Shares of Chipotle Mexican Grill Inc. jumped Monday morning after the federal Centers for Disease Control and Prevention said two E. colioutbreaks tied to the burrito chain’s restaurants appear to be over.
Shares of Chipotle were up $22.20, or 4.9%, to $475.17 in morning trading on Wall Street despite a down market. In an update on its website, the CDC said it was closing its investigation, though it was unable to determine a food or ingredient responsible for the contamination. “When a restaurant serves foods with several ingredients that are mixed or cooked together and then used in multiple menu items, it can be more difficult for epidemiologic studies to identify the specific ingredient that is contaminated,” the CDC said.
Chipotle spokesman Chris Arnold said in an email that the company has taken “significant steps” to improve the safety of its food.
“We are pleased that the CDC has concluded its investigation, and we have offered our full cooperation throughout,” he said.
Chipotle’s stock first started to climb when the market opened Monday morning after the Wall Street Journal reported Sunday night that the outbreak was expected to be declared over.
Chipotle's sales have slipped since outbreaks of E. coli were tied to its restaurants. The chain's December sales were down 30%, according to a recent filing with theSecurities and Exchange Commission.
In November, the Denver-based burrito chain temporarily closed 43 restaurants in Washington and Oregon after 22 E. coli cases were linked to its eateries. Those restaurants have since reopened.
A month later, 141 Boston College students were reported to have contracted norovirus after eating at a Chipotle in Brighton, Mass.
That same month, Chipotle was served with a federal grand jury subpoena in connection with a criminal investigation being conducted by the U.S. attorney's office for the Central District of California in conjunction with the U.S. Food and Drug Administration's Office of Criminal Investigations.
The investigation is related to a norovirus outbreak in August at a Simi Valley Chipotle restaurant. Chipotle has said it will fully cooperate in the probe.
The chain plans to close all of its U.S. stores for part of the day on Feb. 8 in order to hold a meeting with employees across the nation. The meeting is designed to address changes in food-safety procedures, as well as to allow employees to ask questions about the situation.
Article can be found online at: http://www.latimes.com/business/la-fi-chipotle-stock-20160201-story.html
Due to the E.Coli outbreak chipotles image was drastically effected. The period translated in lesser sales revenue for the food company along with a bad name and reputation. It is interesting to observe that speculation plays such a big part in the economy and share prices in particular. With in hours of CDC concluding that the bacterial outbreak was over the share prices of chipotle rose to $437, almost a 5 % increase over night. Speculation shapes a persons expectation and causes them to act accordingly as can be seen from this Chipotle example and its effects.
ReplyDeleteThis is great for a company like Chipotle that serves as a fast food alternative worth getting/dining in for. Restaurants like McDonalds, Wendy's, and Burger King enjoyed when Chipotle was making negative headlines because their loss in customers became their gain. Now with the crisis of E.coli over Chipotle will raise stakes on the restaurants mentioned above to rethink their business models and find ways to compete more effectively.
ReplyDeleteChipotle has always been a great choice of food that is served in a very reasonable time and fairly healthy when talking about other fast food options. Fast food alternatives will not enjoy the extra business due too the Chipotle related outbreaks for much longer. It is very nice to see Chipotle getting passed these outbreaks issues with the recent rise in their shares. It is hard to find fast and healthy food options now-a-days and Chipotle's great business model with shoot them up above their competitors once again.
ReplyDeleteThe E. Coli scandal at Chipotle has demonstrated the popular chain's ability to deal with adversity and focus on solving problems that comes its way. It is encouraging for investors to see Chipotle deal with this issue in a relatively prompt manner and they look to be growing after the crisis had been declared a non-issue. The February 8th closing demonstrates the ability for the entire chain to be organized and effective in attempting to solve problems from many different perspectives. I expect Chipotle to come out of this turbulent period with honors.
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