chipotle mexican grill, inc. - steel city re€¦ · chipotle mexican grill, inc. (nyse:cmg) is an...
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Forging reputation resilience
Chipotle Mexican Grill, Inc.Pro forma analysis of the performance of Reputation Assurance
Chipotle Mexican Grill, Inc. (NYSE:CMG) is an American chain of fast casual restaurants specializing in tacos and Mission-style burritos. Food safety is a key stakeholder expectation.
Food-borne illnesses are therefor common triggers of reputation crises. Food safety is a persistent reputational peril at Chipotle. Documented outbreaks include: March 2008 hepatitis, April 2008 norovirus,
February 2009 C. jejuni, July 2015 E. coli, August 2015 norovirus, August 2015 Salmonella, October 2015 E. Coli, November 2015 E. Coli, December 2015 norovirus, and July 2017 norovirus.
The effects of these outbreaks on Chipotle’s rebased equity value, reputation value, and pro forma indemnification events with parametric reputation insurances are shown.
December 2018
CMG Case Study
Source: Wikipedia-https://en.wikipedia.org/wiki/Chipotle_Mexican_Grill
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Chipotle (CMG): Equity and Reputation Value
A. 7/20/12. “Consistently elevated comp expectations have increasingly passed reality.”
B. 11/3/2015. Chipotle goes viral.
C. 10/27/2016. Same store sales down 20%
D. 10/25/2017. “Can’t find winning recipe. CEO steps down.
April 2011-April 2018
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• Reputation value: economic benefits of stakeholders’ expectations.
• Reputation risk: peril of stakeholders’ disappointment and anger.
• Reputation crisis: disappointment, diminished trust, causing economic losses.
• Reputation risk management: mitigating both disappointment and noxious media.
• Reputation insurance: indemnification affirming trust and reducing economic losses.
Essential definitions of reputation risk
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Reputation insurance with parametric triggers
5 Loss Gates
{2015
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December 2018
{
5 Loss Gates
Reputation insurance with parametric triggers
5 Loss Gates
{
2016
2017
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Parametric Insurance Trigger History (pro forma)
2015 – No Indemnification 2016 – 100% Indemnification 2017 – No Indemnification
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Trigger conditions for indemnification under Steel City Re’s parametric policies include a 20 week depression of the reputation value metric below a Loss Gate. See policy for language and details.
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