Chipotle Mexican Grill Inc. said its recent E. coli outbreak would cut deeply into its sales and earnings for the current quarter, as USA health authorities said illnesses linked to the company’s restaurants had occurred in three more states.
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Investigators are sequencing the bacterial DNA of the E. coli strain to figure out if there are other cases out there and to find a source for the outbreak, according to the CDC.
Company shares (CMG) slid 0.7% in regular trading – only to dive another 8% after-hours as the fast-casual chain lowered its outlook.
The Chipotle outbreak comes after a similar Shiga toxin-producing strain of E. coli sickened at least 19 people in late November.
Of the 52 reported cases, 47 reported eating at Chipotle before becoming ill, said the CDC.
Chipotle, which is known for touting the quality of its ingredients, also said Friday it was tightening its food standards.
“Seven more ill people have been reported from California (1), IL (1), Maryland (1), OH (2), Pennsylvania (1), and Washington (1)…two of these illnesses started in October, five started in November”, said the CDC on Friday in a statement. Twenty people sickened in the outbreak had to be hospitalized, according to the CDC.
There may be further cases, but the reporting process takes an average of two to three weeks to document, said the agency.
Shares of the company’s stock have dropped 25 percent since mid-October.
The company also said it might cut down on local food sourcing in the future, as local suppliers might not be able to meet the company’s heightened food safety requirements. It said that if “recent sales trends continue”, it expects a decline in sales at established locations of 8 percent to 11 percent during the fourth quarter, and for fourth-quarter earnings per share to fall to between $2.45 and $2.85, from last year’s $3.84 per share.
The bacterial illness exhibits symptoms like nausea, vomiting, diarrhea and abdominal cramps.
Bill Marler of Seattle law firm Marler Clark commented that people should not totally rely on a company that uses only local and fresh ingredients, since it is not immune from food safety issues.
Chipotle said it tested ingredients before, but that it is moving to testing smaller batches and a larger number of samples.
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It said that no ingredients that are likely to have been linked with the outbreak remain in its restaurants.
