Future of Food, Post Chipotle

Clean menus, fewer ingredients and food safety are top of mind for foodservice establishments following Chipotle’s devastating foodborne illness take-down.

May 02, 2016

NEW YORK – Chipotle Mexican Grill reigned as a leader in fresh, all-natural fast-food fare until a multistate foodborne illness stripped away at its crown. The new leader, and the potential future of fast food, may be Panera Bread.

"Clearly we live in a post-Chipotle world, where there is an elevated focus on food safety at all restaurants," Panera President Drew Madsen said during an earnings call last week with investors, according to CNBC. "Given that, we have brought in a highly respected consultant with extensive food safety and supply chain risk management expertise to assess our current practices and suggest opportunities for improvement."

The effects of Chipotle's food safety troubles have hit the company’s bottom line, which coupons and free burritos haven’t been able to offset, notes the news source, adding that comparable restaurant sales at Chipotle dropped approximately 30% in the first quarter of this year.

Many chains have stepped up to tout cage-free eggs and meats free from antibiotics and preservatives, while chains such as Panera are touting clean menus free from artificial ingredients. “There's a broad push to clean food and food safety,” Stephen Anderson, a restaurants and consumer analyst at the Maxim Group, told CNBC.

According to Reuters, some Chipotle customers opted for Panera following the E.coli outbreaks. In December 2015, 13.4% of Chipotle customers also visited Panera, up from 11.6% in September 2015. “The reality is in the last month, when Chipotle has essentially been giving away their food with tremendous couponing and discounting, our [comparable sales] were as high as they have ever been,” Panera CEO Ron Shaich told CNBC.

The news source notes that Panera is increasing its food safety audits throughout the supply chain. "Given these changes, we expect our cost for food safety effort in 2016 to be about $2 million higher than originally targeted," Madsen said.

Panera’s digital investments are also paying off, notes CNBC, reporting that about 17% of the company’s sales are conducted online or through mobile platforms. "Panera is a tech company that just happens to sell sandwiches and soups,” Anderson said.

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