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Chipotle Sales Crater, Gets Subpoena in Criminal Probe

Jan 06, 2016

Chipotle Mexican Grill's (cmg) problems keep getting worse.

The burrito chain on Wednesday reported in an SEC filing that sales at restaurants open at least a year fell 30% last month in the wake of an outbreak last fall of E.Coli.

Adding to Chipotle's E.Coli woes, there was a norovirus outbreak at one of its stores in Boston, news that kept its food safety issues in headlines. And then in December, just as Chipotle seemed to be finding its footing again, the government said it was looking a potential new outbreak.

In the fourth quarter, same-store sales are expected to decline 14.6%. The company had previously said same-store sales would fall 8%-11% during the quarter. Chipotle shares were down 4% in early trading Wednesday and have fallen more than 40% since hitting a 52-week high of $758.61 on Aug. 5.

Chipotle has launched a public relations campaign touting changes to its food safety practices and apologizing to customers.

But now, the restaurant faces a whole new challenge. The company also said Wednesday that it had received a federal grand jury subpoena from the U.S. District Court for the Central District of California as part of a criminal investigation.

Chipotle is being compelled to produce a broad range of documents related to a Chipotle restaurant in Simi Valley, Calif., that experienced an isolated norovirus incident last August, the company said. Chipotle added that for now, it "can't estimate any penalties it might incur related to this investigation."

That is part of a criminal probe by the U.S. Attorney’s Office there and the U.S. Food and Drug Administration’s Office of Criminal Investigations.

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