Martha Gebala Rebecca Pilipchuk Rylie Terrion Sara Abdelaal

CHIPOTLE’S FOOD

POISONING CRISIS

J U N E 2 0 1 6

2

Executive Summary Study Background and Purpose: A recent E. coli outbreak across the Chipotle chain made national headlines in 2015. Since then, Chipotle, known for their steady success and popularity, took a 36% hit in sales. The now contained outbreaks caused a major blow to the brand. How does a company recover from bacteria outbreaks? How can they bring their once-loyal customers back? M. Bars Market Analytics conducted several studies to determine how millennials, Chipotle’s target audience, feel after the outbreaks and how we can best satisfy them as consumers. Methodology: To answer these questions, we gathered both qualitative and quantitative data. We performed a series of one-on-one, in-depth interviews. Our interviewees were selected by convenience and judgement sampling in order to target our consumers, millennials. Our interview questions were designed to target interviewee’s opinions on Chipotle’s brand, their likelihood of returning after hearing about the outbreaks, and who Chipotle’s biggest industry threats are. We also conducted a survey on Qualtrics. Shared by M. Bars market analyzers via social media, the responses were non-random convenience samples. With over 80 responses we were able to analyze respondent’s opinions on the same research questions used in the in-depth interviews. Main Findings: Through both our qualitative and quantitative research, we found that the E. coli crisis has not deterred majority of Chipotle’s target audience, millennials. We also found that millennials are interested in seeing Chipotle expand menu options, both in price and variety. Our respondents and interviewees also expressed that Chipotle’s main competitors are fast food restaurants that offer cheaper menu options such as the Dollar Menu (McDonald’s) and You Pick Two (Subway). Conclusion and Recommendations: Our findings, although conclusive, would be better tested on a larger scale. More survey respondents over a larger area would increase the validity of the results. We recommend a QR code-based survey printed on the bottom of Chipotle receipts. This both targets consumers and is cost effective. Likewise, focus groups would be another effective method of gaining deeper insight to consumer behavior and thought.

3

Table of Contents Executive Summary……………………………………………………………………………...2 Situation Analysis……………………………………………………………………………….4-9

Introduction……………………………………………………………………………...4 Background……………………………………………………………………………...4-6 The Issue………………………………………………………………………………...4-5

The Company…………………………………………………………………………....5-6 SWOT Analysis………………………………………………………………………………….7-8 Strengths………………………………………………………………………………...7

Weaknesses……………………………………………………………………………...7-8 Opportunities……………………………………………………………………………8 Threats…………………………………………………………………………….…….8

Information Needs………………………….…………………………………………...8-9 Interview Report………………………………………………………………………………....9-10 Topic and Research Goals……………………………………………………………….9 Justification and Method Sampling……………………………………………………...9

Interview Highlights…………………………………………………………………….9-10 Insights………………………………………………………………………………….10 Research Questions, Revisited………………………………………………………….10

Survey Report……………………………………………………………………………………10-15

Research Topic………………………………………………………………………….10-11 Research Questions……………………………………………………………………...11-12 Plans…………………………………………………………………………………….12-13 Analysis………………………………………………………………………………....12-14

Bivariate Data Analysis…………………………………………………………………14 Discussion………………………………………………………………………………14-15

Recommendations for Further Research………………………………………………………....16-17

Further Data Collection Plans…………………………………………………………....16-17 Works Cited……………………………………………………………………………………….18-19 Appendix………………………………………………………………………………………….20-26

Revised Interview Guide………………………………………………………………...19-23 Revised Survey…………………………………………………………………………. 23-26

4

Situation Analysis

Introduction: Chipotle Mexican Grill, Inc. is an American chain of fast food restaurants that focuses on serving food sourced from sustainable farming practices. Since its establishment in 1993, Chipotle has become a sensation within the restaurant business. It has faced incredible growth since the company went public in 2006. A lot of the firm’s success can be credited to the consumer base. M. Bars, our research group, is working alongside Chipotle to gain deeper insight into the consumer’s mind. We looked at Chipotle’s target audience, millennials, to delve deeper into their thoughts on Chipotle as a brand; their loyalty, their opinions on the recent outbreaks, and Chipotle’s position in the fast-casual restaurant chain industry. Background:

The Issue Since the summer of 2015, Chipotle has been suffering their first major decrease in sales

due to two recent E. Coli outbreaks throughout the chain. Escherichia coli, more commonly known as E. coli, is a germ that normally thrives in the intestines of humans and animals. The most common source of E. coli germ is found in beef; to be exact, 55% of the cases are found in this source. 21% is found in raw vegetables, 11% in raw milk and cheese, and 65% in other meats and poultry. Many E. coli are harmless and actually contribute to a healthy human intestinal tract. But there are six types of E. coli that cause illness. Not all STEC infections are diagnosed though due to the fact that many people do not seek medical help when symptoms occur. (Porjes 27).

Realizing that someone has been affected by STEC, or Shiga toxin-producing E. coli, is not immediate. People usually see signs and symptoms about 2-8 days after consuming the food that has been contaminated with the germ. Diarrhea, oftentimes bloody, and abdominal cramping are the most common symptom. Recovery usually lasts about a week. In some cases, the illness lasts longer and can have more serious side effects, potentially resulting in hemolytic uremic syndrome, which is a type of kidney failure. Fever, abdominal pain, pale skin tone, bruising or bleeding on the face, and fatigue are some common symptoms of this syndrome. Anyone can get infected by E. coli, regardless of age. But very young children and the elderly have a higher chance of this. In the Chipotle E. coli outbreak, the youngest infected was 1-year-old and the oldest was 67. (“FDA Investigates”)

In November of 2015, 43 Chipotle restaurants were closed in Washington and Oregon as a result of the initial E. coli outbreak. Chipotle consulted and collaborated with health officials during the investigation to figure out whether it was acceptable to re-open these locations. They did so later that month. However before doing so, Chipotle reported to have taken a series of steps in order to make sure all health regulations were met. This was an intense process; it included actions such as expanding testing of fresh produce, raw meat, and dairy items prior to arriving at the restaurant locations, and working with federal, state, and local government agencies in executing additional safety procedures and audits in all 2,000 (approximate) restaurants to make sure that all food safety standards are in place. Over 2,500 tests were done testing Chipotle’s food, restaurant surfaces, and equipment. All employees were examined for the possibility of the illness before returning to work. (“FDA Investigates”)

5

Because of the food-poisoning outbreaks, Chipotle has suffered some major financial damage. Overall, Chipotle has been accused of five separate food poisoning outbreaks during the year 2015. Between October and November of 2015, the company was connected with two food-poisoning outbreaks. The remaining three outbreaks did not receive as much publicity and attention as the last two. 64 people in Minnesota were infected by Salmonella in August. Approximately 294 cases were reported for norovirus in California’s Simi Valley during the same month. And in July, an outbreak of a different type of E. coli infected 5 people in Seattle. It was reported that an E. coli outbreak in October-November had a 16% sales decline in the store that it occurred in. The company’s stock is now 30% less than the record high it just set in August of 2015. In December of 2015, 80 Boston College students reported to have stomach pains after consuming Chipotle. It was found that this was the most popular type of foodborne illness – norovirus. Due to this, that Chipotle restaurant in Boston was closed down. In total, Chipotle’s E. coli issue has negatively affected over 350 people across the country. Benjamin Chapman, an Associate Professor and food-safety specialist at North Carolina State University stated “It’s off to see so many issues at one chain. It’s not very common to see outbreaks linked to the same place, the same brand, in a couple of months with different issues. It does make you wonder how they’re managing food safety as a whole.” (Porjes, 93)

In the wake of these food safety illnesses, the media has not been very kind towards Chipotle. Consumer perception of the brand has also dramatically worsened. In order to aid in the prevention of future outbreaks of foodborne illnesses, Chipotle has been working with several food safety consultant firms to assess and recover its already high standards for food safety. It is also encompassing higher standards for food suppliers. Chipotle will also start using DNA-based tests instead of just trusting suppliers to test for potential contamination. The chain will heighten and improve internal training make certain that all employees completely understand Chipotle’s food safety and handling standards. Future sales trends may be significantly affected by these improvements and progresses. (Porjes, 94)

On February 1, 2016, the Centers of Disease Control and Prevention (CDC) announced that the E. coli outbreak linked to Chipotle Mexican Grill appears to have concluded (“FDA Investigates”). Nevertheless, it is thought that this may be a major crisis for Chipotle, since it is a brand that has centered on a promise of clean and safe food for years.

The Company Chipotle is in “the business of good food” (Chipotle Mexican Grill, Inc.) and it is paying

off. Chipotle is a fast food option that is taking over the United States. Since 2006, the number of Chipotle restaurants in this country has almost doubled, and as of last year, Chipotle has tripled its revenue to $2.3 billion (Stein).

Chipotle is a Mexican style restaurant. It is a more organic and natural option compared to fried, preserved food like McDonalds. From the very start, Chipotle used quality ingredients that were raw, and cooked them with technique, rather than mass-producing (Chipotle Mexican Grill, Inc.). Chipotle “brought features from the realm of fine dining to the world of quick-service restaurants” (Chipotle Mexican Grill, Inc.).

Chipotle opened its first restaurant in 1993, with a simple goal, to show that “food served fast didn't have to be a ‘fast-food’ experience” (Chipotle Mexican Grill, Inc.). “We're all about simple, fresh food without artificial flavors or fillers. Just genuine raw ingredients and their individual, delectable flavors. We source from farms rather than factories, and spend a lot more on our ingredients than many other restaurants. We wouldn't have it any other way” (Chipotle Mexican Grill, Inc.).

6

More than twenty years has passed since the world’s first Chipotle, and the brand hasn’t changed. Chipotle has devoted its brand to “finding the very best ingredients they can—with respect for animals, farmers, and the environment—is shown through our Food with Integrity commitment” (Chipotle Mexican Grill, Inc.). As Chipotle grew, they extended their mission to creating an exceptional experience for their customers. They claim the exceptional experience is “the natural result of cultivating a culture of genuine, rewarding opportunities for our employees” (Chipotle Mexican Grill, Inc.).

“[Chipotle’s] goal is to destroy fast food: no more frozen patties, no more microwaves, no more factory farms (Stein). The employees at Chipotle actually cook. Although this causes some variety in taste of the food, it is a much healthier option to greasy foods. “Chipotle uses locally grown produce whenever possible,” and the beans used are both organic and no-till (Stein). No-till beans do less damage to the soil, making them an even better option than merely organic beans. “Last year, Chipotle used 10 million lb. of locally grown avocados and other produce,” “All the sour cream (and 65% of the cheese) comes from pasture-raised cows,” “The carnitas comes from pigs that can roam outside or in deeply bedded pens” (Stein).

Chipotle’s website has a section dedicated to informing their customers. One can visit the site and click the “Food With Integrity” tab to find out about the food’s preparation and the company. Under the tab, one can learn about the “whole or nothing” ingredients, the chefs, the livestock’s’ environment and the outcome of using healthy livestock. The fact that Chipotle has a designated section on their website to inform their customers is something that sets them apart from many other fast food alternatives. They are not hiding their ingredients or their methods.

Chipotle has a reputation for informing their customers. Typically, Chipotle uses locally grown, pasture-raised meats. However, occasionally that is not attainable due to livestock shortages. If any type of meat being served at Chipotle is not 100% locally grown and pasture raised, there is a sign posted on the bar. The sign informs customers that a specific meat may not be grass-fed or from local farmers. Signs are also posted if the restaurant is out of an ingredient or if it has changed a recipe. For instance, Chipotle changed the recipe for pinto beans and posted a sign stating “We’ve created a new pinto bean recipe that no longer contains bacon, but is still just as delicious. So vegetarians, vegans, and the bacon-adverse, rejoice. Omnivores, enjoy them as you normally would” (Renneisen). The signs that Chipotle posts helps keeps customers up to date, and makes the fast-food experience faster and more convenient.

“Cultivating a better world” (Chipotle Mexican Grill, Inc.) is what Chipotle has set out to do. They are trying to redefine fast food with a healthier option. Between natural ingredients, and keeping the customers informed, the foundation of the Chipotle brand is that it is a healthier option, and a fast-food company that differs from all other fast-food brands.

7

SWOT Analysis: Strengths Weaknesses

● Efficiency at both the corporate level and individual chain level

● Many restaurants with healthy revenue ● Sustainably sourced food ● Millennial target audience and

nontraditional marketing

● E. coli and other food safety-related outbreaks

● Closing of stores by health officials

● Decline in revenue due to outbreaks

Opportunities Threats

● Improve health standards publicly ● Millennial-geared marketing efforts ● Expand the menu

● Many competitors ● Cost to customer compared to

other fast food options

Strengths Chipotle doesn't franchise. This allows for better quality control because it operates under one singular corporate. The assembly line-style of the restaurants not only allows customers to customize every aspect of their meal, it also allows for increased efficiency. Increased efficiency not only cuts down on costs, but also increases customer satisfaction. Another positive attribute is the amount of stores, in 2014 chipotle had over 1,700 stores in the US. This is not including the 16 international restaurants. This shows that Chipotle is widespread and therefore reaches a large target audience. Another strength is Chipotle’s revenue. On average, each location brings in approximately $2.2 million a year. Coupled with a projected store growth of up to 7,000 worldwide, there is a large margin for profit (Simpson). Financial stability and positive predicted growth as a company is a great strength. Chipotle, as a corporation, prides itself on serving “food with integrity”. Chipotle only serves naturally raised chicken, pork and 60% of it’s beef is naturally raised. Chipotle only uses zero trans-fat frying oil and does not use cheese or sour cream with rBGH. In addition, 40% of Chipotle’s black beans are certified organic (Simpson). Chipotle recognized that consumers valued their own health and the well-being of animals so invested into the idea and eventually made it a pillar of their corporation. Another strength that Chipotle utilized and continues to utilize non-traditional marketing methods to reach millennials. They utilize social media and are engaged on college campuses. Through their marketing, they offer millennials fun promotional events such as their annual Halloween specials, or interactive games resulting in free food.

Weaknesses

Chipotle’s largest weakness is the recent E. coli outbreak. In the fall of 2015, 43 restaurants in the pacific northwest were closed and liked to an E. coli outbreak throughout six regional restaurants. Then more cases of E. coli were reported throughout seven more states (Edmund). Norovirus and salmonella poisoning were also reported (Sifferlin). These outbreaks set off a chain of events that included health authorities shutting down numerous restaurants and even Chipotle taking a corporate-wide meeting day that involved all restaurants to close for a period of time. The recent E. coli outbreaks, although now under control were very detrimental to the

8

public’s view of Chipotle. Chipotle experienced a 36% decline in stock post-outbreak. This equates to a loss of at least $1 per share (Gensler).

Opportunities

In light of the E. coli outbreak, Chipotle has hired IEH Labs to help improve health standards and produce-testing. This is an opportunity that Chipotle could take advantage of. If they publicized their new cleanliness standards than people would feel safer coming back to the chain. Chipotle also should utilize millennial-targeted marketing. In February of 2016, Chipotle ran a free burrito promotion which lessened their post-outbreak decline by about 10% (Gensler). Chipotle also has great opportunity with expanding their menu. Although there are thousands of possible meal combinations, competitors such as Qdoba offer items such as nachos and a variety of dips.

Threats

Chipotle faces many competitors. Not only from similar companies like Qdoba or other Tex Mex chains, but from other fast-food corporations. Their largest threats come from Rubio’s Restaurants, Brinker International, Panda Restaurant Group, Carrols Restaurant Group, BJ’s Restaurants, Burger King Worldwide, Yum! Brands, Fiesta Restaurant Group, and Jack in the Box. These are threats because some of the restaurants under these corporations have a better hold on the market and a stronger presence. These businesses also sell food at lower prices and offer value menu options.

Information Needs: Our team still needs more information of the opinions of customers towards what kind of strategies would be effective in order to bring customers back to Chipotle after the crisis. Due to the damage done to their reputation by the E. Coli scandal, we want to know if Chipotle will be able to recover. Based on Chipotle’s past reputation and good standing with the public, and the various tactics they have tried to revive their business and reputation, will Chipotle goers gain back their loyalty to the brand? This information can be gathered through focus groups with members of our target market to learn more about their attitudes and reactions to Chipotle’s crisis; and large-scale surveys to gain a broader picture of the effect of the promotions at Chipotle. We will use similar questions that we have used in our survey and interviews, however, we will change the wording a little bit and add some perks to spice it up. Overall, the research will reflect the effect of these promotions on consumer attitudes and whether they have a positive or negative effect on Chipotle’s sales. Large-scale survey researching customer opinion of Chipotle as a brand ● How do customers feel after eating Chipotle? ● Does the crisis prevent a customer from buying Chipotle? ● Every respondent will be sent a promotion through e-mail upon completion of the survey.

300 lucky survey respondents will be randomly chosen to win a $100 Chipotle gift card. Employees at every Chipotle restaurant will be told to inform every customer about the survey.

● QR codes on the bottom of every Chipotle receipt to link to the survey with information about the Chipotle promotions and incentives that will be given to those who take the survey

9

Focus groups: ● Are customers going back to Chipotle after the crisis? ● Did the promotions make customers want to go back to Chipotle? ● Provide food samples so people can try things they have never eaten at Chipotle ● Each participant would receive a $50 Chipotle gift card

Interview Report

Topic and Research Goals: In light of the recent bacteria outbreaks amongst Chipotle’s chains, we decided that both qualitative and quantitative data was necessary. Our goal in conducting qualitative interviews was to gain a deeper insight into the mind of Chipotle’s largest consumers: millennials. How did the E. coli outbreaks affect Chipotle’s target audience, and ultimately, the brand?

Our research questions included: ● What was the overarching effect of the outbreaks on consumerism? ● How do consumers view Chipotle as a brand? ● Who are Chipotle’s industry competitors in relation to millennials?

Justification of Method and Sampling: An in-depth interview is a useful method for gaining insight because it is a form of qualitative research. The qualitative data collection process is not linear. Responses are recorded, processed, and analyzed to harvest the data. One-on-one interviews also allow for a conversational format which grants the interviewer more control over the questions. In-depth interviews allow for a one-on-one interview style with the ability to delve deeper into questions to gain more information. For our interviews, we used both convenience sampling coupled with judgement non-random sampling. Our interviewees were all millennials who either were friends (convenience sampling) or college students who live in Oregon (judgement non-random) because the E. coli outbreak originated there. Interview Highlights: Female, urban Midwest college student, frequent Chipotle customer ● Reported that the E. coli outbreaks deterred her from going to Chipotle as often as she did

before the bacteria was reported ● The free burrito promotions brought her back to Chipotle ● Still associates Chipotle with E. coli and sickness

Female, rural Midwest college student, frequent Chipotle customer ● Price was her deciding factor when choosing a restaurant ● Stated that Chipotle’s lack of menu-price variety makes it uneconomical for a college

student budget (versus McDonalds) ● Was aware of the outbreaks, but since there were none reported in her area, she was not

deterred ● Associated Chipotle with the younger, college-aged generation (millennials)

Female, attends college in Oregon, health-conscious ● Considers Chipotle to be a favorite among millennials

10

● Did not fear eating at Chipotle after hearing about the outbreaks ● Suggested BOGO promotions ● Recommended expansion of the menu as a way to bring in customers

Male, Midwest college student, eats out frequently ● After hearing about the E. coli outbreaks, he was not deterred from eating there ● Prefers Qdoba’s menu options, such as queso- Recommended menu expansion ● Rated Chipotle as his first choice in regards to the fast-casual restaurant market ● Stated that Chipotle’s taste is their biggest success and what brings people in

Insights: A theme that resonated throughout our research, and shocked us, was that people were not afraid to return to Chipotle after hearing of the outbreaks. Our initial research reported that Chipotle was experiencing a 36% decrease in sales directly after the outbreaks were reported. This does not correlate with our qualitative and quantitative results. Our findings report good news for Chipotle, that customers are not deterred and will make a return to the chain. Some other themes found in our research were that our interviewees consistently reported a want, moreover, a need for Chipotle to expand its menu options if it wishes to remain relevant in the fast-casual restaurant market. Not only were consumers looking for a larger menu with more options, but a menu with cheaper options. Something comparable to McDonald’s Dollar Menu. Overall, our qualitative interviews gave us invaluable insight into how to better Chipotle and how to improve upon the brand. Research Questions, Revisited: What was the overarching effects of the outbreaks on consumerism? ● People reported that they were not afraid of returning to Chipotle, so according to our

research there was no correlation between consumerism and the E. coli outbreaks How do consumers view Chipotle as a brand? ● Overall, our interviewees had a very positive opinion on Chipotle. They thought it was

fast and convenient, but not affordable compared to other options. Who are Chipotle’s competitors in relation to millennial? ● Our qualitative research showed that millennials see Chipotle as a “splurge” and although

they enjoy the food over other restaurants, they cannot afford to go as often as they’d like. Restaurants such as Panera Bread, McDonald's and Subway were mentioned as cheaper options that all offered cheaper menu options such as the You Pick Two, Dollar Menu and $5 Footlong.

Survey Report Research Topic: In light of Chipotle’s recent E. coli outbreaks, we are looking at how these events have affected the company as a brand, its sales, and the public opinion. We want to figure out if Chipotle as a brand will survive the food safety crisis. We strive to develop a possible public relations strategy to revive Chipotle and move past the devastation of 2015.

11

Research Questions: Our overarching research questions are: ● What do millennials think of Chipotle? ● Is there a chance for Chipotle to survive after its food safety crisis in 2015? ● What strategies would be effective in order to bring customers back to Chipotle after the

food safety issues? In order to look deeper at Chipotle consumerism (or lack thereof) post the outbreak, we generated survey questions that allow us to delve into the consumer’s mindset. Some questions that we hope to be able to answer include: Did the E. coli crisis affect consumer’s choice to eat at a Chipotle restaurant? Do consumers believe Chipotle’s mission statement is still valid? Who are Chipotle’s competitors in the fast-casual restaurant industry currently? What are Chipotle’s strong suits, looking outside of the crisis? These questions are connected back to seeking the roots of the problem and then designing a strategy to effectively place Chipotle back on the map. We expect these questions and many more to be answered by analyzing our qualitative and quantitative data. Plans: ● Method:

○ The best option for this line of questioning is a survey. Using a survey method is most effective in this scenario because we are looking to gather quantitative data rather than qualitative. We are interesting in larger-scale data collection because it ensures stronger correlations and more reliable data. It is also efficient, especially with direct questions, like the ones we used for this survey. An example of a method that would be ineffective in this scenario would be a focus group. This is purely based on the fact that larger amounts of data are needed, and focus groups take too much time to complete. As well as being time-consuming, a focus group often (hopefully) encourages group discussion, which would be unnecessary with the straightforward questions in this survey. Qualitative data tells researchers consumer insight on an individual basis and we are here looking at consumer insight on a large-scale basis in order to generalize our findings more easily.

● Sampling: ○ The sampling method that was used for this pilot test was non-probability

convenience sampling. People that we are acquainted with took this survey. Therefore, this is not exactly ideal for a full-scale study because the results could be inaccurate. The survey that we created and sent out was completed on a volunteer basis. The survey was released via our teams’ various social media accounts in an attempt to target millennials, but also to get a large amount of respondents.

○ With a full budget, the survey would most likely be longer and more in-depth regarding certain topics and variables. In addition, we would expand our number of respondents. Rather than sending the survey out on social media, which targets only people who we know, we would use a probability sampling method. For the people who would take the survey, we would offer incentives (such as Chipotle gift cards) and promotions.

● Administration:

12

○ Our group used Qualtrics to create the survey. We used social media platforms to “blast” the survey link to our followers and friends. Some of us sent the link and invitation to specific people (millennials) and others directly posted the link to the survey on our social media pages. We chose social media because we are focusing on millennials as Chipotle customers, and millennials are the largest users and proponents of social media usage.

Analysis: Variables and Relationships: The three most important variables that we are trying to measure are: ● Fear ● Brand loyalty ● Satisfaction

○ Fear: Fear is an emotion associated with feeling hesitant, nervous, or scared of eating at Chipotle after hearing about the contamination issues in the food. It may cause a person to choose to not eat there at all. This variable is operationalized in the survey in questions 8, 9, 10, and 11.

○ Brand Loyalty: Brand loyalty is the extent to which consumers are loyal to Chipotle as a brand. When consumers are committed to Chipotle, they consistently return there. Oftentimes customers who are brand loyal choose Chipotle over any other fast-casual restaurant. This variable is operationalized in the survey in questions 1, 2, 8, 9, and 10.

○ Satisfaction: Satisfaction is a feeling associated with being pleased or happy with the overall quality and taste of the food at Chipotle, or even with the experience at Chipotle. Customers who are satisfied with Chipotle would say that Chipotle has fulfilled their expectations, needs, or wishes. This variable is operationalized in the survey in questions 3, 4, 5, and 10.

Relationships Between Variables: We have been looking at a variety of relationships between variables from our survey. Two relationships that we are particularly interested in are: ● Is there a correlation between a customer’s overall satisfaction with Chipotle (variable:

satisfaction) and the likelihood of someone returning there even after hearing about the E. Coli outbreaks in 2015 (variable: fear)? ○ We hypothesize that people who have been and are satisfied with Chipotle are

most likely still going to return there even after the 2015 food safety issues. ● Is there a correlation between a customer’s loyalty to Chipotle as a brand (variable: brand

loyalty) and their regularity of eating food from Chipotle even after finding out about the major food contamination issues (variable: fear)? ○ We hypothesize that customers who are truly loyal to Chipotle and choose it over

other fast-casual restaurants are most likely still going to go to Chipotle just as often after the finding out about the food safety issues, regardless of the severity of the events.

13

Analyze the Data: Based on our research questions, we noticed so far that millennials seem to be fans of Chipotle as well as Panera Bread. The results of this survey, along with prior research, have shown that to be true. In the first question of the survey, we asked people to rank a list of fast-casual restaurants. 45.71% of people who took the survey chose Chipotle as their number one choice and 41.43% of people chose Panera Bread as their number one choice (question #1 in survey). While interpreting the results of our survey, we also noticed that Chipotle seems to have a chance to survive its major food safety crisis of 2015. People seem to be not as bothered by this news as we had anticipated. 36% of respondents said they are extremely likely to return to Chipotle even after hearing about Chipotle’s E. Coli outbreaks and 27% said that they are moderately likely to do so (question #8 in survey). Also, 68% of those who took the survey said that their visits to

Chipotle have stayed about the same since hearing about the food safety issues (question #9 in survey). We are keeping in mind that the sample size was small and was not random. Therefore, we cannot generalize from this pilot test. Nonetheless, it gives us an idea of what might be found in a larger-scale study.

14

Bivariate Data Analysis:

Out of the respondents who said they were extremely likely to return to Chipotle after hearing about the E. coli outbreaks, 58.33% reported being very satisfied with the quality of Chipotle’s ingredients. Out of the respondents who said they were extremely unlikely to return to Chipotle after hearing about the E. coli outbreaks, 33.33% reported being dissatisfied with the quality of Chipotle’s ingredients. Although, this cannot be substantiated because only 3.17% of the total respondents reported being dissatisfied with the quality of Chipotle’s ingredients with 46.03% overall respondents reporting that they were satisfied.

Out of respondents who reported eating at Chipotle on a weekly-basis (1- Several times a week), 100% had heard about the E. coli crisis. This shows that frequent Chipotle consumers pay more attention to news about Chipotle. This can be expanded on through social media use by the company. Discussion: While analyzing the data we noticed some trends that were both similar and different to what we had expected. We thought that many people would choose Chipotle over other brands in questions like question #1. Chipotle is a very popular brand amongst millennials, and we predicted that millennials would rank it higher than all of the other brands in our survey. The data proves this to be true. Chipotle was most frequently ranked as the favored brand; in question number one, 45.71% of people who took the survey chose Chipotle as their number one choice, which was the most out of all the other options. We were surprised at the amount of people who said they felt sick after eating food at Chipotle. There were no major food contamination issues reported at any Chipotle in the state of Illinois in 2015. A large majority of our respondents were from Illinois so we did not expect that many to respond that they felt nauseous, constipated, had diarrhea, abdominal pain, or experienced vomiting. Maybe the respondents were psychologically influenced by the fact that they are

15

completing a survey focusing on the food safety issues, so they may have subconsciously over-exaggerated this response.

The survey was very straightforward, and used simple language. we do not think our respondents were confused by the questions. However, we do think we could have possibly created a more explanatory introduction. It would have been nice for the respondents to know what the purpose of this survey is, without directly stating that it is focused on Chipotle’s food safety issues, which could possibly sway the results of the survey. Also, we could have been more specific for the open-ended question (number 11). We thought that a vague question would allow the respondent to tell us anything that is on their mind about the topic. We thought we’d get some insight on the deeper feelings that people have regarding the issue. But in actuality, most people either skipped it or answered something irrelevant to what we had asked in the wording of the question. We think we could have asked a question asking what state each respondent lives in. We think that a majority of our respondents are from Illinois, but since some of us posted the link to our social media pages, any of our friends from any part of the country may have answered that. People from states in which these food safety issues were reported in could have had a different insight about the topic, even if they were not actually physically affected by it. To improve our survey, we could include a few more questions about what Chipotle can do to improve their brand name and what kind of strategies (promotional strategies perhaps) could work to bring customers back.

In conclusion, throughout our study, we have learned a lot about customer satisfaction, their brand loyalty, and their fear (or lack of fear) regarding Chipotle and the E. Coli scandal of 2015. We tested each of those three variables in specific questions in our survey. We found that customers seem to have satisfaction and brand loyalty towards Chipotle. And most people do not fear eating there, regardless of the food safety issues that were all over the news. We were surprised by the low amount of fear from of the brand after the crisis, but not at all surprised at the high satisfaction and brand loyalty. Although we cannot generalize to the population from this pilot test, because the sample size was small and was not random, the survey gave us an idea of what might be found in a larger-scale study - high brand loyalty and high satisfaction, which trumps low fear of eating at Chipotle. Conducting a survey was more difficult than we expected it to be. There is a lot more work that goes into creating it than what we had anticipated. It was difficult trying to create non-leading questions that still ask what we wanted to ask. It was also difficult creating questions that would show possible relationships in the data, and ones that would provide sufficient evidence for us to conclude themes from the data. It was also hard to get valuable information out of our one open-ended questions. Many of our respondents did not answer it seriously or just did not answer it at all. For a full-scale study, we would use a random sample for our data, and it would be a larger sample. This way we could more accurately generalize to the population. We would also include a few more questions (without making it too long, since then less people will want to participate in the survey) focusing on our variables, in order to dig as deep as we can into what our respondents think about the topic. Although surveys are meant to be used for quantitative data, by doing this we could get more “quality” answers. Other than that, we would keep most of the survey the same as this.

16

Recommendations for Further Research After analyzing data from qualitative interviews and a quantifiable survey, we have determined that Chipotle has a high rate of customer satisfaction and brand loyalty. Due to personal experiences, we expected that the high levels of satisfaction and loyalty would occur. We also discovered that there is hardly any fear associated with eating Chipotle and the E. Coli scandal of 2015, and the existing fear that customers may feel does not trump their desire to eat Chipotle. Before conducting research on Chipotle’s brand perception after the E. coli crisis, we theorized that the crisis caused a significant decline in customer support and brand perception of Chipotle. Because of our previous hypothesis, the low amount of fear regarding the brand after the crisis was an especially interesting find for our group. From conducting our research over the past ten weeks, we learned that the brand’s name and reputation prior to the crisis helped Chipotle overcome the E. Coli crisis. A majority of our participants reported that positive feelings are still associated with Chipotle after the crisis, we conclude that this is due to the fact that customers are, and have been, pleased with the brand’s service and products. Further Data Collection Plans: Throughout the duration of our study, analyzing our secondary, qualitative, and quantitative research, we were able to reach some interesting conclusions about Chipotle and their consumers. Our data from our primary interviews and survey has elicited valuable information regarding what millennials think of Chipotle and the chance for Chipotle to survive as a brand after its food contamination issue in 2015. A majority or respondents felt neutral towards the event and the situation did not affect their Chipotle visits afterwards. However, we did not find out as much as we wanted to about what kind of strategies would be effective in order to bring customers back to Chipotle after the crisis. To further gain better insight about millennials’ attitudes towards Chipotle and the future of the brand, and to find out which promotional strategies would be most efficient, we would like to expand the research. Here are two plans for further data collection: 1. The first recommendation is a large-scale survey. 2. The second recommendation is conducting focus groups.

A large-scale survey would allow for more accurate quantitative information regarding Chipotle and their consumers. The insights that we gathered from our pilot survey revealed to us that this type of research is effective for our study and our research goals. However, the more respondents we have for the survey, the better because it would be a more accurate representation of the population and the overall public opinion of Chipotle as a brand. We want as many Chipotle consumers and members of the general public as possible to take the survey. Some minor corrections would be made in the wording of some questions from the pilot survey and a couple additional questions would be added on to receive more valuable information. The informational goals would be the same as those for our pilot survey, since this study would simply be an expansion of the pilot study we already conducted.

The way we would conduct a large-scale survey is by providing promotions and incentives to survey respondents. Many people do not want to take surveys simply to benefit the purpose of professional research. Some do not understand the importance of it and others do not

17

think it’s worth their time. Because we want a large amount of respondents, by providing promotions and incentives to those who take the survey we are positive that more people will take it than if we did not do so. Therefore, our plan is to print QR codes on the bottom of every Chipotle receipt to link to the survey. On the receipt there would be some information about the Chipotle promotions and incentives that will be given to those who take the survey. Often times receipts have links to surveys, but people get dis-interested in searching for the survey themselves by typing in the URL. By providing a QR code to the link, we are making it as easy as possible for people to get to the survey. In the introduction of the survey, we would include the exact information about the promos and incentives: Every respondent will be sent a promotion through e-mail upon completion of the survey. 300 lucky survey respondents will be randomly chosen to win a $100 Chipotle gift card. Employees at every Chipotle restaurant will be told to inform every customer about the survey. Conducting focus groups would allow for more in-depth qualitative information regarding Chipotle and their consumers. Focus groups have similar benefits as in-depth interviews. Both types of primary research provide more information about how people feel deep down about a particular topic, which is difficult to be acquired through conducting surveys. Focus groups are carefully planned beforehand that uncover attitudes and perceptions, which enable more fully informed and more successful decisions to be made. Focus groups are more beneficial than in-depth one-on-one interviews however, because insight is gained from more people and it is more cost-efficient. The way we would conduct the focus groups to be as effective in gaining the information we want as possible would be by organizing them throughout the United States. Every state would have two organized focus groups, since difference in geography causes differences in attitudes and behaviors. People participating in the focus groups would be randomly chosen Chipotle customers. Compatibility is key in focus groups: the people do not have to be necessarily identical, but they must be comfortable with each other so that they are not discouraged from stating valuable opinions. The facility for each focus group would be carefully selected, so that members feel comfortable and so that the setting does not affect their thoughts or feelings. There would be a refreshment table with food from Chipotle along with beverages. This strategy would work like food samples, so people can try things they have never eaten at Chipotle. Each moderator hired for this study would have to be interested, be an excellent conversationalist, be an active listener, and be flexible and innovative in monitoring the conversation and pulling out the most valuable information. Each participant would receive a $50 Chipotle gift card.

18

Works Cited:

"Chipotle Mexican Grill, Inc." Chipotle Mexican Grill, Inc. SWOT Analysis (2015): 1-8.

Business Source Complete. Web. 1 May 2016.

Edmund, Mark. "Farm-to-Fork Follies." Quality Progress 49.2 (2016): 10-11. ProQuest.Web. 20

Apr. 2016.

"FDA Investigates Multistate Outbreak of E. Coli O26 Infections Linked to Chipotle Mexican

Grill Restaurants." U.S. Food and Drug Administration. FDA, 1 Feb. 2016. Web. 28 Apr.

2016.

Gensler, Lauren. "Chipotle's Sales Are Still a Wreck, But The Free Burritos Helped."

Forbes.Com (2016): 4. Business Source Complete. Web. 1 May 2016.

Rachels, Stuart. The Elements of Moral Philosophy. 7th ed. New York: McGraw Hill, 2012.

Print.

Renneisen, Andrew. "A Sign Sits in the Window of a Chipotle Restaurant on Broadway In..."

Getty Images. Getty Images, n.d. Web. 01 May 2016.

Russolillo, Steven. "Chipotle Deserves another Chance; Chipotle's Shares Have Fallen Too Far

Following E. Coli and Other Health-Related Incidents; Why the Stock is due for a

Rebound." Wall Street Journal (Online) Apr 25 2016 ProQuest. 1 May 2016.

Sifferlin, Alexandra. "Why The Rise in Food-Poisoning Reports Is Actually a Good Thing."

Time 187.11 (2016): 27-28. Academic Search Complete. Web. 1 May 2016.

Simpson, Sondra. "Chipotle Mexican Grill Inc.: Strategy with a Higher Mission or Farmed and

Dangerous?." Journal of Case Studies 33.2 (2015): 38-59. Business Source Complete.

Web. 20 Apr. 2016.

19

Stein, Joel. "The Fast-Food Ethicist. (Cover Story)." Time 180.4 (2012): 40-44. Academic Search

Complete. Web. 1 May 2016.

20

Appendix

Revised Interview Guide: Plan for the interview: The plan for the interview is to gain a better understanding about what millennials think of Chipotle and its future as a brand. Specifically, we want to gain a better insight on what college students have to say, since they are typically frequent Chipotle customers. We want to find out what is the chance of Chipotle surviving after its major food safety crisis. We also would like to know what strategies would be effective in order to increase consumer traffic since the Introduction:

● Explain the reason for the interview: ● To learn more about the participant’s knowledge of the Chipotle outbreaks and to

know how relevant these concerns are to the participant. ▪ “I am interviewing you as a millennial to learn more about your

perspective on Chipotle and Chipotle’s E. Coli crisis.” ● Introduce yourself.

● “I am conducting a research project for my Research Methods for my Public Relations and Advertising Professional course, and this interview is a part of my qualitative research.”

● Tell the interviewee the expected amount of time that this interview will take 30-60 minutes

● Emphasize that there is no "right" response and all answers will be kept anonymous ● Explain that you will be taking notes during the interview, but that you are listening. ● Explain to the interviewee that they are not obligated to participate. Reiterate that they

are in control of their decision to be an interviewee, they have the right not to answer a question if they do not feel comfortable doing so, and if at any time they no longer want to complete the interview, they may leave.

● Allow the interviewee to thoroughly read over the consent form and sign it before the interview is held.

Topics covered: ● Chipotle’s E. coli outbreak and its effects on consumerism ● Chipotle’s brand image ● Competitors in relation to Chipotle in the industry

Suggested questions/ activities: ● Background Questions:

○ To get a better understanding of your viewpoint on Chipotle Mexican Grill as a brand, I’d like to begin by asking you about your experiences with this fast-casual restaurant chain. Your responses will help me understand what type of consumer you are.

o What is your go-to spot when choosing a place to eat out? o (Follow up: Why is that your go-to spot?)

o How frequently do you consume food from Chipotle? o (Follow up: If the interview is a frequent customer, ask what is it

about Chipotle that brings you back or draws you in?)

21

o Why would you or why do you choose Chipotle over other restaurants? o Describe your typical experience at Chipotle.

o (Follow up: How do you feel when you are there? Do you feel welcomed? Do you feel respected as a customer?)

o Describe your typical social experience at Chipotle. o (Follow up: When you do go to Chipotle, do you usually go alone,

with a friend, or a group of people?) o Do you typically dine in or take out?

o (Follow up: Why do you dine in/why do you take out?) o Describe your emotional response when eating Chipotle? How does it

make you feel? o If you were to choose a famous person as a spokesperson for Chipotle or

someone to represent Chipotle, who would you choose? ● Context/Situation Analysis Questions:

○ Now, I want to move on to talking about your knowledge about Chipotle’s food safety crisis and get a better understanding about your viewpoint of the situation.

o Describe to me what you know about Chipotle’s food safety situation. o (Follow up: Where/how did you find out about it? If you

remember, when did you find out?) If interviewee was able to answer questions above, proceed to the rest of the questions in this section. If not, move on to the next section.

o Have you or someone you know been affected by E. Coli, Salmonella, or any other foodborne illness caused by consuming food from Chipotle?

o (Follow up: If yes, describe the situation. How did you feel/how did they feel?)

o How did you feel when you first heard about the food safety issues at Chipotle?

o (Follow up: Did it change your opinion or perspective on Chipotle as a brand? Did you ever expect this to be an issue that Chipotle would be dealing with?)

o Since hearing about the food poisoning crisis, describe your frequency of eating Chipotle.

o (Follow up: Have your Chipotle visits increased, decreased, or stayed the same since the major E. Coli crisis?)

o Chipotle’s mission statement is called “Food with Integrity”. Their commitment highlights its efforts in using naturally grown ingredients and serving more naturally-raised meat than any other restaurant chain. What do you think about this?

o (Follow up: Do you think they have the right to state this after their major food safety crisis?)

● Comparing/Contrasting Chipotle and Other Restaurants: ○ I will now move on to a few exercises that will allow me to gain a more thorough

understanding about your thoughts of Chipotle and other fast-casual restaurants. o Projective technique #1 (Verbal Stimuli): List out fast casual restaurants

and have the interviewee state the first thing that comes to mind. This should be their initial response. Let the interviewee know that they will

22

only be given about 5-8 seconds to respond after they hear each fast-casual restaurant. The goal is to gain insight about what they think of other cafes, restaurants, and Chipotle’s competitors, but do not tell the interviewee this.

- Potbelly’s - Panera Bread - Chipotle - Noodles and Company - Jimmy Johns - Subway - Starbucks - Qdoba - Panda Express - Burger King - McDonald’s - Taco Bell - Chick-Fil-A

o Projective technique #2 (Pictures as Stimuli): Provide picture of people,

some older and some younger. Have the respondent match it with the provided certain fast-casual restaurants. Inform the interviewee that only photos of males will be shown in order to prevent bias. The goal is to get a better idea of what people think of as the target consumer of each brand.

● List of fast-casual restaurants that the interviewee has as options to

match to each photo: - Subway - Potbelly’s - Panera Bread - Burger King - Chipotle - McDonald’s - Panda Express - Qdoba

o Process Technique (Repertory Grid): Provide the interviewee a list of these

characteristics and have the interviewee match it with either Chipotle or Panera Bread.

Chipotle Panera Bread

More friendly/welcoming environment Less friendly/welcoming environment Quick-paced Takes more time Quality food Less quality food Healthy food Less healthy food Large menu selection Small menu selection

23

Makes you feel important as a customer Does not make you feel as important as a customer

“I would more likely choose this place to go to with my significant other.”

“I would less likely choose this place to go to with my significant other.”

Food is definitely safe to eat Food safety is a possible concern More casual Less casual I feel good after I consume the food I do not feel as good after I consume the

food ● Future of Chipotle Questions:

o After being informed about the food poisoning crisis, what do you think is the future of Chipotle as a brand? (Follow up: Do you think Chipotle will be able to survive the crisis? Do you think Chipotle will eventually fail or succeed as a brand?)

o Chipotle has been doing more promotions in order to bring customers back. (For example, free burrito promo when you text a number, BOGO Chipotle meals, free chips and guacamole with a purchase) Do you think these promotions are working?

o What do you think Chipotle should do in order to increase customer traffic and sales revenue?

Conclusion: Thank you so much for participating in this interview. Your responses will remain anonymous because we respect your privacy. If you have any further questions about the results of this research project, you are more than welcome to contact me once the research is completed.

Revised Survey: Please answer the following questions about Chipotle to the best of your ability. Your responses will remain anonymous. The survey should take less than ten minutes. Thank you for your time. Your input is greatly appreciated! Q1 Suppose you have the choice to go to any of these fast-casual restaurants on a given day. Please rank these in order to the best of your ability. (1 being your first choice, 5 being your last choice.) ______ Panera Bread (1) ______ Potbelly's Sandwich Works (2) ______ Subway (3) ______ Chipotle Mexican Grill (4) ______ Qdoba (5) Q2 How often do you eat food from Chipotle? ● Never (1) ● Few times in a year (2) ● About 1-2 times per month (3) ● Once a week (4)

24

● Several times per week (5) ● Almost every day (6) ● Every day (7)

If Never Is Selected, Then Skip to Have you heard about Chipotle's food ... Q3 Next to each of the statements below about Chipotle, please indicate how strongly you agree or disagree. Strongly

agree (1) Agree (2) Neither

agree nor disagree (neutral) (3)

Disagree (4) Strongly disagree (5)

Prices are reasonable. (1)

It is convenient, quick, and/or easy. (2)

Customer service is great. (3)

Quality and fresh ingredients. (4)

Food is satisfying and tasty. (5)

Q4 Please indicate from the following your overall satisfaction or dissatisfaction with the quality of Chipotle's ingredients: Very satisfied (1) Satisfied (2) Undecided/neutral (3) Dissatisfied (4) Very dissatisfied (5) Q5 Have you ever felt sick caused by consuming food from Chipotle? ● Yes (1) ● Maybe (2) ● No (3) ● Probably not (4) ● Not sure (5)

25

Answer If Have you ever felt sick caused by consuming food from Chipotle? Yes Is Selected Q6 Checkmark all of the side effects you experienced when you felt sick after eating at Chipotle. ● Nauseous (1) ● Bloated (2) ● Constipation (3) ● Diarrhea (4) ● Fever (5) ● Loss of appetite (6) ● Vomiting (7) ● Abdominal pain (8) ● Other (9)

Q7 Have you heard about Chipotle's food safety issues and/or the E. Coli outbreaks, which occurred during 2015? ● Yes (1) ● No (2)

Answer If Have you heard about Chipotle's food safety issues and/or the E. Coli outbreaks, which occurred during 2015? Yes Is Selected Q8 After hearing about Chipotle's E. Coli outbreaks, how likely are you to return there? ● Extremely likely (1) ● Moderately likely (2) ● Slightly likely (3) ● Neither likely nor unlikely (4) ● Slightly unlikely (5) ● Moderately unlikely (6) ● Extremely unlikely (7)

Answer If Have you heard about Chipotle's food safety issues and/or the E. Coli outbreaks, which occurred d... Yes Is Selected Q9 Please complete the sentence by choosing one of the following: "Since Chipotle's E. Coli outbreaks and food safety issues in 2015, my visits to Chipotle have ___________________." ● Increased (1) ● Slightly increased (2) ● Decreased (3) ● Slightly decreased (4) ● Stayed about the same (5)

Answer If Have you heard about Chipotle's food safety issues and/or the E. Coli outbreaks, which occurred d... Yes Is Selected Q10 Chipotle's mission statement is called "Food with Integrity", which highlights its efforts in using naturally grown ingredients and serving more naturally raised meat than any other restaurant chain. Since the E. Coli crisis in 2015, how well do you trust Chipotle's mission statement? ● Extremely well (1) ● Very well (2)

26

● Moderately well (3) ● Slightly well (4) ● Not well at all (5) ● Undecided/neutral (6)

Answer If Have you heard about Chipotle's food safety issues and/or the E. Coli outbreaks, which occurred during 2015? Yes Is Selected Q11 Please describe any thoughts you have regarding Chipotle's food contamination crisis. Q12 Please indicate your gender. ● Male (1) ● Female (2) ● I do not wish to indicate my gender (3)

Q13 What age category do you fall under? ● Under 10 years old (1) ● Ages 11-13 (2) ● Ages 14-16 (3) ● Ages 17-19 (4) ● Ages 20-22 (5) ● Ages 23-25 (6) ● Over 25 years old (7)

Q14 Which state do you currently reside in? (Choose state from scroll down menu. There would be a “choose not to answer” option. )