Now the company faces a class action filed in California that alleges the claim of being free of genetically modified organisms, or GMOs, isn't true. The court filings point to meat and dairy products from animals fed genetically modified grains and soft drinks produced with corn syrup from GMO crops.
The suit points out a problem Chipotle faces that also exists for virtually all large corporations. Supply chains -- the total of all the parties involved in providing and distributing ingredients or materials, assembled components and even entire products -- are incredibly complex. Controlling what they do -- whether in terms of GMO foods, minerals from warring factions in a country or abusive conditions for workers -- can be far more difficult than executives like to admit.
Chipotle has disclosed some of the challenges of commercial soft drinks and animal feed on its website, as NPR has reported. As the site said: "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."
GMOs have been a point of controversy between those who say science has proven them safe and others who counter that they want the choice not to eat them. That leaves Chipotle, and its customers, with two issues: How do you define GMO when it comes to animals, and how deeply into a supply chain does a company have to dig?
It's a thorny issue for companies in any industry. The Securities & Exchange Commission had required companies to publicly disclose whether they used "conflict minerals" in their products, but that rule was struck down by a court in August. The term refers to such materials as gold, tin, tungsten and tantalum that often are produced in whole or part from ores mined by enslaved people in areas torn by violence. Factions force the mines to sell the materials for profit through a chain of intermediaries to giant electronics companies.
Companies had complained about the rule, demanded as part of the Dodd-Frank Act, for a few reasons. Some probably didn't want to cut short potential supplies of materials they needed to manufacture products. But many were also unsure how to truly establish that the chain of intermediaries and suppliers they use weren't bringing in shipments from the regions in question. Is it enough to believe what companies say?
The issue has reared its head elsewhere. Apple (AAPL) and other electronics companies have seen how working conditions in outsourced factories in China and elsewhere can suddenly be perceived as their problems.
Clearly, asking companies to be truthful about their practices isn't enough, but what can be? Do periodic inspections really settle the factor, or can the outsourced companies learn in advance of the visit, put up a good front for a day or two, and then go back to business as usual?
In the modern world, doing business has come to mean concentrating on an area where the company has an advantage and having others do related activities they can do better. But that has made it virtually impossible for a corporation to make a strong statement about how it will operate and then know it can back up the claim. There's simply no way to guarantee that business partners will go along.