Chipotle Struggles With More Food-borne Illness Scares This Week

Chipotle Mexican Grill is having a little trouble today after temporarily closing a restaurant in Ohio when customers fell ill after eating at the establishment.  Fortunately, it appears the incident is isolated with no other immediate indications of a wider scope.  Unfortunately, the closure helped to increase investor concern which, in turn, drove stock prices for the chain down by 7 percent on Tuesday afternoon.

Looking more specifically at the incident, the franchise of concern is located in Powell, Ohio.  As many as 10 people have, so far, reported illness (nausea and diarrhea) after eating there.  However, the Delaware General Health District in Ohio has said they are currently investigating the incident after receiving more than 100 calls regarding the issue.

Of course, Chipotle is still trying to recover from several foodborne illnesses scares—a series of both E. coli and norovirus scares within the last three years—which have unnerved customers and set the company back financially.

Still, Chipotle spokesperson Laurie Schalow emailed a statement to assure that this latest scare was “an isolated incident.”

She attests, “Our protocols identified a handful of illness reports at one restaurant in Powell, OH. We acted quickly and closed this single restaurant out of an abundance of caution. We are working with the local health department and we plan to reopen this restaurant today.”

On Tuesday morning, Chipotle stock was trading above $435, which is up from 50 percent on the year so far (but still down more than 40 percent from before the original crises).

Cowen Stock analyst Andrew M. Charles comments the closure of this Ohio restaurant marks “Brian Niccol’s first test as CEO,” since he has only very recently taken the helm. Still, Niccol is a former CEO of Taco Bell and has promised digital innovation, new menu items, and an approach to a more fresh appeal to the younger consumer market.

Charles adds, “We would like to see CEO Brian Niccol take a more accountable and responsible approach and grab the bull by horns to clarify what happened, what was remedied, and what changes going forward to limit the risk an event like this will occur again. We believe this will be a more effective way to restore trustworthiness than previous tactics.”

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