Have Contamination Issues Finally Brought Down Chipotle?
Blue Bell isn’t the only food company facing trouble nowadays. Chipotle Mexican Grill, which has suffered E. coli and norovirus outbreak within the last few months, has received a grand jury subpoena as part of a criminal investigation by the U.S. Department of Justice and the FDA.
Read more: Chipotle Suffers E. Coli Outbreak
The restaurant chain insists it is fully cooperating with feds on this matter. Chipotle has filed with the Securities and Exchange Commission, noting that it’s been served with a federal grand jury subpoena and is being investigated by the U.S. Attorney’s Office for the Central District of California. This is in conjunction with the FDA’s Office of Criminal Investigations — the FDA published a notice on Dec. 22 about the E.coli outbreak, which states that over 50 people in 12 states are suspected to have gotten sick after eating at Chipotle. Some experts have blamed the contamination on local, farm-to-table food.
Chipotle figured that its business would suffer from this outbreak, but the latest numbers show that their dire predictions weren’t dire enough. The Washington Post notes that Chipotle’s comparable restaurant sales are expected to drop by almost 15 percent, and in December alone same-restaurant sales plunged 30 percent.
Meanwhile, a Washington State pharmacist is suing the company for $75,000 after suffering nausea and severe diarrhea four days after eating its food. College students in Boston have also alleged that Chipotle food made them sick. As many as 500 people nationwide may have suffered from different E. coli and norovirus strains linked to Chipotle food. A Reuters/Ipsos poll conducted in December found that about a quarter of Americans who were aware of the E. coli cases said they were eating Chipotle less often.
Public opinion factors into the company’s stock — financial experts have warned investors against picking up Chipotle stock, because customers are no longer supporting the franchise. In a move likely designed to inspire investor confidence, Chipotle will buy back about $300 million in its stock … but it may be too late to turn this ship around.