This was supposed to be a comeback year for Chipotle, the beleaguered burrito chain whose stock once soared to nearly $750 per share. Of course, that was back before the fast-casual behemoth was socked with one of the most widely-reported food safety scandals in recent memory. The great Chipotle E. coli disaster came to an end in 2015, but the chain has struggled to regain in its footing in the 12 months since. Below, the 10 most important things that happened to Chipotle in 2016, organized into the good, the bad, and the ugly.
Chipotle’s transparency campaign
In 2016, Steve Ells’ company worked to regain its reputation as a purveyor of “food with integrity.” After a rash of E. coli outbreaks last year, Chipotle changed the way it prepares some of its ingredients in an effort to ensure food safety. That included pre-cooking steaks off-site, blasting pathogens off of chorizo with “high-powered water jets,” and testing for pathogens at the supplier level.
Unfortunately, many Chipotle customers seem less than thrilled by the revamped preparations, with some social media users calling the steak "gross" and "disgusting" and even comparing it to canned meatballs.
Chipotle’s new burger concept
Chipotle got a lot of flack over its decision to break into the already-crowded burger business, with a new concept called Tasty Made. Despite a rather lukewarm reception on online review sites, the Lancaster, Ohio burger joint is, according to a spokesperson, off to a good start. “The volumes have been strong, the food has been really good, and the team has been doing really well,” he said in an email.
So it was weird when, earlier this month, the chain announced it was nixing sustainably sourced beef and lowering prices, thereby rebranding into a more traditional fast food burger concept.
The chain unveiled its first-ever loyalty program
Chipotle launched Chiptopia, a three-month rewards program, in June. All together, 85,000 people reached “Hot” status — the highest level — in the program, and were therefore awarded free catering for 20 people. The program was a pricey gamble, and it’s unclear exactly how well it paid off for the company: That 85,000 number comes out to approximately $20.4 million worth of catering — that’s a lot of burritos for each of those winners. Overall the program helped get people back into Chipotle locations, though it’s unclear if those customers have continued to dine at Chipotle since the program ended.
A new menu item was launched (for the first time in ages)
Professional critics might not be the biggest fans, but Chipotle customers have so far been loving Chipotle’s chorizo, a new protein the chain added to menus nationwide in October. The chicken-pork hybrid was rolled out as a way to combat menu fatigue (it's one of the only additions to the menu in the company's 23-year history).
Early Tasty Made reviews weren’t great
The menu at Tasty Made is incredibly simple, with just hamburgers, cheeseburgers, fries, shakes, and something called "Tasty Bacon Sauce," which is apparently a condiment for fries. Still, the food itself hasn’t been deemed “tasty” by many online reviewers. Some posted their reactions on Twitter, where one user said the new concept did "not live up to the Chipotle brand," citing thin, undercooked beef patties and skimpy milkshakes.
Financial analysts think the company’s move into desserts is an act of desperation
$CMG: You're not McDonald's. Your clientele don't want dessert.— John Miller (@Woofdidfly) October 25, 2016
On a recent earnings call with investors, CEO Steve Ells announced that the chain was testing two new desserts, though he didn’t elaborate. Executives said the company is still in the process of evaluating which dessert will be introduced to menus nationwide. Investors weren’t thrilled with the announcement, taking to Twitter to joke that the move could be the beginning of the end for a once-innovative brand.
Under $360 and $CMG is going to test a Third dessert option.. Churros? Flan? Or maybe eating CROW?— Option Millionaires (@OMillionaires) October 26, 2016
Chipotle stopped funding its fast-casual Asian concept, ShopHouse
Saying the brand has not "demonstrated the ability" to show meaningful growth, Ells told analysts on an October earnings call that Chipotle has "decided not to invest further in growing the ShopHouse brand." The company will, however, continue to invest in other concepts, such as its assembly-line pizza concept Pizzeria Locale and the aforementioned burger restaurant Tasty Made.
Stocks were messy
Despite its best efforts, Chipotle failed to inspire confidence in investors by the summer of 2016. In June, the company's stock hit its lowest level in three years. Its all-time high, in July 2015, was over $742. On June 15, it was trading at around $390 per share. The stock did recover, though, and by November was trading at more than $400. Today it’s around $390.
Investors want to oust founder Steve Ells from Chipotle’s board
In November, two Chipotle shareholders filed a proposal calling on Ells to be ousted as chairman, and replaced with an independent director. In a statement, Amalgamated Bank CEO Keith Mestrich said Chipotle’s governance poses “a direct risk to shareholders and the public at large.” An independent, outside chair, he added, would allow Chipotle “to provide a more publicly transparent and responsive approach moving forward.”
The company was hit with a number of lawsuits
For Chipotle, 2016 might be viewed as the year of the lawsuit. In January, the burrito chain was sued by its investors for allegedly misleading investors regarding its food safety processes. Then came April, when a judge green-lit a lawsuit against Chipotle over claims that not all of its food and beverages came without GMOs.
In August, the company was ordered to pay $550,000 in compensation and damages for allegedly discriminating against a pregnant employee. Later that month, nearly 10,000 workers announced they were suing, too — alleging the company cheated them out of wages. In September, the chain was slapped with a racial discrimination suit and ordered to pay a teen employee and her mother $7.65 million in a sexual harassment case.