Embattled fast-food restaurant Chipotle is now facing a criminal investigation over a norovirus outbreak in California, the company said yesterday. Sales at restaurants open at least a year slid 30% in December and fell 14.6% during the fourth quarter.
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Chipotle Mexican Grill Inc. has been slapped with a subpoena in a federal crime probe concerning the outbreak of norovirus cases at the firm’s restaurants in California in 2015, according to Reuters.
Chipotle has been facing outbreaks since last few months.
A federal investigation into a one-restaurant outbreak is surprising since there wasn’t a clear interstate element, said Bill Marler, a Seattle-based lawyer who is representing customers saying they were sickened in Simi Valley.
The investigation announced on Wednesday is the latest headache for the company, which has seen sales slump after an E. coli outbreak sickened more than 50 people in nine states in October and November.
Chipotle voluntarily closed the restaurant to restock food products and conduct extensive cleaning and disinfection.
Despite Chipotle trying to signal that its stock is undervalued through its buyback plans, investors remained unconvinced sales and earnings will recover in the first part of 2016.
In its regulatory filing Wednesday, the company said it could not determine or reasonably predict the amount of any “fines, penalties or further liabilities” it might face in connection with the federal investigation.
Numerous ingredients, such as tomatoes and cilantro, will be chopped and tested at other locations before they go to stores, Daily Mail reports.
Beach also said that Chipotle has been cooperating with the investigation, which already revealed issues such as unclean equipment in restaurants and employees without the essential food handling permits.
The subpoena, issued in December 2015, came out of a grand jury from the U.S. District Court for the Central District of California, according to a document Chipotle filed with the Securities and Exchange Commission on January 6.
Chipotle’s sales reportedly plummeted 30 percent in December alone, after the two most recent outbreaks. There have only been a handful of criminal investigations into these kinds of food-safety problems, and they typically involve products shipped across state lines, he said.
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“Following (the CDC) announcement and related national media attention, our comparable restaurant sales trended down to -37 percent”.
