Chipotle: A 30,000 foot view of the impact of crisis on a publicly traded company
This a an overview of former stock market high flyer Chipotle (NYSE: CMG). The “fast casual food with integrity” chain in the United States is the poster child of the impacts of 21st-century crisis, poor business continuity planning, and just plain smugness by management.
For all their vision that management had building the company into a darling of the stock market with the skyhigh valuation, they seem to have and have no vision on risk, the effect of crisis on the operations, customer perception, and employee loyalty. Ultimately the share price fell by half, and has only rebounded modestly. Management seemed to have no idea as to the multitude of issues they would face, while trying to dig out of the hole they put themselves in.
The market capitalization of the company while peaking at around $24B, now stands at just under $14B. Activist investors Pershing Capital bought up 10% of the company at a hefty discount. New expectations have been set, and the company is struggling to meet them.
The standard communication plays have not worked, and the company continues to struggle in its efforts to exit the post crisis hangover.