Chipotle Shares Down After Sales Warning Linked To E. coli
NEW YORK (AP) — Chipotle shares extended their slide Monday as an E. coli outbreak linked to its restaurants has the company facing its first decline in a key sales figure.
The chain known for touting its quality ingredients had said Friday it expects sales to drop between 8 and 11 percent at established locations for the fourth quarter if current trends continue. That would mark the first time the figure fell since Chipotle went public in 2006.
Chipotle's stock closed down 1.7 percent at $551.75 Monday.
In a filing with the Securities and Exchange Commission, Chipotle said sales have been "extremely volatile" since it temporarily closed restaurants in Oregon and Washington in early November as a result of the outbreak. Sales plummeted by as much as 22 percent as additional cases were reported, and were down 16 percent for November.
The Centers for Disease Control and Prevention has said the outbreak has sickened 52 people in nine states. It has not yet identified the ingredient that made people sick.
The first cases were reported at the end of October, with the most recent illness starting on Nov. 13
About 48 million people get sick from a foodborne illness each year, according to the CDC.
Chipotle Mexican Grill Inc., based in Denver, says whatever the likely ingredient was that made people sick is out of its restaurants and that it is adopting stricter food-safety standards.
The company, which has touted its use of local ingredients, said some of its local produce suppliers might not be able to meet the new standards. Locally sourced produce accounts for a "relatively small percentage" of the produce the chain uses, said Chris Arnold, a Chipotle spokesman.
Jeffrey Bernstein, a Barclays analyst, noted that fast-food chains have recovered from similar foodborne illnesses in the past. But he said Chipotle's recovery will likely take longer given greater social media awareness.
Bernstein also noted that Chipotle is known for its "Food with Integrity" slogan, which makes the E. coli cases "all the more damaging."
By CANDICE CHOI, AP Food Industry Writer
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