Things have gone from bad to worse at the popular burrito chain.
E. coli and norovirus outbreaks sent Chipotle shares plummeting last week, but the worst may be yet to come.
Chipotle knew that its business would take a hit after the outbreaks but felt it had stopped the bleeding by the end of 2015, but now the company is revising its estimtes and expects the shares to dive even lower, according to a Washington Post report.
Chipotle is now expecting restaurant sales to fall by 15 percent for the quarter ending Dec. 31, a revision from the 11 percent that had been epected previously. That includes a dip of 30 percent in December alone.
And now, the feds are getting involved. The company will have to respond to a grand jury subpoena, which was served last month. It is linked to a norovirus outbreak in August in California, and it has prompted authorities from the Food and Drug Administration as well as the U.S. attorney’s office in California. Chipotle says they are cooperating with the investigation.
Hopefully, the situation wraps up soon for Chipotle. The government typically only wants to ensure that the threat to the public safety is over, which Chipotle has repeatedly asserted it has. But it’s certainly not good news, and it can only make the stock go lower.
It was an ugly 2015 for Chipotle. The restaurant chain had to close 43 residents in Washington state and Oregon after an E. coli outbreak was reported at six restaurants. Illnesses spread to seven more states in Mmidwest and on the East Coast.
That was soon followed by a norovirus outbreak among students at Boston College, leading to the closure of another restaurant due to improper handling of food, authorities say.