Will Chipotle, With Latest Scare, Ever Get Its Food Right?

July 18, 2017 by Chris Lange

Chipotle Mexican Grill, Inc. (NYSE: CMG) looks to be facing yet another food scare after reports surfaced that one of its restaurants in Sterling, Virginia, has infected some of its customers with what seems to be the norovirus. This is yet another blemish on the burrito chain, and it begs the question: Will Chipotle ever get it right?

The Chipotle restaurant in Virginia was shut down initially for sterilization. However, the restaurant reportedly plans to open at 3 p.m. local time on Tuesday.

Shares of Chipotle were last trading down over 6% at $366.55, with a consensus analyst price target of $449.07 and a 52-week range of $352.96 to $499.

The norovirus is the leading cause of illness and outbreaks from contaminated food in the United States, according to the Centers for Disease Control and Prevention. Infected employees are frequently the source of the outbreaks, the CDC says, often by touching foods such as raw fruits and vegetables with their bare hands before serving them. Symptoms include nausea, stomach pain and diarrhea.

The Denver-based burrito chain has been tainted by food-borne viruses since an E.coli outbreak in the fall of 2015 and a norovirus case in Boston later that year.

In the wake of these outbreaks, Chipotle re-examined its supply chain and how to maintain a high quality for its ingredients while still sourcing local providers. This was successful for about 18 months when the chain was illness-free, Now everything is being called into question.

Some are even calling for the chief executive officer to step down.

24/7 Wall St. tried to reach out to Chipotle for comment but was unsuccessful.

Excluding Tuesday’s move, Chipotle has lagged behind the broad markets, with the stock only up about 4% year to date. Over the past 52 weeks, the stock is down 3%.

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