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Chipotle Halts Pork Sales at a Third of U.S. Locations

Burgess COMMENTARY

Peter Burgess

Chipotle Halts Pork Sales at a Third of U.S. Locations

* Price chart for CHIPOTLE MEXICAN GRILL INC. ... CMG:US709.74-4.32 -0.60% 713.00 01/14/2015

Chipotle Mexican Grill Inc. (CMG) halted pork sales at about one-third of its approximately 1,700 U.S. restaurants after discovering violations of its pig-housing policies at a supplier.

“This is fundamentally an animal-welfare decision and is rooted in our unwillingness to compromise our standards,” Chris Arnold, a spokesman for the Denver-based company, said in an e-mail, while declining to name the supplier. He said the violations were primarily related to Chipotle’s livestock-housing rules, which require that animals are raised with access to the outdoors or deeply bedded barns.

Chipotle is protecting its image as a socially responsible company, part of its appeal to younger customers who also seek healthier options and higher-quality ingredients. The restaurant operator has created short films to educate Americans about industrial farming and hosted festivals with organic snacks and local food and drink purveyors.

Pork sales have been cut off at about 560 U.S. restaurants. Chipotle is exploring options to boost its pork supply, including adding new providers and increasing output from its existing vendors, Arnold said. He added that replacing the lost supply will “take some time.”

Photographer: Craig Warga/Bloomberg Chipotle Mexican Grill Inc. is protecting its image as a socially responsible company,... Read More The company won’t serve pork from conventional sources as it sorts out the supplier issue, Arnold said.

No Substitute

“Conventionally raised pigs generally do not have access to the outdoors, spend their lives in densely crowded buildings, live on hard, slatted floors with no ability to root and are given antibiotics to keep them from getting sick,” Arnold said. “We would rather not serve pork at all than serve pork from animals raised in that way.”

Chipotle’s largest pork supplier, Niman Ranch, said it isn’t the vendor at issue. Niman is sending Chipotle about 20 percent more pork this week after the company called and asked for a bigger shipment, said Jeff Tripician, Niman’s chief marketing officer.

“They wanted more, but that’s the best we can do that quickly,” he said in a telephone interview.

Niman sources beef and pork from a network of 700 independent U.S. farms and sells Chipotle “significantly” more than 1 million pounds of pork a year, Tripician said. The Alameda, California-based company became Chipotle’s first “natural” pork supplier in 2001. It also sells beef and pork to Whole Foods Market Inc., Shake Shack Inc., Panera Bread Co. and Sprouts Farmers Market Inc., among others.

Since 2001, Chipotle has sourced 100 percent of its pork from producers who follow its guidelines, according to the company’s website.

Chipotle fell 0.6 percent to $709.74 at the close in New York. The stock was the best performer in the Standard & Poor’s 500 Restaurants Index last year, rising 28 percent.

To contact the reporter on this story: Craig Giammona in New York at cgiammona@bloomberg.net

To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net Kevin Orland, John Lear