After Numerous Health Incidents, Chipotle Has a Big Perception Problem

Outbreaks of E. Coli and norovirus have caused the fast casual chain to temporarily shut down locations across the country.

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By Laura Entis

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Recently, Chipotle has made headlines for reasons that make the aphorism "all press is good press" ring ridiculously false.

It started last month, when the Mexican fast-casual chain temporarily shut down 43 locations in the Pacific Northwest after an E. coli outbreak was linked to six restaurants in the region. It was a sizeable setback, but not an outright PR disaster.

That changed when, over the course of a month, E. coli outbreaks were traced to restaurants in seven states sprinkled throughout the country. The cherry on top of Chipotle's E. coli-laced sundae was the news that more than 140 Boston College students fell ill after eating at a nearby location earlier this week. While Boston health officials believe the culprit is norovirus, not E. coli, for a public already primed to associate Chipotle with disease, it hardly mattered.

Related: Why Fresh Fruits and Veggies Means Healthy Profits for Fast Food

Case in point: A few days ago, on the way to grab a quick dinner with a friend before our 7:30 p.m. movie, I texted that we should meet at Chipotle. Her response?

"We're not going to the E. coli restaurant."

We ended up going to Dos Toros, a local Chipotle competitor. This, in a nutshell, is the massive perception problem Chipotle is now up against. My friend, a previously self-described "Chipotle addict," will be indulging her burrito habit at other fast-casual chains for the foreseeable future. As I'm sure will many other consumers.

Chipotle is well aware of this -- the company has already predicted that fourth quarter sales at its flagship stores could fall by as much as 11 percent. It will be the first significant revenue slump the company has experienced since going public nearly a decade ago.

Ironically, Chipotle's immense success is partially due to the same factors now plaguing the company: a much-publicized reliance on fresh, locally-sourced meats and produce. It's a worthy mission, but it practically requires that Chipotle work with a network of local suppliers rather than a few large ones. As the New Yorker notes, this patchwork system makes it far harder to insure food safety.

Related: Are Flavored Buns The Next Fast Food Frontier?

Chipotle is now in damage-control mode, working in overdrive to assure consumers that plans to overhaul its safety standards will make the outbreaks stop. On Thursday, the company's CEO and founder Steve Ells appeared on the Today Show to publicly apologize for the rash of illnesses.

"This was a very unfortunate incident," he said. "I'm deeply sorry that this happened, but the procedures we're putting in place today are so above industry norms that we are going to be the safest place to eat."

While Chipotle is certainly in a pickle, if the company does manage to stop future instances of E. coli, precedents suggest that it will be able to eventually recover in the eyes of the public. (Both Taco Bell and Jack in the Box managed to bounce back after E. coli outbreaks of their own, albeit the turnaround in both cases was not quick.)

First it has to make good on those claims, though. Despite Ells' assurances, the company's health concerns aren't over yet: The same day he made his Today Show appearance, officials shut down a Chipotle restaurant in Seattle over "repeated food safety violations."

To put it another way, I doubt I'll be meeting my friend at Chipotle in the near future.

Related: Chipotle CEO Apologizes to Ill Patrons, Promises to Become 'Safest Place to Eat'

Laura Entis
Laura Entis is a reporter for Fortune.com's Venture section.

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