Scenario: You are sitting in your consultancy's conference room, trying to grasp how one of the world's hottest brands just took a dive into freezing water. Your team members are promoting their ideas on how you should lead a meeting with Chipotle leadership, which is only three days away. For just a moment, you zone out, trying to assimilate the facts, going back to the beginning.

Over 20 years ago, Chipotle Mexican Grill set out to raise the bar in delivering fresh, sustainable, locally sourced food to U.S. customers. Chipotle grew rapidly, establishing 2,000 restaurants, earning customer trust, and gaining notoriety as the best Mexican grill in America. Chipotle's motto, "Food with integrity," and its commitment to transparent product sourcing had made it the biggest name in the rapidly growing fast casual segment. Industry experts had predicted Chipotle would surpass McDonald's in terms of number of stores in the U.S.

Then Chipotle suffered a supply shortage. One of its pork suppliers was violating Chipotle's animal welfare standards. Unable to find a viable substitute supplier, Chipotle was forced to pull carnitasone of its most popular menu itemsfrom menus across the country. Who knew that a food-with-integrity strategy would become a limit to growth. Worse, only a few months later, over 500 customers in a dozen states came down with e Coli, norovirus, and salmonella food poisoning. Suddenly, Chipotle's food-with-integrity strategy had become a real liability. In fact, the blowback was startling not only in its breadth but also in its ferocity.

Sales in stores open at least a year sank 14.6%. Profits plunged 44%down from $121.2 million to $67.9 million (from $3.91 per share to $2.17 a share)compared with the same quarter the previous year.

The cost of new food safety equipment, testing to determine the cause of the problems, hiring auditors and consultants, and training employees in new procedures had reduced profit margins by more than 8%.

A group of Chipotle shareholders filed a federal lawsuit accusing executives of "failing to establish quality-control and emergency-response measures to prevent and then stop food-borne illnesses that sickened customers across the country and proved costly to the company."

A new marketing and promotional campaign cost the Chipotle $50 millionthree times more than Chipotle had spent on such programs in the previous year. Chipotle had never spent more on a marketing campaign.

Trying to recover from the crisis, Chipotle announced what it described as a pioneering safety program. The program was extensive.

More ingredients would be prepared in central kitchens rather than in restaurants. For instance, lettuce would be cleaned and cheese grated in carefully controlled, centralized processing center. Similarly, onions, jalapeos, and other vegetables that arrive in the restaurant whole would be blanched in boiling water to kill microbes.

Chipotle would put greater scrutiny on suppliers, requiring DNA-based testing of ingredients before they are shipped to restaurants. This program would far exceed industry standards and regulatory requirements.

Chipotle committed $10 million to help suppliers meet its new standards. Any supplier that was unwilling to meet the requirements would be dropped from Chipotle's approved supplier list.

Chipotle would increase employee training to ensure employees could comply with the company's food safety standards.

End-of-shelf-life testing would take place to ensure quality specifications are maintained throughout the ingredient's shelf life.

No one at Chipotle has publicly estimated the cost of the safety program. Everyone simply called it, "Very, very expensive!"

Although food safety experts commended Chipotle's efforts, they warned that, "It's kind of hard to test your way to food safety." Bob Whitaker, chief science and technology officer of the Produce Marketing Association (PMA), says that, "Typically, contamination occurs very infrequently and is not uniform, and the levels are very low, so the odds of isolating that product randomly are very small."

You blink, forcing yourself back into the moment. As you look at the reports your team has compiled, you notice the folder titled, "Total Quality Management." It contains the hard copy material from your most recent continuing education course on quality management. You wonder, "Could some of the concepts I learned in that course be helpful? If so, which ones are most important?"

1. Describe Chipotle's customers in terms of the appropriate dimensions of quality. Which ones are most important?
2. Describe how the concept of quality at the source affects Chipotle's food safety crisis.
3. Assess Chipotle's cost of quality. Be sure to evaluate all four categories.
4. Considering the eight principles of TQM, which principles did Chipotle most likely violate? Which principles will be most important moving forward?
5. Given Bob Whitaker's comment, how do the concepts of common and special cause variation become more challenging when it comes to food safety? What are the unique challenges to Chipotle's new pioneering food safety strategy?