Product recalls or food related incidents are the biggest threats to those working in food or food manufacturing industries. Food related incidents can impact simultaneously both on the retailer and the supplier. They also have the ability to significantly impact a brand’s reputation as well as their bottom line. Chipotle found out this the hard way when their restaurants had a widespread outbreak of multiple foodborne illnesses such as E-coli in 2015. More recently here in Australia, major supermarket chains Coles and Woolworths came under fire after the national recall of pre-packaged salad mixes after they were linked to instances of salmonella.
Last year, Chipotle experienced the full blown damage a food crisis can do to a well established fast food chain. Chipotle posted a loss of 6.8% for Q4 revenue in 2015 compared to the same time last year, their first ever decrease since the company became publically listed in 2006. Additionally, net profit for Q4 fell by nearly 50% compared to the previous year. The company publically stated in their annual report that the decreases in revenue and net profit were due to the sizeable increase in negative publicity in the media and decrease in consumer trust with the brand.
The way in which a company handles a serious crisis such as a potentially deadly outbreak, will determine whether they are able to regain the trust of their customers. However, lack of trust in a company can extend beyond customers to other stakeholders such as investors, which has the ability to further damage the brand. In less than four months Chipotle’s stock price decreased by 38.46% from $747 on October 13th 2015 (before the outbreak) to $459.70 on February 3rd 2016. At one point in January 2016 the decrease stood at 42.16% - Chipotle’s stock price is only now beginning to recover.
Mark Crumpacker, the chief creative and development officer at Chipotle stated that “there’s nothing worse from a trust perspective. This is not the kind of problem that you market your way out of.”
Food crises like salmonella or E. coli put companies in the spotlight - where there is an increase in negative attention from customers, media, public and the government. Planning and preparing for the media storm that surrounds product recalls and foodborne illnesses can ensure that companies restore customer trust and the faith of investors.
Reputation management is crucial for a food safety crisis – the way a company manages the media, ongoing customer complaints and public scrutiny is vital in successfully overcoming a crisis. In a time where there is considerable anger and mistrust from the public, customers and investors, companies must have the skills and training to know how to respond in a way that decreases damage to reputation.
Briggs Communications offers expert reputation and crisis management plans and specialized media training to assist companies in successfully managing all aspects of a crisis. Contact us today for your free consultation.