Chipotle Mexican Grill, Inc. [NYSE:CMG] is one of the largest Mexican fast food chains in the US.
According to Statista, Chipotle is only second to Taco Bell when it comes to sales and location numbers.
Yet people are scared to eat there.
You see, back in 2015 Chipotle suffered an E. coli outbreak.
There were 14 states and 60 people affected, out of which many had to be hospitalized. Chipotle had to temporarily close several locations…and lost a lot of money.
The company had to spend millions to manage the crisis. Between October 2015 and January 2016, the company´s stock price plummeted by over 40%.
But, more importantly, Chipotle´s reputation suffered. Chipotle´s main promise is that they will deliver high quality and sustainable ingredients at their restaurants…so you can see how an E. Coli outbreak can be a problem…
Since then Chipotle has implemented stricter food safety guidelines. Yet the company has still had some other health scares in recent years.
This is making people weary.
A recent report from UBS found that food safety is one of the reasons why people dined at Chipotle less often. As they said, courtesy of Business Insider:
‘Food safety concerns top the list of reasons that customers said they’re eating Chipotle less frequently, according to a UBS Evidence Lab survey of 1,500 people. In the report, released on Monday, 26% of respondents cited a concern about food safety as the main reason they were eating at the chain less…
‘As a result, Chipotle’s food safety reputation is still far worse than any other fast-food chain. For comparison, roughly 15% of respondents say that food safety concerns are the main reason they are eating at McDonald’s less frequently.
‘Customers who rarely or never eat at Chipotle are the most likely to hold food safety concerns against the chain, with a whopping 60% of people who don’t visit the chain indicating a “significantly negative impact or a complete loss of trust in the brand.”
‘…UBS also found that even if the chain is able to improve its food safety reputation, there may be other issues. Most notably, people are significantly more likely to say that Chipotle’s food simply “doesn’t taste good” now, compared to 2016.’
The fact that Chipotle took weeks to contain the outbreak hurt the company´s reputation.
The supply chain has become more complex
The thing is, fast food restaurants like Chipotle depend on trusting their food supply chains. Yet with globalisation and the proliferation of healthy eating trends, the supply chain has become more complex. There are a lot of people involved: farmers, intermediaries, distributors…you name it.
And each of them have their own systems to track data and transactions, and their own centralised databases. This makes the whole system complicated, and quite inefficient. Tracking where an ingredient has been, from when it was farmed to your plate, could be a nightmare.
But, what if I told you there was a way to change this?
What if we could create a shared database? One that would track every detail of each ingredient or product and would increase transparency and efficiency?
I´m talking about blockchain.
If you are not familiar with blockchain, it is essentially a shared public ledger — a database that every member of the network can see and contribute to. It is also the technology behind the cryptocurrency bitcoin.
Blockchain could be a game changer
Source: CBI Insights
Yet blockchain could be a game changer in many other industries, like food supply chains.
With blockchain, you could track and record the information for millions of ingredients from when they were produced until it reaches the final user. Blockchain allows you to record every single detail in between, from where it was grown or raised, what chemicals the farmer used, how it was stored and at what temperature…pretty much anything…
All that information would then be in digital format for easy access for any of the members in the network. And, because information in the blockchain is distributed across millions of databases, it would be impossible to hack or manipulate.
Blockchain could increase transparency, help cut costs and increase food safety in food supply chains.
Yet Blockchain could disrupt plenty of industries. Health, stock trading, voting, real estate, shipping….any industry that is labour intensive, full of paperwork, complex and time consuming…
Editor, Markets & Money