Chipotle Mexican Grill: E. Coli Outbreak Infects 60 Customers (2015)

Controversy

Chipotle Mexican Grill's Logo

Chipotle Mexican Grill was launched in the year of 1993 with two primary goals in mind. The first goal was to prove that serving fast food did not mean there needed to be a sacrifice in quality. The other goal was to raise enough capital so the CEO/founder/chairman of Chipotle, Steve Ells, could open up the fine dining restaurant of his dreams. Chipotle's original location would aim to sell about 107 burritos a day, but that count would quickly turn into over 1,000 burritos. With a strong business model, Chipotle Mexican Grill hit the public stock market in 2006, and would then endure a roller coaster of various successes and failures. Fast forward to 2015, Chipotle would face their first major controversy as a company. In late October of 2015, a wave of an E. coli outbreak hit sail over Washington, Oregon, and 9 other states. All together, this spread of virus infected a total of 55 people; in which, 21 of the infected  were hospitalized. As Chipotle was dealing with the immediate repercussions of the first outbreak, a second wave of E. coli hit Chipotle customers in December of 2015. This second outbreak infected 5 customers from Kansas, North Dakota, and Oklahoma. After immediate investigations, the FDA was not been able to pinpoint the cause(s) of this issue due to the difficulty in completing epidemiological studies when a restaurant serves foods that has been cooked or mixed together with multiple ingredients. Because on the inability to pinpoint the direct cause of the two E. coli outbreaks, two ethics issues that have come about as the potential causes. The first issue is Chipotle's overall concern for purchasing foods that are in compliance with FDA standards. Chipotle has made a commitment to serve ethically and organically developed foods; serving food with traces of E. coli calls the company's actual intentions into question. The second ethical issue that has risen from this controversy is if Chipotle employees are being properly trained to prepare and serve foods in correlation to FDA standards. Some believe that Chipotle employees did not receive proper training in preparing foods on the company's menu, resulting in the two outbreaks. Chipotle is now facing the heat of the kitchen, and must work endlessly to regain the trust they lost from their customers.

Chipotle customers putting in their lunch orders

Stakeholders
The most notable stakeholders in regards to the E. coli outbreaks are Chipotle's customers. The company's customers have suffered the most; 60 of them had been harmed in total from the outbreaks. The spread of the bacterial disease hospitalized 22 of the victims, and stripped their trust in the brand. Another major stakeholder in this controversy is the food vendors that Chipotle Mexican Grill purchases their ingredients from. Chipotle officials reported that a potential cause of the outbreaks is beef that was raised and shipped from Australia. With this report in mind, various vendors that support Chipotle's business activities are affected because they could potentially lose major business from the company if proven to be the source. Another group of stakeholders from this controversy are the company's employees. If Chipotle does not recover from this public relations nightmare, then all of their employees could lose their jobs. Chipotle Mexican Grill employees that work in Boston, MA could lose their jobs because of mistakes that were made by employees in Washington and Oregon. Last, the company's stockholders are major stakeholders in this case. When the second outbreak hit news, Chipotle's stocks hit their lowest point within the last two years. Many investors have lost a great portion of their investments because of Chipotle's recent operations.

Individualism
Milton Friedman, the founder of individualism, believed that all business actions should be in direct efforts to maximize profits for the owners of a business, but must be performed within the constraints of the law. Chipotle's E. coli outbreaks were in violation of the individualist theory of business ethics. The first reasoning for this is because Chipotle did not spend the time or money to make sure their employees were educated on food safety and that their vendors were practicing under the FDA's standards. By doing this, the company was only concerned about short term profits which caused Chipotle to forfeit a large portion of their profits in the fiscal year after the outbreaks occurred. For example, Chipotle Mexican Grill earned a net income of $475.6 million in 2015, which was their best fiscal year as a company. After the two separate cases of E. coli that occurred in late 2015, the company only earned a net income of $22.9 million in 2016. The stockholder's of Chipotle Mexican Grill lost out on $452.7 in net income from 2015 to 2016 because of the company's lack of concern for their long term success. Another aspect in which Chipotle is in violation of the individualist theory is the fact the spreading disease through retail food sales is directly again the FDA's 2013 food code. The FDA demands that employees are educated about the importance of food safety, yet Chipotle did not train their employees to those standards. The company's largest issue is that they did not think about the possible long term negative affects that would come by not training employees and not being careful when shipping meat across the world.

Utilitarianism

Up close look at Chipotle Mexican Grill's Steak Burrito

The ethical rule of utilitarianism is explained by Dr. Heather Salazar, an associate business ethics professor at Western New England University, by stating that business activities should aim to maximize long term happiness for all beings who are affected by an activity. Under this theory, Chipotle Mexican Grill is ethically at fault. In Chipotle's controversy, only their short term happiness was considered. The benefit Chipotle Mexican Grill gained by not training employees properly and not being careful while purchasing from vendors is the saving of time and money in regards to the business's operations. The costs that Chipotle forfeited was long-term success, and the public's trust. Chipotle did not only fail to maximize their happiness in the long run, but they did not consider the happiness of their stakeholders. These unsafe business practices harmed more people involved than it has benefited. For instance, the happiness of the company's customers were overlooked in order to make Chipotle temporarily happy. This ethical issue would cost customers their health, money, and trust for the company. Anther stakeholder that was not considered was Chipotle's vendors. The cost that the vendors endured were accusations, reduced profits, and a potential loss of business with Chipotle Mexican Grill. Next, the company's employees' happiness were not considered in this ethical case. Employees were not giving the tools to be successful at their jobs; also many Chipotle employees that work in the states of Washington and Oregon almost lost their jobs. Those employees also missed out on pay when Chipotle closed down 43 restaurants in November of 2015 to conduct investigations on the outbreaks. Last, the stockholders of the company's happiness was not maximized in the long run. As stated above, the company had maximized their short term happiness but were not concerned about the future of Chipotle. This cost stockholder's major portions of their investments as Chipotle's stocks hit their lowest points within the past three fiscal years. Overall, in long term, it would be of Chipotle's best interests to implement a cost and time effective training and purchasing program that leaves little to no flaw in their operations. By doing this the company will work towards creating future success while a reasonable and necessary cost. The company's customers will receive great food, and feel safe eating the organic food they were promised. Also, vendors and employees' happiness will be maximized in the long run because they will have the tools to be successful in their future business transactions with Chipotle.

Chipotle's promise to their customers

Kantianism
The ethical theory of Kantianism states that in order for a business practice to be considered ethical, the business must conduct the activity in a way that respects and honors individuals and their choices. In order to do this, a company may not lie, cheat, or harm their stakeholders in any way. Under this ethical theory, one can conclude that Chipotle Mexican Grill is in violation of the basic Kantian principles. For instance, under Kantianism, a business may not harm others within their practices. In this case, Chipotle harmed 60 of their customers by infected them with E. coli. Although this was not intentional, the company intentionally cut corners in training employees and purchasing ingredients. Another aspect that explains how Chipotle is at fault is that they did not enable their customers to make good choices. By serving foods that were prepared with little attention to food safety, there was a risk of health. Customers were continuously buying foods from Chipotle with this unknown risk. Another violation of Kantianism would be that fact that Chipotle did not respect their stakeholder's needs. For example, Chipotle employees were not trained in a way that would allow them to grow in their positions; in result their employees have a risk of not developing properly in their role with the company and potentially being let ago as a result. Under the Formula of Humanity, Chipotle did not appropriately enable their stakeholders to use their rationality. By fooling their customers in the sense of an added health risk per purchase, Chipotle was able to profit for years without being fair to their customers' rationalities. In order to conform to basic Kant principles, the company must provide clear information regarding their safety habits so that their customers will have the proper information to make a rational decision. Another way the company can conform is by giving their employees the correct tools to grow. By doing these two things, Chipotle will be respecting their various stakeholders' needs. If Chipotle is able to do this with the motivation of Good Will, the company may eventually become in compliance with Kantianism.

Virtue Theory
The Virtue Theory, unlike any other theory, embodies a more diverse set of values when evaluating an ethical case. The Case Manual, by Dr. Heather Salazar explains that in order for one or an organization to be considered virtuous or ethical under this theory, a person or business must “act so as to embody a variety of virtuous or good character traits and so as to avoid vicious or bad character traits”. With this in mind, there are four primary business virtues in which are used to assess a company's character. These virtues are known as courage, temperance, honesty, and justice. Chipotle is considered both not virtuous and unethical under this theory because the company only embodies two out of the four primary virtues. The virtues that Chipotle has demonstrated are courage and temperance. The company has showed courage by being willing to take risks in providing fast food that is not of fast food quality. Chipotle Mexican Grill also demonstrated temperance in their early selling goals. When the company first opened their doors, owner Steve Ells only set selling goals to what he needed to make in profits. He did not expect more from the company than what he needed out of it. The two primary business virtues that Chipotle did not embody were honesty and justice. Being dishonest as in being truthfulness has not been the company's issue; they have dishonest in the aspect of training their employees. As stated in other theories, by not providing training to employees Chipotle is not being true to their employee's needs. Chipotle employees were not given the opportunity to excel in their roles with the company. Last, Chipotle did not embody the virtue of justice. The company failed to provide justice by selling E. coli contaminated products to 60 customers. What this means is that the company failed to deliver quality products to their customers. In order to be virtuous, Chipotle Mexican Grill must find a way to be honest and provide justice on a consistent basis. To do this, the company could fulfill their customer's needs by providing mandatory training and providing the correct tools for one to become a leader at Chipotle. The company can also work diligently to make sure that no contaminated products are sold by Chipotle again.

Justified Ethics Evaluation
In my opinion, I believe that Chipotle Mexican Grill did act unethically in their business practices. By cutting corners in training and purchasing procedures, the company had put itself at risk of closing down. I do not think it is fair that customers were hurt and hospitalized because Chipotle Mexican Grill did not want to take the time or spend the money to ensure safety. The company's customers expect and pay for an organic and arguably healthy meal; therefore, they should receive a safe and quality product. In order to prevent another E. coli outbreak, Chipotle Mexican Grill must make it a priority to ensure the safety of their foods. To be considered ethical, the company must give their employees the tools to succeed and create great products. In order to fix their purchasing issue, the company must implement a cost effective but structured system for ensuring the safety and quality of their incoming goods. Chipotle's ethical case should stand as a warning to any food retailer who does not take the necessary steps to ensure the safety of their products and stakeholders.


References

Anonymous Employees. "Chipotle Employee Job Training." Glassdoor. Glassdoor, Inc., n.d. Web. 03 Apr. 2017.

Daszkowski, Don. "How Did Chipotle Mexican Grill Get Started?" The Balance. About, 28 Nov. 2016. Web. 03 Apr. 2017.

"Food Code - Food Code 2013." U S Food and Drug Administration Home Page. Center for Food Safety and Applied Nutrition, 1 Jan. 2013. Web. 03 Apr. 2017.

Salazar, Heather. “Kantian Business Ethics,” in Business in Ethical Focus, ed. Fritz Allhoff and Anand J. Vaidya. Broadview Press. 2008.

Salazar, Heather. The Business Ethics Case Manual. 2014.

Stearns, Denis. "Chipotle E. Coli O26 Outbreak Sickens 60 in 14 States." Food Poison Journal. Marler Clark, 13 Mar. 2016. Web. 03 Apr. 2017.