They were the moments the industry would like to forget, from a high-profile arrest to terrible public relations moves. But here they are again, reviewed for one last time before being suppressed as painful memories.
Mark Crumpacker’s run-in with the law
A year-long investigation by drug authorities in New York City led to the arrest of a surprising suspect when the alleged cocaine ring was finally rolled up this summer: Mark Crumpacker, Chipotle’s marketing chief. He was accused of being a small-time customer of the operation, not a pusher, and his involvement had nothing to do with his job. And he was charged with misdemeanors, not felonies. But officials said they had proof Crumpacker ordered cocaine from the syndicate, which, in an echo of what was happening in Crumpacker’s industry, had attracted customers by offering to deliver product directly to their homes or leisure haunts.
Crumpacker turned himself in, was arrested, and is apparently awaiting trial. He apologized to the financial community for what he termed a mistake and a learning experience. After a brief leave of absence, he returned to active duty at Chipotle in September.
Chipotle’s first loss
The first full quarter following Chipotle’s highly publicized food safety problems was a financial disaster of epic proportions. Same-store sales fell 29.7% year over year, reflecting a 21.1% drop-off in traffic, and revenues plummeted 23.4%, leaving the chain with a loss of $26.4 million—its first in-the-red finish since becoming a public company. Sales and traffic have since inched back, but the chain will end 2016 with a considerable gap from where it was a year ago, before the E. coli and norovirus contaminations.
Bill Ackman buys 10% of Chipotle
Some in the business were not heartbroken to see Chipotle take a whuppin’ in 2016, noting its arrogance and public disparagement of other restaurant chains prior to hitting a string of food safety problems. But even its disparagers likely felt a pang of sympathy when word emerged that Bill Ackman, the notoriously meddlesome investor, had bought a 9.9% stake in the chain.
Chipotle apparently thought so. It hired consultants and legal counsels in anticipation of a struggle for control.
More recently, Chipotle and Ackman both stated publicly that conversations about the burrito specialist’s direction had indeed taken place, but characterized the interactions as amicable.
Word leaked, however, that the parties had negotiated a pact behind closed boardroom doors to reflect Ackman’s input. Shortly afterward, Monty Moran stepped down as co-CEO and the chain reshuffled its board.
Ruby Tuesday shuts 95 restaurants
Not all of the year’s wince-worthy moments involved Chipotle. Ruby Tuesday, one of casual dining’s most venerable brands, induced a gulp or two when it announced intentions to shut 95 of its 646 restaurants, or roughly 15% of the system, in a three-week stretch.
A dramatic and still unexplained downturn in restaurant traffic was the nudge that pushed a slew of restaurant operations to file for bankruptcy this year. The list of chains that operated under Chapter 11 included Fox & Hounds, Champps, Cosi, Logan’s, Don Pablo’s, Zio’s, Souplantation, Sweet Tomatoes, Bailey’s, Ryan’s, HomeTown Buffet, Old Country Buffet and Roscoe’s Chicken and Waffles.