Chipotle, Brand Liabilities, and Brand Equity
While learning about brand equity and how it can affect an organization, I thought of the food safety problems Chipotle faced in 2015. In 2015, food from Chipotle caused 10 outbreaks nationwide of serious illness including E. Coli, Norovirus, and Salmonella. At least 500 people were affected, but no deaths were reported. This led to various lawsuits brought against Chipotle aiming to obtain compensation for medical bills, loss of wages, and other damages. Additionally, a suit was brought against the Simi Valley, California store for attempting to hide evidence of a Norovirus outbreak.
These events all contributed to Chipotle's brand liabilities. "Brands can also incur brand liabilities due to product failure, lawsuits, or questionable business practices" (Best, pg 253). Check, check, and check. Chipotle's product failed by getting people sick, lawsuits were rolling in, and food safety and transparency (Simi Valley) practices were definitely questionable.
5 kinds of brand liabilities that could potentially hurt a brand:
- Customer Dissatisfaction
- Product or Service Failures
- Questionable Practices
- Poor Record on Social Issues
- Negative Associations
Chipotle faced 4 out of these 5 liabilities and the damage to the brand could be seen immediately. Company stock began to slide, consumers remained leery of the brand, store sales dropped 14.6%, and 43 stores in the Northwestern region of the US were forced to shut down permanently.
However, Chipotle didn't just give up. They put in the work to decrease their brand liability and get their brand equity back up. Chipotle implemented new food safety and employee sickness programs, closed affected stores for deep cleaning, closed all stores for one full day for a company- wide meeting on policy changes, and offered free burrito coupons. These tactics, complete transparency, and a focus on "people over profits" allowed Chipotle to mend their bruised reputation and regain the loyalty of their customers.
I think this is a great example of how brand liabilities can have a detrimental effect on brand equity as well as company's sales and profits. It also shows that there are ways to decrease these liabilities. Just look at Chipotle now. It is a thriving business that I personally eat at all the time. I'm sure many of you do as well.
Here are a couple questions that my classmates may want to answer:
- Since I only really discussed Chipotle's brand liabilities, what are some of Chipotle's brand assets?
- Do you believe that Chipotle's current brand equity is strong or weak? why?
- Do you think there is a possibility for Chipotle to increase their current brand equity?
Great blog Emelia! 1.) Some of Chipotle's assets are that it has a"brand awareness," and "fresh food," made-to-order, but there are mixed reviews out there on whether it's reputation has recovered from the earlier food safety scares.2.) Current brand equity for Chipotle is not strong... 3.) There should be a possibility for Chipotle to increase its current brand equity. What is interesting is to read the web article in Adage about the new CEO's take that he feels Chipotle has been "invisible" and will be working on making some changes to increase its visibility. He will likely be under scrutiny for results of any marketing plans, as the former founder and CEO stepped down recently after two years after "failing...to rescue sales and the company's reputation" (staying on as executive chairman).
ReplyDeletehttps://www.reuters.com/article/us-chipotle-results-stocks/no-easy-solutions-to-chipotles-public-image-problem-idUSKBN1FR26Q
http://adage.com/article/cmo-strategy/chipotle-s-ceo-brand-invisible/313275/
Great blog emelia. This is such a good point. To touch upon that first question about Chipotle's brand assets. On Chipotle's website they have a "food with integrity" tab that states "We're committed because we understand the connection between how food is raised and prepared,
ReplyDeleteand how it tastes." They do not use added colors or preservatives as well as gets their meat/veggies from farmers instead of factories like many other companies and spend the extra money to make sure the customers are satisfied. Another brand asset is that the food is cooked at each individual chipotle - it isnt shipped.
Nice blog. The one thing that comes to mind when reading is this is why did everyone hear about this lawsuit? I find it interesting that the public was all up in arms about this while other companies hide their wrong doings every day. They may not so name brand but issues like this come up all the time. I guess thats the dark side of marketing. If you are doing something well everyone will be happy. But if your marking is strong and you mess up, good luck!
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