Corporate Crises in the Digital AgeA Content Analysis of Chipotle’s Crisis
Stephanie McGuintyB.A. Communications & Spanish | CHRP Candidate
@step_mcg
ca.linkedin.com/in/smcguinty
Chipotle’s Crisis October 2015 to February 2016Founded in 1993, Chipotle Mexican Grill is fast-food
restaurant chain with over 2,000 stores across North
America. Chipotle competes against McDonald’s, Taco
Bell, and Nando’s.
From October 2015 to February 2016, over 500 outbreaks
of E. coli were identified among individuals who consumed
Chipotle. This led to the closure of 43 restaurants in some
States. Restaurants were investigated by the Centre
of Disease Control (CDC) and the U.S. Food & Drug
Administration, who were unable to trace the source of
E. coli, nor attribute responsibility to Chipotle. As stores
reopened, Chipotle reinstated a new food safety policy
and held a company-wide meeting, where all Chipotle
stores were closed for four hours.
Chipotle’s sales plummeted to an all-time low during this
crisis. Various news outlets reported incidents of this
case, both through traditional and social media. Chipotle
also used Twitter to communicate some details with its
followers. This case study will examine Chipotle’s Twitter
strategy through the period examined.
Research Questions R1 - How can social media analytics be used to measure
data during organizational crises?
R2 - How did Twitter contribute to Chipotle’s handling of
the crisis?
R3 - How can Twitter be used to sucessfully manage
organizational crises? .
Social Media & Chipotle. Twitter Followers: 794,000
Faceobook Page Likes: 2,900,000
Instagram Followers: 355,000
Ranks top 10 in fast food restaurant following in the U.S
Method 1. Data Anlysis - Comparison of three periods (pre-cri-
sis, during crisis, and post-crisis)
*Engagement Scores measure audience responses to
the company’s proactive tweets and activity on Twit-
ter. Based on this formula, shares and re-tweets are
weighed higher than likes and favourites as they ampli-
fy the audience reach of a tweet.
2. Case Analysis - In addition to analytics, information
from Chipotle’s Investor Relations page was gathered.
The information shows significant drops in Chipotle’s
stock, and sales during the fourth quarter of 2015 and
first quarter of 2016.
3. Theoretical Framework - Use of Coomb’s Situational
Crisis Communication Theory (SCCT), a framework
which helps orgnaizations protect themselves during
crises; Pearson & Clair’s Crisis Success Outcome Measure
Framework; and Aaker’s Brand Equity Ten, which outlines
ten brand equity measures, such as price premium,
perceived quality, and market share.
Data During the crisis phase, Chipotle responded to users’
concerns quicker than normal (33 minutes for average
response time) - some of the keywords and hashtags
that were most used were “health” “Chipotleallteam”
and “e.coli”. Prior to the crisis, Chipotle’s tweets were
very produce-oriented, with an emphasis on freshness.
However, after a few cases of E. coli identified, those
tweets stopped.
In terms of brand equity, Chipotle’s price premium
is significantly higher than its competitors. However,
Chipotle continues to attract a young crowd, perhaps
illustrating the preferences of Millenials and a strong
brand loyalty. Based on Chipotle’s “Food With Integrity”
campaign, which explains the company’s efforts to
serve naturally-raised meats and produce free of added
hormones, the quality of its products is higher than most
of its fast-food competitors. Chipotle’s market share has
historically been strong - ever since its public offering in
2006, stocks sky-rocketed and restaurant sales increaed
every year. During the time of crisis, profits sunk 44%
and by the following quarter, stocks were down 40%. In
total, Chipotle had a net loss of $26.4 million as opposed
to a net income of $122.6 million in the previous year.
Chipotle’s customer base consists mostly of Millenials
(born between years 1980 to 2000), which is also the
prominent age group of Twitter users.
ResultsUsing Peason & Clair’s success measures, Chipotle’s
crisis outcome has been rated based on the following
criteria: signal detection, incident containment, business
resumption, effects on learning, reputation, resource
availability, and decision-making. The outcome selected
is midground - which means the company did not fully
succeed at managing the crisis, nor did it completely fail.
R1. How to use analytics R1 : Engagement scores are used to identify the impact
of a crisis on users following brand tweets. They can
also be analyzed in comparison to the time of tweet. A
higher engagement score is desireable. Keywords and
hashtags (#) can be counted to see where conversations
are occuring, between who, and how many times they
appear. Organizations can then reach out to those
individuals and monitor concerns. Types of tweets are
also important to understand (mentions, proactive, re-
tweet, links to sources) as organizations can tailor content
to audiences. For example, Millenials enjoy videos and
photos, as such it would be advisable to use them in
tweets. Finally, understanding follower profile may help in
tailoring content, message tone, and frequency of posts.
Twitter Analytics’ Dashboard functions allows account
holders to monitor interests and demographics of its
followers.
R2.Twitter’s contribution to Chipot-le’s crisis management outcome R2. Twitter was used to communicate with its consumers
at a high level, but was not used to inform users about
news content, such as store investigations. It seems as
though Chipotle refrained from posting crisis-related
content for fear of starting a viral trend, or “Twitter wars”
(which previously occurred). The reality of today’s digital
economy is that information must be posted where users
are - in this case, Chipotle’s consumer base is on the web.
The most important use of Twitter to mitigate crisis was
the response rate - over 90% of Chipotle’s tweets were
responses to other users.
R3.How to use Twitter to manage crises (strategies) - Measure, measure, measure! This must take place before
the crisis takes place (in anticipation of it happening).
- Use hashtags: generates interest, trends, and a sense
of community
- Foster conversation: Twitter is an ideal platform for brand
& user interaction. Millennials generally have more liberal
views and like an open platform to express themselves.
- Provide timely responses (Average Response Time -
ART): companies are competing for customers and being
able to provide timely responses is crucial to customer
satisfaction.If the user does not receive a timely response,
60% of them are likely to take negative action to express
themselves.
- Collaborate with brand Influencers: these are other
brands (companies, users) with a large following who can
advocate on behalf of the company. A strategy would be
to partner with brands and collaborate on informative
content.
-Provide personalized responses: they provide a better
connection between the user and brand. A Twitter
research indicates that 77% of consumers are likely to
recommend a brand following a personalized brand
interaction (sign with a name!).
Crisis Strategy Matrix The following matrix has been created to assist crisis
managers in the digital age, using a combination of
Coombs’ SCCT framework and data from this research.
The practice of crisis communication has evolved since the rise of digital technologies and social media. Defined as an unexpected and nonroutine event with high levels of uncertainty, crisis management is essential to organizations. Failure to strategically manage crises may result in significant damages and losses. This MRP examines a recent corporate crisis - the case of Chipotle Mexican Grill during the 2015-2016 E. coli outbreak across the United-States - and how the social media strategy influenced the outcome of the case. Using a combination of data analytics and theoretical frameworks, this research brings to light the importance of measuring online data, and how it can be effectively used to manage various types of crises.
The table above illustrates differences in data gathered from Chipotlle’s
Twitter page during the three periods examined. This data was obtained
through Unmetric, a data analytics platform for online users.
Variables Mar 1/15 -
Jul 31/15 Oct 1/15 - Mar 1/16
Apr 1/16 - Jul 9/16
Day count 153 153 100
Follower growth 6.5% 6% 4.8%
Engagement * 383 566 863
Number of tweets
42,000 44,000 36,000
Average tweet/day
207 290 300
% Tweets are replies
99% 98% 97%
Average Response Time (ART)
43 minutes 33 minutes 51 minutes
Common hashtags
#chipotle #lovewins
#chipotlecultivate
#boorito #ecoli
#chipotleallteam
#raincheck
#chipotle101
#waitinginlinethoughts #mplusplac
es Influencers Vogue
Paul Coelho People
Magazine
Kevin Hart CNN*
Today Show*
N/A
“CONSUMERS WILL PUNISH BRANDS THAT FAIL TO RESPOND ON TWITTER QUICKLY” If a Tweet is a complaint, 72% of users will expect an answer within an hour
Crisis
Cluster Crisis Strategy Social Strategies
Accidental Diminish convince stakeholders the crisis is not as bad as people think
• Post often, post fast
• Use consistent message across platforms
• Partner with positive brand influencers
Victim Deny
eliminates the link between organization and crisis
• Post links referring to legitimate sources
• Post facts
Preventable Rebuild suggests that organizations should compensate affected stakeholders for errors
• Marketing and promotion campaigns (#trends)
• Social media apology
• Personal responses
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