Chipotle Supplier Issues

It’s not just the restaurants in nine states that are feeling the plunge in sales at Chipotle restaurants. The aftermath of declining sales following the outbreaks of Listeria and E. coli are now affecting other businesses that interact with the chain.

Huhtamaki, a paper mill in Maine that supplies the chain with its burrito bowl take out containers, has had to lay off workers. Between 25 and 30 employees were laid off just after Christmas 2015.

Company officials at the mill say that they hope that the layoffs will be only temporary and that they can hire the furloughed workers back in a couple months’ time as the demand for Chipotle returns. For its part, however, officials at Chipotle really don’t expect demand and customer traffic to fully recover for at least a year.

"It's going to be messy in terms of margins, it's going to be messy in terms of earnings," Chipotle Chief Financial Officer Jack Hartung said in an investor presentation, referring to the rest of 2016. "We’re not going to be the efficient business model that everyone has come to know."

The company is expecting to win back "most, if not all" of the customers that it lost since the crisis at some point in 2017.

In the meantime, however, Chipotle has launched a major advertising campaign beginning in February 2016 to encourage customers to come back to the chain’s restaurants. Company executives have expressed optimism that they will be able to get customers to return eventually.


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