Been to Chipotle lately? No? Well, join the club. Thanks to the food safety crisis that has left hundreds of people ill with E. coli, salmonella, and norovirus since summer, the burrito chain is hemorrhaging customers.
Sales at restaurants open for at least a year were down 14.6 percent during the fourth quarter, worse than the company initially projected. Business deteriorated badly in December after the Centers for Disease Control and Prevention announced it was investigating five new cases of E. coli. Sales proceeded to fall a whopping 30 percent for the month. So, so many uneaten flour tortillas.
The pain gets worse. Chipotle said Wednesday it has also been slapped with a grand jury subpoena related to a criminal investigation by federal prosecutors and the Food and Drug Administration, who are looking into a norovirus outbreak in California. “We intend to fully cooperate,” the company said, because, well, it kind of has to.
Regarding the whole health scare, it also admitted: “Future sales trends may be significantly influenced by further developments.” While obviously legal boilerplate, the line still deserves some sort of award for corporate understatement.
It goes without saying that the company’s stock got hammered. If you’re still holding on to $CMG stocks, perhaps it is time to reassess your position and reduce your exposure.
Massive numbers of people will never eat at Chipotle again and that should terrify investors.
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