Protectors of the Brand

This is an excerpt of the original article. It was written for the November 2016 edition of Supply Chain Management Review. The full article is available to current subscribers.

November 2016

Is supply chain management strategic or tactical? Are the best supply chains collaborative? Should the goal be an integrated supply chain or an integrative supply chain? The answers are a mixed bag, according to this month’s contributors.

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In August of 2016, Chipotle was riding high. Perceived as a healthy food choice for its use of local, farm fresh ingredients, the Mexican food chain was one of the three most respected limited service restaurants in the world. Neither diners, who flocked to its locations, nor investors, who drove the price of a single share of stock to more than $750, could seem to get enough. Of course, that was before an outbreak of Norovirus in Simi Valley, Calif. that affected nearly 100 customers.

As if that was not enough, the California outbreak was followed by more outbreaks of food borne illnesses linked to Chipotle locations in at least 12 states. The low point may have been reached in February 2016, when the chain temporarily closed all of its locations to address the issue.

Soon, Chipotle’s stock had dropped 47%. The company had lost $10 billion in market capitalization along with its reputation as the healthy restaurant choice. Now dubbed “the most dangerous restaurant stock in the industry,” it was among the least respected restaurant brands among investors. While the Centers For Disease Control and Prevention looked for the culprit, a sign posted in the window of one Chipotle identified the cause: “FYI: We are sorry, but we are temporarily closed due to a supply chain issue.”

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