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Reuters/Carlos Barria
Serving up burritos and valuable lessons.
LESSON LEARNED

Fast casual restaurants are girding themselves for a post-Chipotle world

By Chase Purdy

With Chipotle still flailing from a food safety crisis that wrecked its sales growth and its stock price, fellow fast-casual restaurant companies have watched from the sidelines with one big takeaway: Not us.

Panera Bread’s president, Drew Madsen, put it bluntly during an April 27 call with investors:

“Clearly, we live in a post-Chipotle world, where there is elevated focus on food safety at all restaurants. Given these changes, we expect our cost for food safety effort in 2016 to be about $2 million higher than originally targeted.”

With government data showing the number of foodborne illness outbreaks that occur each year has remained relatively steady, the extra spending by Panera is clearly inspired in large part by what happened specifically at Chipotle. The burrito chain was tied to a spate of E. coli and norovirus outbreaks that sickened hundreds of people from Seattle to Boston in 2015.

Panera’s prevention effort has included hiring a food safety consultant who is currently going through the company’s supply chain to assess safety protocols. One resulting change the company has made includes creating more space in its fresh dough facilities to ensure physical distance between fresh produce and raw dough. Panera also has increased the number of food safety audits it conducts throughout its supply chain, Madsen said.

Companies are paying more attention to food safety in the immediate wake of the illness outbreaks at Chipotle because it reminded them of how it can hurt the bottom line, said Jason Moser, an analyst at The Motley Fool. Chipotle’s stock has fallen 41% since the first outbreaks hit.

“I think you’re going to have more and more restaurants see what happened to Chipotle and see perhaps there’s going to be a new standard,” Moser said. “Those headlines can really hit them hard.”