Chipotle, Whole Foods struggle after GMO food demonization campaigns

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Four months ago, I wrote a piece for the Genetic Literacy Project about why I stopped eating at Chipotle and shopping at Whole Foods. The reason was pretty simple; I strongly objected to their anti-GMO marketeering that misleads consumers and vilifies genetic engineering. I also didn’t like their smug air of superiority.

So you can imagine my own smugness this week as both companies struggle with bad publicity. As a devout capitalist who wants businesses to prosper, employees to succeed and investors to profit, I’m trying to be magnanimous about their problems. But I can only come up with three words:

Karma’s a bitch.

With another round of food-borne illness traced to Chipotle (the third this year) and poor earnings results from Whole Foods this week, it’s hard for me not to gloat. I feel bad for sick people and employees whose jobs are now in jeopardy. Yet I can’t help but think their sanctimonious executives and marketing departments are getting exactly what they deserve.

Chipotle: Food poisoning with integrity?

Let’s back up a little. Chipotle’s motto is Food With Integrity, which allows the company to boast and brag about how great they are. It’s worked because the company has become the darling of elite foodies who often cite Chipotle, which is essentially a fast food company, as the anti-McDonald’s. In an effort to further boost its elitist food cred, Chipotle unveiled a massive marketing campaign earlier this year entitled G-M-Over It:

Chipotle is on a never-ending journey to source the highest quality ingredients we can find. Over the years, as we have learned more about GMOs, we’ve decided that using them in our food doesn’t align with that vision.

Sadly, the website posts a litany of unscientific and irresponsible talking points straight from the anti-GMO playbook such as GMOs are not proven safe and they damage the environment. It also alludes to organic-industry supported economist Chuck Benbrook and his widely disputed study that GMOs increase the use of highly toxic pesticides (it doesn’t). Chipotle’s message essentially boils down to anti-GMO propaganda intended to scare consumers into buying more of their high-priced, high-calorie burritos.

But its advertising slogan, if Chipotle truly had integrity, should’ve been “G-M-Only kinda.” Its claim, “when it comes to our food, genetically modified ingredients don’t make the cut,” was not true. Shortly after the campaign announcement, lots of smart people (i.e., actual scientists) made Chipotle eat some of their non-GMO words. Turns out that items like cheese and the chain’s biggest money-maker – soft drinks – are produced using genetically engineered ingredients. The company was forced to backtrack:

The meat and dairy products we buy come from animals that are not genetically modified. But it is important to note that most animal feed in the U.S. is genetically modified, which means that the meat and dairy served at Chipotle are likely to come from animals given at least some GMO feed. Many of the beverages sold in our restaurants contain genetically modified ingredients, including those containing high fructose corn syrup, which is almost always made from GMO corn.

Sooooo….according to Chipotle, it’s ok for animals (the same animals that produce the dairy and meat we eventually consume) to eat genetically modified food that are potentially unsafe and pollute the environment but it’s not ok for Chipotle’s human customers to eat genetically modified food? If you can figure out that way of thinking, you win a burrito bowl.

After Chipotle announced it was ditching GMOs, I decided we would ditch Chipotle. My daughters were not thrilled with the decision, but I wanted to show them that sometimes you have to stand up for principle – and sometimes that principle costs you your weekly barbacoa taco with chips and guacamole.

The G-M-Over It campaign seemed to launch a slippery slope of bad news for Chipotle. Editorial boards across the political spectrum, from the New York Times to my piece in National Review, excoriated the company for its anti-science marketing and fear mongering. A few weeks later, Chipotle managed to insult nearly every American pig farmer by contracting with a British pork supplier and smearing conventional American farming in the process:

In the United States, around 95% of pigs are raised “conventionally.” Raising pigs in this conventional system can be particularly brutal for the animals. They are raised indoors, in densely crowded conditions with little or no bedding. Most live on slatted metal floors that allow their waste to collect beneath them in liquefied pools. Mother pigs are often kept for months at a time in metal crates so tiny that they cannot turn around.

American pig farmers blasted back. Minnesota Pork Producer Council President Lori Stevermer wrote an open letter, “Chipotle, what do you have against U.S. pig farmers?” She asked Chipotle not to “insinuate that the farmers who use a different production practice aren’t treating their animals humanely.”

In late summer, a class-action lawsuit filed in California accused Chipotle of deceptive marketing about its G-M-Over It marketing. “Consumers today are very concerned about what they eat, and restaurants know that consumers place a premium on food that is considered to be healthy or natural,” said Laurence D. King, an attorney for the proposed class, in a statement. “As a result, Chipotle’s advertising in its stores should have accurately informed customers about the source and quality of its ingredients and should not mislead consumers that they are serving food without GMOs when in fact they are.”

The financial news hasn’t been rosy for Chipotle this year, either. It’s stock is down more than 15% over the past month alone. Same store sales have plummeted from a year ago and it’s days as a high flying momentum stock appear to be over. It seemed like 2015 would be one big headache after another for Chipotle. Now, the company only wishes that was its only woe. Soon that headache was accompanied by stomach cramps, high fever and vomiting.

In August, about 80 customers and 18 restaurant employees in California were sickened by norovirus that was traced to a Chipotle restaurant in Simi Valley. A month later, a salmonella outbreak in 17 Chipotle restaurants in the Minneapolis-St. Paul area sickened nearly 70 people, nine of whom were hospitalized. And last week, an E. Coli outbreak forced the company to shut down more than 40 restaurants in Washington and Oregon. So far, at least 37 people are reported ill, with many hospitalized, and that number is expected to rise as more people are tested.

 Whole Paycheck

Giving up Whole Foods was a little tougher than giving up Chipotle. As a cooking teacher and someone who cooks daily for my own family, I shopped often at Whole Foods because it was convenient and offered selections I couldn’t find anywhere else. To be honest, I wasn’t sure how long I would keep my promise not to shop there. It was easier than I thought. And apparently other shoppers have discovered they can live without Whole Foods, too.

Much like Chipotle, the news about Whole Foods has been mostly dismal this year. Shares were already down 37 percent on the year and fell another 11 percent earlier this week when the company announced same-store sales declined in the fourth quarter. Its shares recovered somewhat when it announced a 5.8 percent jump in quarterly earnings, but its growth rate is at its lowest in four years.

In September, the company said it would lay-off 1,500 employees. The job cuts were “part of an evolution the company is going through to free up some more money to invest in lower prices, marketing communication and technology upgrades,” CEO Walter Robb said in an interview the day after the lay-off announcement.

Admittedly, some of the slump is outside its control. Once the mothership of the organic industry, Whole Foods now faces more competition from local stores as well as huge retailers like Costco and Wal-Mart; at the same time, some indicators show consumer interest in organic products might have plateaued. Nationwide, incomes remain stagnant. With some food prices on the rise, cash-strapped consumers are hesitant to spend $6 for asparagus water. Whole Food’s nickname as “Whole Paycheck” won’t be easy to shake.

What is not outside of their control is price-gouging. Over the summer, New York City’s Department of Consumer Affairs announced an investigation into Whole Foods for “systemic overcharging for pre-packaged foods.” The agency tested 80 different kinds of prepackaged products at New York Whole Foods outlets and found all had mislabeled weights. “Our inspectors tell me this is the worst case of mislabeling they have seen in their careers, which DCA and New Yorkers will not tolerate,” said a statement by the agency.

Whole Foods has also dealt with some of its own stomach-turning recalls. In 2015 alone, the company has recalled 44 products including Curry Chicken Salad and Classic Deli Pasta Salad sold at several East Coast locations over concerns about listeria contamination. Unlike the safe GMOs the company shuns, listeria can pose serious health problems including high fever, severe headaches, nausea and diarrhea. It can also cause miscarriages and stillbirths, and can be potentially fatal to young children and elderly people.

Time to eat some GMO crow?

Which brings me back to GMOs. Like Chipotle, I stopped shopping at Whole Foods because of its anti-GMO marketeering. They are major funders of labeling initiatives under the guise of a “right to know” what’s in your food (but perhaps they should worry about their own food ingredients considering the previous paragraph). By 2018, the store says it will label all of its products either GMO or non-GMO. This is designed to steer consumers toward non-GMO organic products sold by Whole Foods, almost always at higher prices.

Whenever I read about so-called earnest GMO labeling efforts, I’m reminded of the best article written this year about GMOs by Slate’s Will Saletan:

The people who push GMO labels and GMO-free shopping aren’t informing you or protecting you. They’re using you. They use your anxiety to justify GMO labels, and then they use GMO labels to justify your anxiety. Keeping you scared is the key to their political and business strategy. And companies like Chipotle, with their non-GMO marketing campaigns, are playing along.

Whole Foods and Chipotle  secured their lucrative market niches by selling commodity goods at higher prices, which consumers willingly paid based on their belief that they were getting a superior product — ethically and sustainably. It was the model pioneered by The Body Shop cosmetic company in the 1980s and early 90s. It profited on what the GLP’s Jon Entine called an “integrity premium” in numerous investigative reports about Body Shop and its founder, Anita Roddick; she was “exploiting idealism,” another phrase that he coined. When the public learned that Body Shop was just another beauty company selling commodity cosmetics at higher prices and that its “high ethics” were a marketing creation, the company’s financial bubble burst — permanently. It began losing money year and year, going from one of London City’s high fliers to a stock doormat that was eventually sold off to L’Oreal.

Now that consumers are coming to see Chipotle and Whole Foods as more marketing than sustainability and substance, will they suffer the same fate? Their integrity premiums are already shrinking. I don’t hope for the companies to fail although they certainly deserve some measure of comeuppance. But they employ a lot of good people who need those jobs and generate tax revenues for governments who need that money. So perhaps Chipotle and Whole Foods need to take a step back and eat some GMO crow. Their demonization of a safe, useful technology that has tremendous potential on a global scale in a crass move to either look trendy or sell more of their products is simply unacceptable. And given some of the problems they’ve encountered this year, perhaps focusing on their own safe food supply should be their priority.

Julie Kelly is a mom of two, a cooking teacher, food writer and ex-customer of Chipotle and Whole Foods. You can spar with her on Twitter @julie_kelly2.