When is a small report of illness at a local restaurant national headline news? When the restaurant is Chipotle and new company leadership is doing everything in its power to climb out from under years of illness-related headlines.
— Kristen Hawley
Chipotle Mexican Grill Inc. is planning to reopen a restaurant in Ohio on Tuesday that was temporarily closed after customers reported getting sick.
The restaurant, located in the city of Powell, was voluntarily closed for cleaning on Monday after local health officials and the company received reports of employees and customers complaining of nausea, diarrhea and cramping. The news sent Chipotle’s shares down as much as 8.5 percent Tuesday as investors grappled with another round of negative headlines tied to the Mexican chain.
“The local health department has informed us of two customer complaints of illness. We acted quickly and closed this single restaurant out of an abundance of caution yesterday,” a spokeswoman for the company said. “We are working with the local health department and we plan to reopen this restaurant today.”
After falling for three consecutive years, the company’s shares had spiked 61 percent in 2018 prior to the news of the illnesses in Ohio. The biggest intraday slide in a month sent the stock as low as $425.88 on Tuesday. Bill Ackman’s Pershing Square Capital Management is the chain’s biggest shareholder.
The latest round of negative headlines comes amid renewed optimism on Wall Street that the chain can mount a comeback under Chief Executive Officer Brian Niccol, the Taco Bell veteran who took over in March. Prior to Tuesday, the Mexican chain had been recovering from a food-safety crisis that battered its brand. Chipotle recently posted same-stores sales that beat estimates for the second quarter as Niccol starts to reshape the company, with new menu items, increased marketing, a delivery push and store remodels.
The chain was upgraded to buy from hold by Andy Barish, an analyst at Jefferies, in a research note sent to clients early Tuesday. He cited the shift to digital sales and operational improvements that should help boost sales. Barish said Tuesday in an email that he was not changing his view on the company in light of the incident.
This “appears to be an isolated incidence in Ohio,” he said, calling it “obviously unfortunate but not indicative” of the changes and training improvements the chain has put in place.
Local health records available online indicate that restaurant inspectors visited the Ohio restaurant, located about 18 miles north of Columbus, on July 26 and found lettuce and beans that weren’t stored at the proper temperature. The Delaware General Health District, a country agency, said it was notified about three days later that five patrons who ate at the restaurant were sick. They got an additional two reports the next day. The records also indicate that as many as five employees of the restaurant got sick.
Local health officials were planning to check on the restaurant on Tuesday.
©2018 Bloomberg L.P.
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