Industry News | July 18, 2017 | By Danny Klein | QSR Exclusive Brief

Chipotle Shares Tumble as Norovirus Reports Surface

Chipotle Mexican Grill
Chipotle Mexican Grill
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Shares of Chipotle dropped more than 5 percent Tuesday after reports of norovirus surfaced at a Virginia restaurant. The Sterling location closed after customers complained of getting sick, including cases of vomiting, diarrhea, severe stomach pain, nausea, dehydration, and even two hospitalizations.

The reports were made to the website iwaspoisoned.com and shared with Business Insider. The claims show at least 13 customers fell ill between July 14—17.

Business Insider reached out to Chipotle’s executive director of food safety, Jim Marsden, who said, "The reported symptoms are consistent with norovirus. Norovirus does not come from our food supply, and it is safe to eat at Chipotle."

He also said the location was an isolated incident.

On Wednesday, Chipotle reopened the store two days after closing. "It is unfortunate that anyone became ill after visiting our restaurant, and when we learned of this issue, we took aggressive action to correct the problem and protect our customers," Chipotle Chief Executive Officer Steve Ells says in a statement.

The timing is, mildly speaking, unfortunate for Chipotle, which reports second-quarter results on July 25. Before the news, Maxim Group upgraded the stock to buy from hold based on the company’s recent revelation that it was testing queso at its NEXT New York City test kitchen.

Chipotle’s first-quarter earnings, outside of an announcement that it was handling a security breach, reported positive with a 17.8 percent boost in comparable restaurant sales year-over-year.

Of course, food safety issues at Chipotle are a different sort of discussion than most brands. The company is still recovering from a 2015 E. coli crisis that began when 42 locations in the Pacific Northwest briefly shut down. It ended up affecting 14 states and leading to a yearlong sales downturn that erased around half of Chipotle’s market cap.

As for norovirus, the brand blamed sick employees for two outbreaks in 2015. A norovirus outbreak in a Boston Chipotle sickened nearly 150 customers.

Those concerns led to a precipitous drop in figures, as same-store sales plummeted 30 percent in December and 36 percent in January.