Meat + Poultry - January 2016 - 11

BUSINESS NOTES

CHIPOTLE MAKES A COMEBACK PLAN
AFTER FOOD SAFETY HICCUPS

LOW CHICKEN PRICES DRAG
ON SANDERSON Q4 PROFIT

Chipotle Mexican Grill can't seem to catch a break. On
the heels of a high-profile E. coli outbreak that sickened
dozens, more than 120 Boston College students who ate
at the burrito chain in early December fell ill with what
health officials reported was a stomach virus.
"The incident ... was erroneously reported sort of
immediately as E. coli and has since then been shown not
to be and probably
is the common flu or
norovirus," said Monty
Moran, co-CEO, during
a Dec. 8 presentation
at the Sanford C.
Bernstein Consumer
Summit.
The Centers for
Disease Control
and Prevention has
identified more than 50
cases of E. coli in nine
states linked to the
fast-casual restaurant as of Dec. 4. The illnesses occurred
between mid-October and early November. Since the
incident, Denver-based Chipotle has pledged to become
an industry leader in food safety with aggressive actions
under way to prevent future outbreaks. The company
partnered with an epidemiologist to develop an enhanced
food safety program.
"We immediately started dicing our tomatoes in a
commissary, so that they could go through a sanitizing
kill step and then be hermetically sealed in containers
and delivered to the restaurants," said Steve Ells, founder,
chairman and co-CEO. "We found it impossible that we
could test every tomato coming into the restaurants. So
we went with an abundance of caution to make sure that
we're testing that way."
The changes won't be cheap, said Jack Hartung, CFO.
"What's most important is that we get this done, that food safety
is the most important thing that we focus on right now..."
In mid-December, the company said it expected the E.
coli incident will lead to a decline in fourth-quarter samestore sales by as much as 11 percent. Moran said the chain
has lost some of its loyal business since the beginning of
November. The first cases were reported in late October
and the company temporarily closed 43 restaurants in the
Pacific Northwest.
Although health officials have been unable to trace
the E. coli cases to a specific ingredient, the company is
confident the outbreak has been contained and is taking
steps to improve food safety by consolidating production
at central kitchens, among other safeguards.

Fourth quarter net income dropped 70 percent at
Sanderson Farms Inc. on lower prices for chicken, the
company reported. Net income for the quarter ended Oct.
31 was $27.4 million, or $1.22 per share, compared with
$93.1 million, or $4.04 per share, reported in the year-ago
quarter. Revenues for the quarter dropped 11 percent to
$679.6 million compared with $760.9 million a year ago.
The company said Georgia Dock prices for boneless
breast meat were 29.5 percent lower in the fourth quarter
compared with the prior-year period. For fiscal 2015,
boneless prices were 15.4 percent lower when compared
with fiscal 2014.
Jumbo wing prices declined 1.3 percent to $1.48 per
lb. during the fourth quarter, while the average market
price for bulk leg quarters plummeted 53.3 percent for
the quarter, and decreased approximately 31.5 percent
for fiscal 2015. Sanderson said lower prices for dark meat
reflect a significant decline in industry export volumes
during the second half of fiscal 2015.
Net sales for the year were $2.803 billion compared with
$2.775 billion for fiscal 2014. Net income for fiscal 2015
totaled $216.0 million, or $9.52 per share, compared with
net income of $249.0 million, or $10.80 per share, in 2014.

USDA AMENDS RECORDKEEPING RULE
The Food Safety and Inspection Service (FSIS) of the US
Dept. of Agriculture (USDA) has finalized a new rule to
enhance its ability to investigate ground beef foodborne
illness outbreaks.
FSIS is amending its recordkeeping regulations to
require all official establishments and retail stores that
grind raw beef products maintain records of:
x the establishment numbers of establishments supplying
material used to prepare each lot of raw ground beef
product;
x all supplier lot numbers and production dates;
x the names of the supplied materials, including beef
components and any materials carried over from one
production lot to the next; and
x the date and time each lot of raw ground beef product
is produced; and the date and time when grinding
equipment and other related food-contact surfaces are
cleaned and sanitized.
The agency hopes the new steps will improve
traceability.
"In the event that unsafe product does make it
into commerce, these new procedures will give us the
information we need to act much more effectively to
keep families across the country safe," said Deputy
Undersecretary for Food Safety, Al Almanza.
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Meat + Poultry - January 2016

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