04 Aug How We Can Learn from Chipotle’s Mistakes
Chipotle Mexican Grill Inc. is cherished by many for their affordable yet delicious Mexican cuisine. However, if you google Chipotle, it’s safe to say it’s a scary sight. “Chipotle Mexican Grill: Time to Go Long,” “They can’t stomach it: 2 VA men hit Chipotle with lawsuit over illness,” and “96 people who ate Chipotle and got sick settle for cash” are just a few of the nasty headlines about the restaurant chain.
The burrito chain’s strategy of resolving claims out of court, which has not previously been reported, shows it wants to avoid drawn-out public battles over foodborne illnesses that battered the company’s stock price and reputation. Chipotle graciously takes responsibility for the sickness claims, avoiding making headlines for fighting with customers, and costing the company thousands of dollars. The Centers for Disease Control and Prevention estimates that one-in-six Americans get sick every year from contaminated food or beverages. The recent chain of events that has stained Chipotle Mexican Grill paves the road to mandatory insurance for other restaurants by example.
One primary factor in the sicknesses sweeping over Chipotle’s loyal customers is employee illness. Making sure that employees have sick days, paid sick time off, and health insurance really should be crucial in a restaurant’s business plan. A sick Chipotle employee came to work out of fear of not being paid. This one misstep led to other employees getting sick as well as the customers.
Restaurants usually have insurance in case of outbreaks like the Norovirus or E. Coli that covers customers suing the restaurant for doctor’s bills and damages. However, there is a separate insurance policy that restaurants like Chipotle should consider that includes the real problem with sickness. Chipotle has suffered a huge decrease in sales because of the foodborne illness uproar. However, it seems that by the time the restaurant has recovered and is back on the right track, they are hit with another claim.
Financial loss is why restaurants should do more to protect themselves against the risk of an uncovered claim. Those in the food industry can do this by paying careful attention to the fine print when purchasing commercial general liability (CGL) and commercial property insurance policies, and by negotiating coverage enhancements to fill potential gaps in coverage. Moreover, the manner in which a claim is characterized when submitted to an insurer can often be the difference between a covered and an uncovered claim.
It’s not just foodborne illnesses plaguing Chipotle’s livelihood. Chipotle was hit by a massive cyber attack this year. The breaches happened between March 24 and April 18. The malware worked by infecting cash registers and capturing information stored on the magnetic strip on credit cards, called “track data.” Chipotle said track data sometimes includes the cardholder’s name, card number, expiration date and internal verification code. Cyber attacks are an increasing problem with all different types of businesses now, but luckily there’s insurance for that as well.
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