Chipotle Mexican Grill has long been the darling of the casual diner market – offering great food at good prices and served with a healthy dollop of integrity and ethics. But the US also loves a good fall from grace.
The brand has prided itself on being anti-industrial, using ethically farmed pork and chicken, and recently went GMO-free (genetically modified organism). Consumers rejoiced, stores exploded to 1 700 units in the US, and shares boomed to $727 each.
And now for the snag…
Chipotle dodged a potentially catastrophic PR incident when its own internal audit uncovered one of its pork suppliers dodging some of its strict porcine welfare regulations.
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Suspending all pork purchases from the supplier has meant that one third of the chain is now without its popular topping and carnitas side dish that makes up 6% to 7% of all entrée sales – ouch.
No pork, no profits
Because the brand is not prepared to compromise on animal welfare, it’s looking into using other cuts of pork, and also increasing orders with its other suppliers to meet the needs of the nearly 600 stores left porkless.
Besides being inconvenient, this is starting to have an impact on the listed company’s stock price: Analysts are anticipating a share price drop of 15% to 20% which will throw the company into unchartered territory.