VW Vs. Chipotle: Which Brand Is The Biggest Loser?

by Rebecca Brooks , Columnist, January 19, 2016

Two of the biggest corporate PR-brand crises of 2015 have roared into the New Year with no end in sight. Recently, the U.S. Justice Department and the Environmental Protection Agency sued VW over its illegal diesel emissions scandal. Days later, Chipotle was sued for misleading its investors about food safety procedures.

Both companies face uphill battles to rebuild consumer trust in their brands, built largely on “we do it better” reputations. But is one crisis worse than the other?

VW’s Cover-Up

When it was pointed out to VW in 2013 by various government authorities that road tests on its “clean diesel” cars showed wildly unacceptable results — as much as 40 times the pollutants allowed — the manufacturer began a year-long campaign to discredit the results. It was only when VW was presented with incontrovertible proof that it had installed software in its diesel-engine car computers to deliberately manipulate its pollutant emission — the proverbial smoking gun — did VW engineers admit to the fraud. This was no lone wolf act; it took a German village to carry out this malfeasance.

Regaining the public’s trust (not to mention that of VW dealers) will not be easy. Changes will have to be made that must be big, bold and sincere. Forget burnishing the brand. The entire culture of VW that gave permission to dupe customers will have to be reengineered, and the process will have to transparent.

Chipotle’s Dark Side

The Chipotle situation has definitely taken a turn to the dark side. When the norovirus story first hit, Chipotle fans came to its defense because of the company's seemingly genuine efforts on behalf of real, healthy food. Chipotle was leading the good fight by promoting hormone-free, non-GMO products in the food industry. They were the good guys that were going to change the system by marrying business success with ethics.

Now, however, things look a bit sinister with the Fed investigating. The fact that the Fed is being cagey and not saying if Chipotle executives or business practices are the focus of the investigation makes it even more unsettling. The lack of information suggests to consumers there might actually be something rotten at Chipotle headquarters.

The last quarter saw a nearly 35% drop in sales. Let’s be real, if McDonald’s was accused of unhealthy food preparation practices, no one would be overly surprised and their customers would still keep going because food ethics aren’t the reason they go to McDonald’s. But Chipotle built a brand on transparency, honesty and consumer health. If it is found they broke that promise, their consumers will react strongly.

Which Brand Crisis Is Worse?

Chipotle is a franchise company, which removes the national brand to some degree away from the current crisis that is originating among its franchisees. If the buck stops at some bad apples in the franchisee pool, Chipotle can rebound. But, if this a command from the top, they are in very bad shape.

As bad as Chipotle’s brand problem is, VW’s is worse. In the case of VW, we now know this was deliberate cheating straight from the top. Even now, upper management refuses a mea culpa. In an interview with NPR last week at the Detroit Car Show, the new VW chief, Matthias Mueller, justified the cheating and cover-up by saying, “We didn't lie. We didn't understand the question first.” The EPA, for one, isn’t buying that the whole mess was merely a matter of semantics. In addition to its lawsuit against the car manufacturer, the EPA has rejected its recall proposal as “incomplete.”

7 comments about "VW Vs. Chipotle: Which Brand Is The Biggest Loser?".

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Jonathan Hutter from Northern Light Health, January 19, 2016 at 8:55 a.m.
The rules for crisis management and crisis communications are pretty clear. Yet there are alway some companies that think it doesn't apply to them, which is astounding. A company like VW...well there might be less surprise, but no less damage to the brand. But Chipotle? As you mentioned, brand lovers came to its defense, which makes its problems that much worse (if corporate is at fault).

Truth usually wins. Ask Lance Armstrong.
Reply

Ken Kurtz from creative license, January 19, 2016 at 11:04 a.m.

Based upon personal experience, I would say that Chipotle would have the larger problem, and might wind up being the bigger loser. My 14 year old daughter, a big fan of Chipotle for years, has REFUSED to walk through their doors since they started making people sick. I don't blame her, and I will never eat at Chipotle again.

On the other hand, I purchased two new cars in the last quarter of 2015... a VW for me, and an Audi for my wife. There is no denying the quality of these cars for the money, and there is plenty of denying (including by scientists) that the EPA's onerous emission restrictions can result in even a scintilla of difference regarding "cleaner air" on this planet. As such, I don't feel particularly "duped" by the company, especially since I've never considered purchase of one of their diesel vehicles.

That some people are angry, and feel "duped" by the company's "misdirection" made my late year purchases that much more enjoyable (while saving me more money), as the both the VW dealer, and Audi dealer were genuinely happy to see me, and clearly valued my business in the midst of the current dearth of visitation to their showrooms among those that are allowing the media to dictate their "bleeding heart" behaviors. To me, much ado about very, very little.

Getting sick from Norovirus, on the other hand? I will avoid that like the plague that it is.

Ken Kurtz from creative license, January 19, 2016 at 11:07 a.m.

All that written, I totally agree with Jonathan that "truth" would have been the better path.

CJ McCabe from C-Mac, January 19, 2016 at 3:46 p.m.

Greetings. Chipotle is NOT a franchise company. Corporate owns all of the locations. And, of course, VW IS a franchise company at the reatail level. Pesky details!

Rebecca Brooks from Alter Agents, January 19, 2016 at 6:17 p.m.

CJ, thank you for bringing that to my attention. In an article about owning your mistakes, I am owning this one! I still contend that VW is in the tougher spot. Time will tell, but I think Chipotle is starting to get ahead of their problem and VW is still flailing.

Ken Kurtz from creative license replied, January 21, 2016 at 12:15 p.m.

CJ...

Do those that "pesky details" lead you to believe that Chipotle, in all its "corporateness" might be in a bigger jam, and VW less so because its franchisers were likely not privy to the corporate shenanigans?

Judy Mowatt from Freelance Media Buyer, January 21, 2016 at 3:10 p.m.

I believe Chipotle has the larger problem of consumer trust, and maybe they also put to much trust in their suppliers? There's a lot of unknowns still, as to where the problems originated. Was it at the production plant level, the transportation level, or at the individual store level? The unknowns are more troubling than the deliberate deceit of VW, which are already known and can be rectified. The quality of VWs were never compromised.