Chipotle Faces A Federal Criminal Investigation Over Food-Sickness Outbreak!
The Mexican-food chain announced Wednesday that it has been served with a federal grand-jury subpoena stemming from a probe into a norovirous outbreak at a Chipotle in Simi Valley, California, last August, which reportedly sickened at least 234 people. The investigation is being made by the U.S. Attorney’s Office for the central district of California, in conjunction with the Food and Drug Administration’s Office of Criminal Investigations, according to a regulatory filing Chipotle made with the Securities and Exchange Commission.
According to reports from Food Safety News, which reviewed internal documents, inspectors found violations for sanitation issues and pest control. Bathrooms were also reportedly unclean and in disrepair.
In its filing, Chipotle said it would fully cooperate with the investigation, and warned investors that it is currently impossible to determine how much the outbreak will cost them in terms of fines or further liabilities.
One unfortunate mishap might not have been a deal breaker for investors. Unfortunately, Chipotle was not so lucky. This fall brought a spate of food-borne-illness outbreaks at Chipotle locations in nine states, reportedly sickening at least 53 people, according to the Center for Disease Control. As a result, 43 Chipotle stores across Oregon and Washington temporarily shut their doors in October.
This was followed by another norovirus occurrence at a Boston location in December, which sickened more than 100 college students, including players on the Boston College men’s basketball team. Later in the month, the C.D.C. announced an additional Chipotle-related illness.
As the number of Chipotle customers who have fallen ill continued to rise, Chipotle sales continued to fall. Same-store sales tanked 14.6 percent in the fourth quarter, according to Wednesday’s regulatory filing—worse than the estimated 11 percent investors were predicting, and the first quarterly drop Chipotle’s reported since it went public in 2006.
In the month of December alone, as the C.D.C. continued to update its numbers based on the E. coli outbreaks and the Boston norovirus issue, same-store sales tumbled about 30 percent, Chipotle said.
And still it gets worse for Chipotle: the company said that all of this—the cost of replacing food in some restaurants, analyzing food samples, increased legal and marketing fees—could tally up to between $14 million and $16 million in the fourth quarter alone.
After the filing, shares for the company declined nearly 5 percent in late-day trading Wednesday. In 2015, the stock dropped about 30 percent.