Chipotle shares plummet following report of norovirus at Virginia restaurant
The chain confirmed Tuesday that several customers who ate at a Chipotle Mexican Grill in Sterling, Virginia, reported symptoms of norovirus after eating at the chain. So far eight cases between July 14 and July 17 were reported to Newsinfi.com, a website that allows users to report when they get sick after eating at a restaurant. Business Insider was alerted to the issues at the restaurant by the site, and thenpublished a story. Customers reported symptoms such as vomiting, severe stomach pains, diarrhea, dehydration and, in some cases, hospitalization.
Jim Marsden, Chipotle's executive director of food safety, said that the company has notified local health department officials of the incident.
"Norovirus does not come from our food supply, and it is safe to eat at Chipotle. We plan to reopen the restaurant today," he said in a statement Tuesday. "We take every report of illness seriously. In accordance with our established protocols, our team is working to ensure the safety of our customers and employees, including voluntarily closing the restaurant yesterday to conduct a complete sanitization."
The company's shares plummeted more than 5 percent after reports of the incident surfaced.
It has been two years since a string of food safety incidents battered sales and scared away diners. While the beleaguered burrito chain has returned to profitability and its same-store sales have begun trending in a positive direction, its successes have been overshadowed by a data breach, overtime pay lawsuits, drug charges being brought against a senior manager and, now, another an outbreak of illness.
"This is the last thing Chipotle needs," Neil Saunders, managing director of GlobalData, told CNBC. "Even if it is an isolated incident, it brings back memories of previous food scares and has the potential to damage the brand. Chipotle has worked hard to overcome previous issues, but it is still in recovery mode and this could be a very unhelpful setback. Fairly or unfairly, this is just the latest in a long line of 'issues' which give the impression that Chipotle is a poorly run and managed brand."
However, Maxim analyst Stephen Anderson doesn't think that this outbreak will have a huge impact on Chipotle in the long run. He said that norovirus "is not all that uncommon among restaurants" and can be spread by a sick employee or customer.
Some of Chipotle's previous issues were caused by E. coli outbreaks, which are typically the result of problems in the food supply chain and can lead to widespread customer illnesses.
Prior to the reports of norovirus in Virginia, Anderson upgraded his rating on the stock to buy from hold, and lifted its price target to $470 from $440. He said that he would not be changing that rating.
Chipotle Mexican Grill, Inc.'s shares closed down 4.34% on Tuesday after the Mexican burrito chain restaurant confirmed that a Virginia location was connected to customers experiencing norovirus. The restaurant has been closed on Monday on the possibility of a norovirus outbreak and was scheduled to re-open yesterday, but did not. Company spokesman Chris Arnold said he does not know when the restaurant will re-open. Business Insider was the first to break the news citing website iwaspoisoned.com, where there were 8 reports of 13 people that fell sick In between the dates of July 14th and July 15th at the location. The company's executive director for food safety released the following statement: "Norovirus does not come from our food supply, and it is safe to eat at Chipotle." The CDC has said that the norovirus is a "winter vomiting bug" that is caused by outbreaks from contaminated food in the U.S. It's been a couple of years since Chipotle's E coli. outbreak which had a damaging effect on the company as well as a loss of many customers. Chipotle will be soon releasing its second quarter results on the 25th of the month.
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