Chipotle Redemption

Americans are a forgiving people. In the case of Chipotle (CMG stock symbol), they forgive them for years of food-borne-illnesses such as an E Coli outbreak or two or three or four.

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How do I know this? Because their stock price — after weathering a huge hit based on food-borne-illness scandals — hit an all time high yesterday.

In the midst of their troubles, the stock hit a low price of $255.46/share in February of 2018. Pre-market price indicators today, you ask? $762. You do the math. Wow!

Did you buy on the bad news, dear reader? NO, you did not because you, like everyone else, just said, “Gross!”

Keep it clean, Big Red Car

The largest offending food-born-illness incident was in July 2018 and sent 700 patrons of a store at Sawmill Parkway in Powell, Ohio to seek comfort on the edge of their commodes whereat they attempted — successfully, one hopes — to purge their bodies of the toxins formed by C. perfringens.

This lovely bit of data was gleaned by testing stool samples of those infected. [Hey, it’s probably a good job.]

Note: while having an outbreak of something like salmonella, shigella, E. coli, Norovirus, or C. perfringens is bad enough for the company’s public image and top line revenue, they also end up getting sued. While these matters are handled confidentially (no, they do not bargain with Chipotle gift cards), this bout of food-borne-illnesses had individual victims seeking $25,000 each and class action status. Seems a nominal amount to a Big Red Car, but if you’re paying off a thousand folks, it can add up quicker than tariffs on avocados.

And, yes, the ambulance class action brethren were circling the dumpsters.

What did they fix, Big Red Car?

With Chipotle’s litany of issues, the problem (as in all food-related issues) is simple — food sourcing, food handling, food storage, food prep, food temperature, and server/physical plant hygiene. It is a simple fix that has to be applied store-by-store on a company-wide basis.

Note: Chipotle was never accused of a system-wide deficiency. It was always single stores, but the reportage was nationwide.

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“Clean food, clean storage, clean hands, can’t lose!”

Bottom line it, Big Red Car

Here are the takeaways:

 1. Food is a hard business made harder when you do things wrong.

 2. The customers will punish when you fill them with illness instead guacamole.

 3. The markets will punish you when you mess up.

 4. American customers and investors are a forgiving tribe. They will forgive you if you acknowledge the problem, take action to fix it, and take ownership of the problem and the fix.

 5. Americans are quick to forgive you. Low price for Chipotle? July 2018, a year ago!

OK, so maybe the thing is that Americans have no real memory? Could be a bit of that. Burritos will impact your institutional memory.

 6. A company can redeem itself in America.

 7. If one has the cojones to buy on bad news, one can hit a good lick.

Throw away line: I guess the Mexican avocado tariff didn’t hurt business too much, eh?

Hey, dear reader, remember this should you hit a pothole in your company. Is this a great country or what?

But, hey, what the Hell do I really know anyway? I’m just a Big Red Car.

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