, it’s
really, really hard to get off."



Most Innovative Companies of 2012: Chipotle


Chipotle is exploding all the fast-food rules.
Instead, Crumpacker released animated films promoting Chipotle’s
food ethics, commissioned novelists such as Toni Morrison and
Jonathan Safran Foer to write short original pieces to feature on
food packaging, and launched a "food, music, and ideas" festival
called Cultivate. The results gave Chipotle a creative, ethically
conscious aura—and won Crumpacker and the company a mountain of
advertising awards, which line his office’s shelves. It also enabled
Chipotle to flourish without the conventional high-cost investments
in fast-food advertising. In 2015, the company spent just $69
million on marketing, or 1.5% of its sales. McDonald’s spent $718
million, or 2.8% of its revenue.



In the aftermath of its food-safety crisis, however, the company
realized that this preexisting playbook was too limited. They needed
to get customers back into the restaurants, and fast. The hope was,
if lapsed customers just sampled Chipotle’s burritos and tacos
again, they would remember why they loved them, and the company’s
momentum would resume. But given Chipotle’s marketing philosophy, it
couldn’t merely adopt conventional fast-food tactics. When Jack in
the Box experienced its 1993 E. coli crisis, which tragically killed
four children, it nearly went bankrupt. Then it slashed the price of
almost all its menu items, permanently offering its signature Jumbo
Jack burger for just 99 cents, and within three years was back on
track. Its recovery was further spurred by a series of aggressive,
irreverent TV spots featuring the introduction of "Jack," the
company’s "CEO." The mascot, a suit who’s a pinheaded clown, was an
instant smash. In one 1994 commercial, he boasts, "Jack’s back"—and
then is shown literally blowing up the company’s board of directors.

Chipotle’s options were narrower. Among other things, a discounted
menu wouldn’t support the high cost of Food With Integrity and could
damage the company’s premium "fast casual" brand positioning.
Hartung says Chipotle was "careful not to jump on that treadmill...
[where] you’ve got to wring costs out of your food... to offer
things at 99 cents or $2.99 and market the heck out of it." Nor
could Chipotle, with its anti-McDonald’s bent, introduce some clown
spokescharacter (let alone one that blows up its board). Chipotle’s
E. coli crisis was different from Jack in the Box’s: Nobody had
died, for one, but Jack also never had to deal with social media
outrage. Nor did it promote its burgers and fries as a better-for-
the-planet alternative.


When I ask a dad pulling his son in a blue roller-wagon what they're
telling people inside Chipotle's "Food Safety Information" tent, he
jokes, "You know, things like, 'We won't kill you anymore!'"

What executives settled on was an aggressive direct-mail blitz in
early 2016: Chipotle sent coupons for a free meal to 20 million
households to encourage them to return. The company also introduced
a $50 discount for catering orders of at least 20 burritos during
the Super Bowl. The idea, Crumpacker says, was to rekindle that
communal dining experience and "overcome the veto effect" of any one
person steering a group of friends to a different restaurant.








Whatever progress these initiatives may have been making, though,
was lost when another norovirus incident hit in early March—this
time in Billerica, Massachusetts. The company promptly closed the
restaurant after several employees reported symptoms; no customers
were infected, yet it appeared in the news as if another outbreak
had occurred. In an earnings call in late April, the company
reported that sales had plunged 29.7% for the quarter. While 17.5%
of the free-burrito coupons had been redeemed (and a similar mobile
offer had a 67% success rate), it wasn’t enough. Executives on the
call talked up plans for additional giveaways worth more than $40
million. Crumpacker also trumpeted a plan under way for "the largest
media spend in our history," which he said "reinforces our
commitment to responsibly raised ingredients cooked using classic
cooking techniques." On the horizon was another initiative to revive
the faithful: A few days later, Chipotle would host one of its
signature Cultivate festivals, in Scottsdale, Arizona.

Chipotle executives will tell you that Cultivate is Ells’s Food With
Integrity philosophy brought to life. It’s a venue to advocate for
the strong public stances the company has taken against genetically
modified foods, factory farms, and many other hot-button issues—all
in a family-friendly environment with young bands and live cooking
demos.

The gates at the WestWorld fairground in Scottsdale open at 11 a.m.
on a cloudy April Saturday morning, and when I arrive 20 minutes
early, there’s no sense that any of the bad news of the past six
months has hurt enthusiasm. The line of people waiting to get in
already stretches a furlong into the parking lot.

Inside, families stroll amid dozens of white pointy tents that line
the trodden-grass field. Bales of hay and sacks of grain dot the
mountain-framed landscape. Strips of chicken and fajita veggies
sizzle on the Chipotle grills. Sure-to-be-carded boys and girls race
to the tasting tents where beers from Grand Canyon Brewing Company
and other craft brewers sell for $6 a cup. Food Network personality
and acclaimed chef Aarón Sánchez prepares for his onstage culinary
demo. The pop band Echosmith is scheduled to perform later in the
afternoon.


By partnering with local farmers like Joel Salatin, Chipotle
positioned itself as the antithesis of McDonald’s and the
industrial-food-supply complex, while gaining the blessing of a
cadre of foodie evangelists.

People here are happy. The only reminder that Chipotle is in the
middle of a crisis is the addition of a "Food Safety Information"
tent. It’s by far the least popular area of the fair. For much of
the day, the eight staffers stare blankly at their visitor-free
surroundings. When I ask a dad pulling his son in a blue roller-
wagon what they’re telling people, he jokes, "You know, things like,
‘We won’t kill you anymore!’?"

Today’s attendees are Chipotle’s most forgiving fans. "My husband is
a cook, and [these outbreaks] could happen to anyone," one mother
says over tacos as her kids play on a picnic blanket. "They took
responsibility for what happened." A slew of parents tell me the
food-safety issues don’t diminish their affinity for Chipotle
whatsoever; they still love the company’s ethical food and
affordability.

Chipotle reinforces its message everywhere. Big signs placed
throughout the grounds prominently display Chipotle "FACTS," such as
the one by the porta-potties that reads, "Nope, Chipotle is not
owned by McDonald's." (The Golden Arches was a major investor in the
early aughts but fully divested by the time Chipotle went public in
2006.) A nearby merchandising tent sells T-shirts adorned with the
Chipotle logo and phrases like "Family Farmed" and "Locally Grown."












Chipotle’s Cultivate festival in Scottsdale, Arizona, on April 30,
2016.

There are even a handful of spots where you can "Learn Your Way to a
Free Burrito." The tour begins at the "Chipotle Cinema," where under
one of the tents, a large projector screen shows Ells chopping
onions and cilantro as he makes guacamole from scratch at a Chipotle
restaurant. Next is the "Fresh vs. Processed" food exhibit, followed
by the display articulating the downsides of GMOs. Inside two
shipping containers housing the "Factory vs. Farm" presentation,
models of frightened-looking pigs are shown raised in claustrophobic
confinement; a tall plastic tube chock-full of oversize capsules is
stamped livestock antibiotics. (Signs warned that the experience
"may be disturbing for children or anyone who is particularly
sensitive to animal suffering.") The folks here eat it all up,
including the promised free lunch.




Around 4:30 p.m., threatening clouds roll in and people dash to
their cars as thunder rumbles, lightning flashes, and rain pours
down. Chipotle is forced to end the event several hours early.
Exiting the parking lot in the storm becomes a horrendous,
infuriating crawl. As one attendee tweets under the hashtag
#ChipotleCultivate, "This is worse than E. coli poisoning."





Joel Salatin had hoped that one day Chipotle would buy 100% of its
pork from independent farmers. After the crisis, its local-sourcing
program was one of the casualties. "For a small business like us,"
Salatin says, "it’s actually very economically devastating."

Chapter 5: Farm-to-Table Casualties

Happy pigs, unhappy farmers.

A week after Cultivate, I visit Polyface Farms in Swoope, Virginia,
a three-hour drive from Washington, D.C. Polyface, which has been a
Chipotle pork supplier since 2007, is one of the places that gives
credence to Chipotle slogans like "Family Farmed" on T-shirts at
Cultivate.

Past winding roads and a small bridge, I find owner Joel Salatin,
arguably the world expert when it comes to responsibly sourcing pork
(his latest book, published just four days earlier, is titled The
Marvelous Pigness of Pigs), lugging planks of wood across a green
field. He’s dressed in a felt outback hat, collared shirt, Wrangler
jeans, and muddy boots, with suspenders tucking in a slight belly. I
ask if I’m interrupting his work. "Not a beat!" he says with a wide
grin and a high-pitched chuckle I’ll hear again and again.

We pile into his pickup truck and putter around his farm under a
blue sky. It’s so idyllic, it’s almost cliché. Cows and chickens
roam on shoulders of fresh glistening grass. An overdue shower
recently made its way to the Shenandoah Valley and the petrichor
wafts through the truck’s rolled-down windows.





Polyface Farms's Joel Salatin's most recent book is The Marvelous
Pigness of Pigs.

This is the pastoral image Chipotle conveys to customers. By
partnering with local farmers like Salatin, Chipotle positioned
itself as the antithesis of McDonald’s and the industrial-food-
supply complex, while gaining the blessing of a cadre of foodie
evangelists such as the prominent writer Michael Pollan, whose
best-selling 2006 book, The Omnivore’s Dilemma, celebrated Salatin
and his unique approach to animal husbandry. Pollan has said that
Chipotle is his favorite fast-food chain.









"Steve was... I don’t know if ‘compulsive’ is strong enough," says
rancher Bill Niman. "He was demonic about his food quality."

Ells’s first steps toward Food With Integrity began in 1999 when he
read about Bill Niman, who shares many of Salatin’s agricultural
philosophies. Ells visited Niman Ranch in Iowa and became enamored
of its approach to responsibly raising pigs. Together, Ells and
Niman also toured the conventional hog farms and slaughterhouses
where the majority of Chipotle’s pork was then coming from. "These
were not farms, they were confinement operations, factories," Ells
recalls. "It was really superbad. I knew that I didn’t want my
success or Chipotle’s based on that kind of exploitation."

Chipotle started buying pork from Niman Ranch, then a collective of
around 70 like-minded family farms. "It wasn’t about the cachet,"
Niman tells me. "Steve was... I don’t know if ‘compulsive’ is strong
enough. He was demonic about his food quality."

If Ells was going to use Chipotle to upend the traditional fast-food
model, working with single-location farmers like Salatin—Polyface
was just 550 acres at the time—was the next logical step. Salatin
says that he and Ells "got along great, and he said he wanted our
pork," recalling their handshake deal after they met in 2006.

Not everyone at Chipotle was sanguine about working with Salatin.
Polyface’s pork was costlier. And, unlike Niman, Salatin refused to
let his pork be shipped to one of Chipotle’s central kitchens. "They
were going to take our pigs from here, put them on a backhaul truck
to [a central kitchen], cook [the meat], and then bring it back
here. I said, ‘Come on, guys! Talk about a carbon footprint! That’s
crazy,’?" Salatin says, drawing out the last word to indicate how
much he disagreed with that plan.





Joel Salatin, owner of Polyface Farms

Chipotle’s marketing team pushed for the deal, while Chipotle’s
quality-assurance team was hesitant: For one thing, Salatin did not
own a refrigerated truck. "[They] were going apoplectic," he
chuckles. Salatin and Chipotle eventually worked out a system that
satisfied safety procedures, and after outfitting a restaurant near
the University of Virginia so they could cook carnitas in-house,
Chipotle began offering Polyface pork on its menu. (They later did
the same at a second restaurant near James Madison University.)

It was a huge hit. "We taught the kids [at the restaurant] how to do
old-school braising. Like really sear the pork, dry-rub it, roast it
off in the oven, and shred it," beams Joel Holland, a veteran
executive chef who worked directly with Ells at Chipotle. "It
started getting a buzz in D.C.!"

Chipotle wasn’t shy about publicizing its local-farmer
relationships. When ABC’s Nightline profiled Ells in 2009, he
arranged for the segment to be shot at Polyface. The following year,
when Oprah Winfrey approached Chipotle about an interview, Ells
suggested to a colleague that they shoot the segment at a cattle
ranch. The problem? It was the dead of winter. "There were probably
22 inches of snow on that land," this colleague recalls. "Steve was
like, ‘Well, can we plow the snow and still film in one of the green
pastures?’ " (Ells does not recall making the comment, but says that
if he did, it was in jest.) Winfrey interviewed Ells in her Chicago
studio.








Around this time, Chipotle was also expanding its "local growers
program," the company’s commitment to sourcing some of its seasonal
produce from within a certain mileage of its restaurants. This
distance was then defined as within 200 miles of its locations, but
the company has since increased that threshold to 350 miles. By
2010, the company was working with roughly 50 family-owned farms to
purchase some 5 million pounds of its lettuce, red onions, tomatoes,
and other items. "Our commitment to serving produce from local farms
and other sustainable sources is one of the ways we are changing the
way people think about and eat fast food," Ells said at the time. By
2015, Chipotle increased its orders with these suppliers so they now
provided more than 30 million pounds of vegetables, which the
company claimed comprised about one-tenth of its produce purchases
when they are in season.



A Tale Of The Two Most Local Chipotles In America


Where do the ingredients that fill your Chipotle burrito come
from? We talked with farmers, suppliers, and supply-chain execs to
try to learn the truth.
Local sourcing has been among the casualties of the E. coli
outbreak. Ells, citing safety concerns, says the company has cut its
dependence on these local growers­­—by as much as 83%. Curious how
the company determines what sources count as "local," I ask whether
that one-tenth seasonal produce figure could include Taylor Farms
(one of the world’s largest lettuce suppliers) if there’s a Chipotle
restaurant within 350 miles. Ells says, "I don’t think so," and
Moran adds that the program is not really for large producers and
promises to get me a specific answer. Arnold ultimately confirms
that Taylor Farms could qualify. "Correct," he writes via email.
"Proximity is the determining factor for our local produce program,
not farm size."

Salatin tells me that Polyface still only provides pork to those two
Chipotle restaurants in Virginia college towns. The company, he
says, has discussed expanding his pork to 10 restaurants, but it has
been "stymied" by its E. coli issues. Chipotle says that it never
set a firm expansion goal and states that the issue is more complex.
Before the outbreak, Chipotle purchased between 550 and 600 pounds
of meat weekly from Salatin. In the immediate aftermath of the
crisis, it sometimes bought as little as 100 pounds. Today,
Chipotle’s weekly order hovers between 300 and 400 pounds. As a
result, Salatin says that he has 9,000 pounds of pork "in the
freezer that was supposed to go to [Chipotle] but that they haven’t
taken since this debacle occurred. We got pigs in the pipeline, and
we can’t afford to keep them on the hoof. For a small business like
us, it’s actually very economically devastating."

He’s not the only one. For some of these smaller purveyors, which
substantially ramped up production to meet Chipotle’s demand, the
lost revenue has materially affected their businesses. "Chipotle
went around to all the suppliers and they just tore those places
apart looking for [traces of] foodborne illness," one supplier tells
me. "Everybody came up clean, but that doesn’t mean they weren’t
damaged [from the lost sales]."

Salatin remembers his friends in the farming community warning him
of this possibility five years ago. He would give talks to thousands
of farmers each year, and "they started coming to me everywhere I
travel, saying, ‘I called Chipotle and they won’t even return my
calls. They don’t want local food! They’re just using you as a
poster child for publicity!’?" Salatin remembers.

He had hoped Chipotle might one day source 100% of its pork from
Polyface-size suppliers, but it was clear even then that this was an
unlikely outcome. When he confronted a Chipotle meat executive
around that time—telling him, "I love you guys, but I don’t want to
be used here"—he was told the company was doing its best to source
more food locally but that it was an extremely complicated process
given all the associated logistics and costs.

"I’m sure Joel [Salatin] wasn’t happy with how it played out. I
wasn’t, either," says Holland, the former Chipotle chef. "Did
marketing get what they needed out of it [and move on]? I don’t
know. Inside of me, I want to believe it just got short-circuited
for business reasons. Where is it marketing? Where is it real? Where
is the transparency?"












Steve Ells says it’s "misleading" to call Chipotle’s steak
"precooked" at central kitchens . . . "It’s sous-vide."

Chapter 6: "Smoke and Mirrors"

What "Food With Integrity" means now.

Chipotle’s efforts to revive its sales accelerated in late June. The
company introduced a summer-long rewards program, called Chiptopia,
which has already attracted several million sign-ups. It launched a
branding campaign centered around a heartwarming animated short film
titled A Love Story, which played on more than 10,000 movie screens.
And it added a new protein, chorizo, to Chipotle’s menu in select
markets. "That stuff works when people say, ‘Oh, something new, I
want to try that,’?" says Crumpacker, the marketing impresario.
"That’s a page we pulled out of the traditional fast-food playbook."

Around this time, the company reported its second-quarter earnings.
Chipotle fell short of Wall Street’s expectations, but there were
signs of recovery: They returned to profitability and its quarterly
same-store sales, which were down 23.6% year over year, narrowed
their decline when compared with Chipotle’s first-quarter results
when sales dropped 29.7%.

But just as Chipotle leadership began to feel some sense of
momentum, an unexpected crisis embarrassed them: Crumpacker was
indicted for cocaine possession leading into Independence Day
weekend. He surrendered to police and faces seven counts of drug
possession; Chipotle placed him on leave, and he checked into rehab.



Chipotle's Mark Crumpacker Talks Chorizo, Comebacks, And Cocaine


"It’s great to be back..."
Two weeks after the news of Crumpacker’s arrest, I travel to New
York to meet with Ells at Chipotle’s Union Square office. These
recent events are an awkward backdrop to my visit, but when Ells
strides into a conference room to greet me, he’s poised and upbeat,
dressed in a navy blue Lacoste polo and crisp khakis. He says he
wants to go to a room where there’s more sunlight and briskly
escorts me to his corner office (which is next to Crumpacker’s now
dark and unoccupied one). It’s a minimalist space; an iMac hides in
a small nook across from his diploma from the Culinary Institute of
America.

We sit at a mahogany table over blueprints for a new restaurant, and
Ells tells me that what’s top of mind for him is instilling safety
into the company’s mind-set. "[It’s] the hardest thing to put into
place... Cultures are developed over a long period of time," he
says. "It has to be deeply instilled, much like our people culture
or our food culture. We’re coming at this from all angles: from the
supplier side, the procedures in the restaurants, things through the
distribution system, training, and auditing."

The culture Ells is most comfortable talking about is food. I ask
whether the company is still living up to its Food With Integrity
promise to consumers and how Chipotle precooking proteins like steak
in central kitchens fits in. Ells says it’s "misleading" to call the
steak "precooked." Rather, he says—his eyes peering over his
narrow-framed glasses—it’s "sous-vide." This is the French cooking
term for immersing food, sealed in a bag, in a low-temperature water
bath to heat it slowly and more evenly. "This technique was used by
many chefs and still is because you can precisely control the
characteristics of meat and achieve a certain kind of tenderness,"
Ells says. "I’d say the steak is [now] more tender. It actually
improves it."








When I bring up Chipotle’s blanching of produce, Ells says it’s more
akin to "tomato concassé," which is a "French term for when you
blanch the tomato, cool it, and peel the skin off. It’s part of the
world of classic cooking techniques." I feel as if I’m being
schooled by a judge on a cooking show (which, incidentally, Ells
once was, on NBC’s short-lived America’s Next Great Restaurant).


"Would you rather eat [real fresh food and] take a chance on getting
a case of the shits? Or would you rather have your food precooked
and every possible intervention done to [it]?"

Holland, the former Chipotle chef (who still reveres Ells), suggests
that Chipotle is now selling "smoke and mirrors," a kind of
"doublespeak" that implies its new food-safety practices somehow
count as classic cooking techniques. "The moves they’re making now
kind of rebut everything they’ve done in the past," he says.

Speaking on background, even one of Ells’s close friends agrees with
this assessment. "One of the unfortunate consequences [of the
crisis] is that this wonderful fresh food, which comes with a risk,
is going to be precooked, pasteurized, double- and triple-washed,
all the things that you wouldn’t do [at home]," the source contends.
"Would you rather eat [real fresh food and] take a chance on getting
a case of the shits? Or would you rather have your food precooked
and every possible intervention done to [it]?"

When I relay this assessment to Ells, he says, "Nothing could be
further from the truth."

What’s dismaying to those who know Ells well is that he has always
fought to do what he thought was right to improve the food Chipotle
serves, even when it didn’t benefit Chipotle’s bottom line. He once
spent a year and a half cycling through prototypes for an egg cooker
so Chipotle could offer breakfast burritos. "We chased that to no
avail and spent who knows how much money," recalls a former
executive who worked intimately with Ells and had knowledge of the
failed effort. Once, Ells wanted to wedge a Jamba Juice–style
blender operation into every Chipotle restaurant so workers could
freshly squeeze limes, even though its kitchens only consume a
half-cup of citrus juice per batch of guacamole. That didn’t work
out either. At Ells’s insistence, many stores boast a custom-built
$6,000 grill, though the inside joke among some executives is that
despite all the fancy kitchen improvements Ells added or attempted
over the years before the crisis, the burritos pretty much taste the
same as they did 15 years ago.

But others will argue just as vehemently that his creativity and
knack for tapping into a je ne sais quoi is what made Chipotle so
special. "The thing with Steve is, every now and then you’d get one
[brilliant idea] and it might turn out to be the next big thing,"
says the former executive. Ells says, "I certainly could’ve made a
lot more money buying cheap ingredients and people might not have
been able to tell the difference. That was never a part of the
calculus. It was not part of my DNA."

In balancing food safety with Food With Integrity, Ells admits that
the pendulum swung too far toward more conventional methods of
fast-food production immediately following the outbreaks—for the
sake of Chipotle’s customers and its business. Now, though, Ells
says that the company is working to correct certain overreactions.
He promises to recommit to the local growers program and believes
Chipotle will return to the precrisis number of independent
suppliers in 2017. He says Chipotle has moved more ingredient
preparation back into its restaurants, including whole heads of
lettuce and bell peppers.








How can Chipotle pull this off without risking another outbreak?
After all, if another one were to happen, even the rumor of one,
"it’d be really bad," Hartung says. "Our recovery has been fragile
so far."

One new tool in the Chipotle arsenal: On June 1, the company rolled
out The Black Book—a revamped version of the Daily Food Safety
Checklist—which ushers in stricter in-restaurant safety protocols,
including 10 "critical control points," ranging from additional
personal-hygiene checks to more detailed temperature logs. It also
introduced the role of food-safety leader, who is the most senior
manager on duty and makes sure all these mandates are met.

The Black Book’s changes demand considerably more audits; its Food
Safety Leader Guide, for example, features 32 bullet points on
hand-washing and disposable-glove procedures alone. "We believe
that... achieving our goal of being the industry leader in food
safety is within our reach," Ells and Moran wrote in introducing the
Black Book.




Jim Marsden, the executive food-safety director, says the company
has also added a number of pasteurization methods, including "high-
hydrostatic pressure processing (HPP)," which essentially sterilizes
food such as chorizo by blasting it with 87,000 pounds of water
pressure for three minutes. (This practice takes place at
specialized, off-site facilities that can support these 85-ton HPP
machines.) Marsden boasts that Chipotle is now an industry leader in
the practice, though, he admits, it’s long been used for "things
like sliced turkey breast, prepared salads, usually foods that are
in the ready-to-eat category." An FDA report on HPP says the process
results in changes that are usually "undesirable because the food
will appear to be processed and no longer fresh or raw." Arnold says
that chorizo has been well received. Chipotle has since rolled it
out to restaurants nationwide.

Marsden also instituted his own testing approach, replacing
Samadpour’s system with one that centers on "routinely" verifying
the efficacy of Chipotle’s intervention requirements. Rather than
having suppliers take more frequent samples of raw beef, for
example, they can now test at far fewer intervals because the meat
is cooked; they’re primarily doing this to ensure that kill steps,
such as the sous-vide process, are working properly. As with
Samadpour’s program, there are complicated pros and cons to this
system, but as one neutral food-safety observer says, "If you’re in
a courtroom and you listen to both sides of the argument, it’s hard
to say that anyone is 100% correct. It’s all wrapped up in a lot of
academic in-fighting and politics."

Ells remains adamant that nothing has changed with the food Chipotle
serves. All these new measures are predicated on his belief that it
is now not only safer but also tastier and fresher than ever.
Proteins like steak, he argues, are "marinated just like we’ve
always marinated" them at the restaurant: The sous-vide meat arrives
from the central kitchen and "looks raw and very red" before it is
cooked on-site. (When I ask a kitchen worker at a restaurant if
Chipotle’s steak has changed, he matter-of-factly responds, "Yeah,
it’s precooked now.") "It might be different, but it’s still
delicious," Ells says. "We want our cake and we want to eat it too!"

The comment reminds me of A Love Story, which has garnered 60
million views. The film seems to reflect the company’s own angst
regarding its current state. The ad, which went into development six
months before the crisis began, depicts two neighborhood kids who
build their rival sidewalk juice stands into fast-food empires. The
result is a dystopian future where their food is manufactured by
machines on assembly lines, and new menu items and buy-one, get-
one-free deals lead to huge profits. The main characters eventually
leave it all behind to start a taco truck where they cook food with
fresh ingredients and, of course, love.










The point of A Love Story, like two previous award-winning shorts,
is that Chipotle is not McDonald’s. But it’s impossible to ignore a
different subtext now given all the change the company has
undergone: Is Chipotle in danger of becoming the evil fast-food
chain?

I decide to put Ells on the spot. I ask if I could have a list of
every Chipotle supplier. Ells says he’s never heard such a request
before but that he’d have his team look into it. He tells me that
the reason the list isn’t made public has nothing to do with trade
secrets. (Later, Arnold explains that he can’t share a list of
suppliers with me for "business competitive reasons.")

Would Ells at least share the names of Chipotle’s beef suppliers in
Australia? "I don’t know the name offhand," Ells responds. "It’s not
like a brand that you would buy at the grocery store." (Chipotle
sources some of its beef through JBS Australia, a giant of the meat
industry that also works with McDonald’s.)

I also ask if I can visit Chipotle’s central kitchens, the ones that
work with McDonald’s, Subway, and Pizza Hut.

To my surprise, Ells agrees.





"Isn’t it beautiful? And it smells good!" says Chuck Nalon, who runs
one of Chipotle's large central kitchens. Could Chipotle do all its
food prep here? "Hmmm, and still be Chipotle? Not everything, no."

Chapter 7: Is This Classic Cooking?

Inside a 200,000-square-foot food factory.

Ed Miniat, one of Chipotle’s three largest central kitchen partners,
is headquartered in the Chicago suburb of South Holland, Illinois,
near a long stretch of strip malls. Once inside this 200,000-
square-foot facility, I am greeted by Miniat president Chuck Nalon,
and he and I don rubber boots, parkas, lab coats, two sets of
gloves, latex sleeves, earplugs, protective eyewear, red hairnets,
and hard hats. We slop through a pool of antibacterial foam spraying
at the entryway to sanitize the soles of our boots—"a nice car
wash!" jokes Nalon, a burly salesman whose own hard hat is painted
to look like a football helmet from his alma mater Purdue. "This is
where it all starts."








The scale of Miniat’s operation is immediately overwhelming. Nalon
guides me through warehouse-size rooms filled with yellow vats of
raw chicken and hundreds of workers, who are decked out in the same
safety gear as we are. They’re running massive metallic machines,
including "The Injector," a hulking apparatus with more than 975
parts designed for meat "augmentation." ("Chipotle doesn’t use the
Injector," Nalon clarifies, though other Miniat customers do.) The
highly industrialized atmosphere calls to mind visions of the boiler
room on the Titanic, with all of Miniat’s pipes and blue lights
flashing everywhere, along with its ceaseless clangs and clanks,
whirls, and whirrs.


"This is your [household] kitchen times 25,000," says Chuck Nalon,
who runs one of Chipotle’s central kitchens. "There’s no other way
to pull this off."

Miniat processes roughly 500,000 pounds of beef and pork each week
for Chipotle, and it’s now ramped up production of the chain’s
sous-vide steak. Nalon first takes me to the line that prepares
Chipotle’s barbacoa beef. Butchers occupy 22 stations, and they trim
shoulders of any excess fat and gristle. A small computer screen at
each station monitors each worker’s meat yield; every chunk of
protein is weighed before it slides down a conveyer belt. It
eventually ends up in a huge, cement mixer–like machine that swirls
it around in a blend of adobo paste, water, and garlic.

We go through several massive doors—which slide open when Nalon tugs
an orange cord hanging from the ceiling—to a space where I can see
the sous-vide process Ells mentioned. Forty-eight tubs, each the
size of a dishwasher, are filled with 180-degree water that slow-
cooks bags of meat for six and a half hours before they’re chilled
for another three. Finally, I watch workers, including one with a
pitchfork, shovel the finished meat into five-pound portions, before
it’s sealed and later boxed and shipped to Chipotle’s restaurants.

"Isn’t it beautiful? And it smells good!" says Nalon, who echoes
Ells when he mentions how these are all just "classic cooking
techniques. This is your [household] kitchen times 25,000. There’s
no other way to pull this off."

The modern and hygienic facility does smell delicious, and it is
difficult to imagine how Chipotle could decentralize its entire food
operation to more than 2,000 local restaurants. "There's nothing
mysterious about what we’re doing, and everything can be easily
explained," Nalon says. "The whole goal is to make good food. The
average person should be able to go, ‘I never dreamt this is how it
works behind the curtain, but I get it.’"

That said, Miniat is the only central kitchen that allowed me
inside—only at Ells’s request—and even then, the company doesn’t
allow photographs of its facilities. The fact is that Miniat, like
Chipotle’s other major central kitchens OSI and Ready Foods, is a
factory—not the mechanized sweatshop in A Love Story, but it’s not
home cooking either. Sanitizing this place, for example, requires
the "Miniat Elite," a 64-person team, which, each night over the
course of seven hours, rinses and washes every single inch of the
facility (including all 975 disassembled parts of the Injector) and
cleans up 12 tons of goopy carcass remains, grease, and oil, using
52,000 gallons of water in the process.


"A manager who leads in an enlightened way creates teams of top
performers who are empowered to achieve real standards," says Moran.
"Those are magic words around here."

Although McDonald’s relies on a similarly centralized model,
Chipotle supporters contend that the chain has higher-quality
ingredients and preparation standards. In their first meeting to
discuss pricing, in 1998, when Chipotle had just 15 restaurants,
Nalon recalls "Steve’s face getting more and more contorted" as
Nalon explained how to make the recipes cheaper by "adding starch,
injecting [meat] with marinade," and so forth. "I marched down the
list of all my food-science options," he tells me, and "Steve said,
‘Promise me you’ll never do anything like that to my food.’?" Nalon
isn’t allowed to discuss Miniat’s other clients, but he does
acknowledge they utilize his kitchen differently than Chipotle.








Back in Nalon’s office, where an old menu sign from a Chipotle
restaurant hangs on the wall opposite a Food With Integrity poster,
I ask whether Chipotle could simply move all its food preparation to
central kitchens like this one. After all, if the food can taste
just as good, why wouldn’t they, especially if it’s safer? "Hmmm,
and still be Chipotle? Not everything, no," Nalon says. "I love the
fact that they do what they do in those stores, because it is
totally unique. You could do everything in central kitchens, but I
don’t think that’s exactly what they want. They want to bring as
much freshness and as much cooking as they can to the stores. But
[some of these items] really need to be done with somebody like us."





To become a Chipotle restaurateur, you had to pass muster with a C-
level executive. One time, Moran's mood turned when he encountered
"easily the dirtiest fucking pans I’ve ever seen."

Chapter 8: People Who Matter

A proud CEO, "the crème de la sour cream," and what $9 per hour
buys.

If Ells is the food person at Chipotle, co-CEO Moran is the people
guy. It’s his task to drive the company’s employees to safely
prepare, assemble, and serve Chipotle’s food at a pace that can
sometimes exceed 350 transactions per hour. "[Without] dramatic
improvements in throughput," Moran told investors before the
outbreaks, using the restaurant-industry term for serving customers
quickly, "we would not be able to achieve such phenomenal same-store
sales."

Moran has been a trusted confidant to Ells since Chipotle started.
Moran served as Chipotle’s outside general counsel before joining in
2005 as COO to help scale operations. Following the company’s 2006
IPO, Ells increasingly relied on him, and when Ells decided to move
to New York full-time in 2008, Moran essentially took over the
company’s Denver headquarters.

By the time Moran was elevated to co-CEO in 2009, the company had
moved to a new office on Denver’s Cherry Creek River, where the mood
became more "corporate" and "tense," sources say. Dogs were no
longer allowed, and executives initially moved to an area locked to
most staff. "It was the weirdest thing," says a former longtime
employee who worked closely with Moran and Ells. "I mean, you had to
be buzzed in! The office became so sterile and cold. Monty ran
things like a law firm."

Moran’s ascendancy at Chipotle has coincided with an increased rigor
(some would say bureaucratization) in the company’s restaurant
culture. Restaurants are graded on the "Four Pillars" of throughput,
such as "Aces in Their Places," which requires that crew workers are
ready in their prime positions at the exact second their shift
begins. In fact, the cameras above the line in all Chipotle’s
restaurants aren’t only for security; managers and internal analysts
access these live feeds either weekly or monthly for surprise, 15-
minute "visual audits" to gauge how well teams are executing the
Pillars during peak hours. "Everyone would see these audit results,
including Steve and Monty," recalls a former operations executive.
"You did not want to be at the low end."

Chipotle’s unrelenting culture has sometimes embroiled the company
in controversy. This past summer, 10,000 employees filed a class-
action lawsuit against Chipotle accusing it of not paying them for
all the hours they worked. In mid-August, a court ordered Chipotle
to pay a former crew member of a Washington, D.C., restaurant
$550,000 for workplace discrimination. A jury found that her
supervisor had, among other things, restricted bathroom breaks and
access to water for this employee, who was then pregnant. (Chipotle
maintains that its actions in the Washington case were legal, but
does not plan to appeal.) When I ask Moran about all this, he says,
"Do we hire people who make mistakes? We sure do," noting that the
company will recruit 60,000 people in the next year. "I spend all of
my time making this culture the very best it can be."








Moran prides himself on engineering the company’s "Restaurateur
Program," which he conceived in the wake of the 2008 financial
crisis and considers central to the company’s success. The program
is designed to imbue workers with the long-term ambition of becoming
"Restaurateurs," a sort of certified-excellent general manager
position, which comes with a higher salary, a company car, stock
options, and other bonuses. Moran calls the GM "the most important
person in the company," because "if you’ve got excellent GMs, you’re
going to have wonderfully safe food, delicious food, and a great
customer experience. If you don’t, you won’t." Restaurateurs, then,
are the "crème de la sour cream" of all GMs, as Chipotle phrases it
in recruitment materials.

The program incentivizes managers to evaluate employees based on
whether they are "top performers" or "low performers." To even get a
shot at the restaurateur title, you have to work your way up—often
starting at crew member—and train top-performer replacements as you
advance. "A manager who leads in an enlightened way creates teams of
top performers who are empowered to achieve real standards," says
Moran. "Those are magic words around here."

Chipotle’s upwardly mobile structure increases service speed and
eliminates "loads of bad habits," says Moran, who, along with Ells,
would personally approve restaurateurs based on intense in-person
assessments. When a restaurateur would be ready for review, one of
the CEOs would make a trip to his or her restaurant, scour the place
for red flags, and even individually interview each crew member. (As
the company has grown, other C-level executives also perform
evaluations.)

According to more than a dozen sources who experienced or witnessed
these reviews firsthand, this became a "dog-and-pony show." If Ells
showed up in a bad mood, a candidate’s odds would be especially
slim; several sources relate stories of him ripping into prospective
restaurateurs for mistakes as trivial as, say, finding leftover
grains of rice on a tabletop or using two different types of
lightbulbs in the ceiling fixtures. If Moran, who is friendlier,
conducted the visit, he’d usually base his evaluation on the
temperature of the room—how many customers are smiling, the
enthusiasm he senses from crew members. Moran, though, could be just
as demanding as Ells, and once nearly ended an otherwise perfect
visit after stumbling upon "easily the dirtiest fucking pans I’ve
ever seen." Moran acknowledges, "If we see things that are dirty,
that would be one of the many things we would look at. But no, we’d
never say, ‘There was rice on the table, you’re not a
restaurateur.’?"





At its 2016 Cultivate festival in Arizona, Chipotle depicted the
effort required to become one of its "restaurateurs" in the form of
a high-striker game: The more effort (and pressure) you apply, the
greater the likelihood of reaching the pinnacle.

The restaurateur program has reinforced a culture where "low-
performer" employees are acceptable collateral damage. At the
company’s 2012 all-managers meeting, for example, Moran asked the
hundreds of attendees for a show of hands if they had low performers
on their teams. Most raised a hand. "Why are you letting these
people stay on your team?" two attendees recall Moran saying. "If
they’re not doing a good job, just fire them. We don’t need them."
"Those words—low performer—were weaponized at Chipotle," says a
former team leader, who regretfully recounts meetings among managers
where they would viciously appraise crew members. "You’d put
someone’s name on the whiteboard and [a manager] would growl,
‘Aarrgghh, no! Low performer! They’re no good!’ Once they were
[deemed] low performers, their careers at Chipotle were torpedoed
whether they knew it or not. Everyone was disposable."

Perhaps that helps explain why crew-level turnover is three times
higher than manager turnover, which itself is a challenge: Out of
every 100 kitchen managers Chipotle promotes, only 25 of them remain
on staff after 12 months. Despite the churn, "there was an abundance
of applications," says a former lead recruiter. "Instead of
investing time and energy into making sure the [low performer] was
developed, it was like, ‘Whatever, we have 150 more applications.
Let’s get rid of that person and take one of them.’?" (In September
2016, the company would repeat its one-day hiring stunt, this time
announcing it would hire 5,000 employees at once.)

As Moran tells me, "There’s no way to force mediocre or low-
performing teams to do a great job day in and day out. You can get a
clipboard and write them up, and yell at them and tell them to clean
stuff, and tell them, ‘If it’s not cleaned by tomorrow, I’ll fire
you.’ That checklist management mentality [is] not effective." In
June, when Ells and Moran released the Black Book operations
protocols for food safety, they stated, "We’re counting on our
empowered teams of top performers to learn all of the high standards
that we have for food safety." If any "symptoms" are discovered,
Ells and Moran wrote, "your diagnosis can only be a lack of top
performers."








From Moran’s perspective, Chipotle’s restaurant culture is a
thriving meritocracy. Crew members, he and his executive team point
out, receive twice-annual merit pay increases, and on average get
promoted to kitchen manager within 10 months—a position that comes
with a 20% raise—and from there to service manager in another year.
In the process, they learn invaluable people, service, and
management skills. "We have substantial rewards that we give to our
people," says Hartung. "Some of the national discussion about just
increasing the starting wage, it only talks about that bottom rung,
like what’s the lowest-paid person willing to earn who works in your
company. We think the narrative ought to be more about investing in
that person, developing that person."

The "national discussion" Hartung is referring to is the so-called
Fight for $15, raising the federal minimum wage to $15 an hour.
Chipotle is sensitive to the impact a 66% increase to its minimum
wage of $9 per hour (which is higher than the $7.25 federal
standard) could have on its business. Without prompting, Moran
defends his compensation. (It would take a starting Chipotle crew
member more than 1,500 years to earn his 2014 pay package.) "The
only reason I deserve, or anyone [at Chipotle] can deserve, to make
more than a GM," Moran says, "is if they have the effect of
empowering or helping loads of GMs get better. That’s the only way."


"It’s overwhelming, very stressful. The line never dies, sometimes
for three hours," says one crew worker. And yet, "the most raise I
ever got was 10 cents, up from $9 per hour."

Some company observers believe that if Chipotle led the Fight for
$15—effectively extending Food With Integrity to the people who
serve it—it could help the company reduce turnover, improve training
and food safety, better its relationship with its low-level
employees, and change the narrative around the company in the wake
of this crisis.

Hartung disagrees that it would reduce turnover. "The idea that $15
will solve things, I think it solves it temporarily," he says.

Not long ago, I spoke with a current crew-level employee who has
been with the company for almost two years. He works around 40 hours
a week, believes in the Food With Integrity mission, and can handle
the line and grills during the lunch rush. "It’s overwhelming, very
stressful. The line never dies, sometimes for three hours," he says.
And yet, "The most raise I ever got was 10 cents, up from $9 per
hour."

He still loves what Chipotle represents and the skills it’s taught
him—"I never thought I’d be cutting onions and peppers and cooking
chicken and able to use a knife," he says—but he wants a livable
wage and has joined the Fight for $15 movement. Even if that isn’t
successful, though, he won’t leave Chipotle. "I’ve gotten so far and
worked so hard for the company that I’m almost there to becoming a
manager," he says with pride. If he attains this goal, though, he
expects his salary to be bumped up just $1.50 per hour. "I wish
Chipotle realized that with what we do, selling all this Food With
Integrity and their vision that we promote to everyone, we should be
getting paid more," he says. "Why do we earn almost the same as
McDonald’s workers when the care we put in is 20 times what they
do?"





Activist investor William Ackman, known for his caustic approach,
amassed a 9.9% stake in Chipotle. "He thinks it’s undervalued and
feels we have a very strong brand that he personally likes," Moran
says. "And so he’s interested in being involved as an investor, I
think, for a longer term."

Chapter 9: The Reckoning

New pressures, lessons learned, and what happens now.








On September 6, Chipotle’s leadership team learned that investor
William Ackman had amassed a 9.9% stake in the company through his
hedge fund, Pershing Square. In an SEC filing disclosing the
position, Pershing called Chipotle "undervalued," with a "strong
brand, differentiated offering, enormous growth opportunity, and
visionary leadership." It also stated its intention to "engage in
discussions with [Chipotle’s] management and board of directors"
about everything from the composition of the board to the company’s
cost structure and strategic plans. Chipotle’s share price jumped
nearly 6% on the news.

Ackman is one of Wall Street’s most high-profile activist investors.
Known for his controversial bets and caustic approach, he’s not like
"those individuals" in Chipotle’s annual shareholder meeting, as
Moran described them, who "read proposals and air a protest or two."
In the past, Ackman has taken substantial positions in fast-food
chains, including McDonald’s and Wendy’s, and then agitated for them
to adopt major transformations such as divesting assets, embracing
franchising, and replacing management. (Ackman declined to comment.)




When Ackman announced his stake, he was Chipotle’s second-largest
shareholder. The first was still Fidelity (though its massive mutual
fund Contrafund cut the number of shares it held by more than 40%
between April and the end of July 2016, according to filings). Ells
and Moran each own less than half a percent of the company. Ackman’s
investment, then, could be a harbinger of bigger structural changes.
"As we’ve gotten nine or 10 months out [from the crisis], maybe
there’s a bigger case now to be made that a different management
tack needs to be taken," says Morgan Stanley analyst John Glass, who
specializes in the fast-food industry and maintains a "hold" rating
on Chipotle. "Early on, there’s nothing to be activist against. But
enough time has passed [for someone like Ackman] to say, ‘Look, you
tried your way and it hasn’t worked.’?"

On September 20, Ells and Moran call me from a car while they’re on
their way with Hartung to an investor meeting in New York. The
company had promised to update me on Chipotle’s recovery, but when I
kick off our conversation by asking them how things are progressing,
Moran first declines to answer, and then says, "Hold on a sec, hold
on a sec." I can hear murmurs between the three executives, and then
Moran comes back on the line and still demurs, citing regulatory
restrictions.

I ask them about Pershing Square and whether its large position in
Chipotle’s stock has altered their game plan in any way. "It hasn’t
affected our strategy. Mr. Ackman said he is very interested in our
company," Moran says. "He thinks it’s undervalued and feels we have
a very strong brand that he personally likes. And so he’s interested
in being involved as an investor, I think, for a longer term."

On October 25, approximately one year after the outbreaks, Chipotle
will announce its third-quarter earnings, and we’ll learn more about
whether customers are giving the restaurant another chance. Perhaps
same-store sales will rebound, revenue and profitability will jump,
and Chipotle will regain favor with investors. Crumpacker, who
returned to his post after Labor Day (his court date for cocaine
possession is pending) and who now serves as the company’s chief
creative and development officer, offers a tidbit of positive data
the day after my call with the CEOs. The company’s Chiptopia rewards
program has signed up 6 million people by the end of August, he
reports, up from 3.6 million in late July, and 3.1 million of them,
just over half, are eating at Chipotle at least once a month. "I’m
happy with where we are with those numbers," Crumpacker says.




In September 2016, Chipotle ran a Sunday kids-eat-free promotion to
woo back families. Pictured: Chipotle's kid's menu.

Still, whatever signs of recovery Chipotle exhibits, the events of
these past 12 months have revealed deep-seated issues that the brand
must grapple with to ensure a bright future. The company’s food-
safety director, Marsden, once told me that not knowing the exact
cause of the E. coli outbreak meant the company had a chance to fix
everything. While he was talking about Chipotle’s safety protocols,
he could’ve meant so much more.








Ells and Moran have not yet seized this moment of crisis to rethink
everything about Chipotle with the kind of daring, unexpected
thinking that made it a beloved brand. Chipotle was a pioneer in
introducing responsibly sourced and fresh ingredients into the world
of fast food, and it deserves much credit for rejuvenating the
industry and inspiring widespread change, from the big players like
McDonald’s pledging to offer more cage-free eggs to the host of
ethically conscious chains such as Beefsteak, Cava Grill, and
Sweetgreen popping up around the country. What this moment offered
was an opening to reinforce and even broaden its commitments to Food
With Integrity (beyond a more thorough embrace of food safety).

Chipotle could still choose this course. It could publish a list of
all its suppliers as a way to reassure customers, introducing
radical transparency to the industry. It could jump into the Fight
for $15 movement, demonstrating its commitment to higher goals and
to its own morale-challenged workers. What if Ells used the crisis
to engage Americans in a larger conversation about the challenges of
our food system and eating habits? "You can’t go around here
surreptitiously talking better than you’re walking," says Joel
Salatin, of Polyface Farms. "How do you have integrity without
accountability?"

For a company that has thrived on speed and efficiency, Chipotle has
been slow to adapt. Its chorizo, only the second menu addition in
its history, was on its product road map before the crisis began.
For all its talk of fresh and local food, it has not embraced
seasonal meal offerings that could entice customers to visit more
often. A Love Story, conceived before the crisis, did not even
attempt to address Chipotle’s current reputation challenges.
Chiptopia, which went into development in April, five months after
the E. coli outbreak, followed years of investor pressure to offer a
rewards program.


"This is a company that is in the throes of a midlife crisis," says
one analyst. "The skills that got them here are not the same skills
they need to get them to the next place."

Chipotle’s brand has been pummeled to a degree that seems out of
proportion to the scale of its limited food-safety outbreaks. But
there’s always been an inherent risk in the company’s pursuit of a
mission as high-minded as Food With Integrity, says Crumpacker. He
isn’t surprised that Chipotle experienced a more severe reputational
punishment than Tesla or Dole after their recent crises. "People
buying products from Dole—it’s a can or bottle of juice—it’s not the
same," he says, indicating that Tesla is also not in Chipotle’s
league in terms of brand affinity. "There’s a Chipotle in every
town, a lot of people have a connection to it, fond memories of
going when they were in high school or taking their kids there." The
outbreaks fractured that special feeling for many customers.

What’s more, Chipotle could never offer customers a satisfying
closure to what caused the problem in the first place. "When you
don’t know what it is," Crumpacker continues, "people are like,
‘Well, gosh, did they fix it?’?"

Is Chipotle closer to offering 100% Food With Integrity, or further
away? When I ask Michael Pollan, author of The Omnivore’s Dilemma
and a public advocate for responsible eating, about whether Chipotle
is still his favorite fast-food restaurant, he laughs and says that
he forgot he ever said that. He tells me he prefers it over
McDonald’s but that he’d rather live in a world where "we have 2,000
individually owned burrito shops rather than one big one. But to the
extent that we live in a world where people want a very predictable
fast-food experience, then it’s better to have those restaurants
trying to engage with the kinds of values that Chipotle professes to
care about and, in fact, has cared about."


"Will we climb out of it and get back to our former greatness?" asks
co-CEO Monty Moran. "I absolutely believe we will."

Chipotle’s future hinges less on hourly audits or triple-washed
lettuce or rewards programs than a reimagining of what Food With
Integrity means for the next 20 years. Can a leadership team helmed
by three college buddies make that transition? What about a board of
directors with a 17-year median tenure? "Whether or not the food-
safety issues happened last year," says Morgan Stanley’s Glass,
"this is a company that is in the throes of a midlife crisis, where
the skills that got them here are not the same skills they need to
get them to the next place." Every chain restaurant, he says, goes
through this rite of passage. For every success like Starbucks,
there are former high-flyers like Baja Fresh and Boston Market that
no longer have cultural currency and are slowly fading.

Moran remains confident that Chipotle will not end up an
afterthought dotting the strip malls of America, but he preaches
patience. "Will we climb out of it and get back to our former
greatness? I absolutely believe we will," he told me in June. "But
will that take a year or two or three or four? I don’t know. The
full recovery from this is going to take a long time."

Moran says he wants everyone to know exactly what happened, and to
judge him and Ells based on that. "I wish that every single person
in the U.S. knew exactly the truth about what happened," he says. "I
wish they knew exactly the truth about everything that Chipotle
does."


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BREAKING NEWS
In other news, somehow Crooked Hillary still isn't in prison...