OM in the News: Chipotle’s Toxic Supply Chain

My family is the perfect customer unit for Chipotle Mexican Grill. We eat organic, prefer range fed animals, and select local fresh vegetables and fruit. For a long time, the chain of 1,900+ locations has reminded customers that its fresh ingredients and naturally raised meat are better than rivals’ and better for the world. The implication: If you eat Chipotle, you’re doing the right thing, and maybe you’re better, too. But fewer people associate Chipotle with “healthy” today, reports BusinessWeek (Dec. 28, 2015-Jan.10, 2016). Almost 500 people around the country have become sick from their food since July. And food-safety experts say they believe the total number affected is at least 10 times the reported number.

The company has always urged customers to think about its supply chain. Now they are. And so is Chipotle, which has blamed the outbreak on its supply chain’s use of local farmers and growers. To respond to the crisis, it will shift more food preparation out of restaurants and into centralized kitchens–doing things more like the McDonalds type of chains it’s long mocked.

Chipotle has about 100 major suppliers for its 64 ingredients–plus many more local farms, which supply 10% of its produce. More food will be prepared ahead of time, out of sight at commissaries, and transported to 19 distribution centers and then to restaurants. “They’re sort of in a bind,” says a Boston U. prof. “They want to have this local, fresh image, and making food in a commissary and shipping it all over the country takes away from that.”

Before it’s harvested, produce will be screened for pathogens using DNA-based tests. Meeting these higher standards will be expensive for smaller farms: There’s the cost of the testing itself and of discarding rejected vegetables and herbs. From there, it will be sent to the commissaries, to be washed, sanitized, and retested. The commissaries, rather than the restaurants, will be responsible for cleaning and packaging the cilantro, shredding the lettuce, and dicing the tomatoes.

Classroom discussion questions:

1. Compare Chipotle’s supply chain to that of Darden’s, described in the Global Company Profile in Chapter 11.
2. What are the advantages and disadvantages of using locally grown supplies?