Chipotle Shares And Sales Drop After E. coli outbreak

Chipotle shares dropped to nearly 7% after they announced that fourth-quarter earnings per share were expected to fall from $2.45 to $2.85—sharply below the $4.06 analysts expect—and restaurant sales drop of 8% to 11%.

"Future sales trends may be significantly influenced by further developments, including potential additional announcements from federal and state health authorities," Chipotle (CMG) said in the filing. The food chain has also projected lower sales for 2016.

The CDC reported the E. coli outbreak effected more than 50 people across nine states-California, Minnesota, Ohio, New York, Oregon, Illinois, Pennsylvania, Maryland and Washington. Final totals of people reported ill from the outbreak between October and November came to 52.

Chipotle is also expecting to spend around $6 to $8 million to replace food, testing, and consultation with advisers. This does not even include legal costs associated with the recall. 

"As a restaurant company, nothing is more important to us than serving our guests food that is delicious and safe to eat," Chipotle said. "Since this incident began, we have significantly increased our efforts to ensure that our teams are adhering to all of our food safety protocols."

A cause for the outbreak has not been determined yet, but authorities believe it was most likely a produce ingredient used nationally since it was spread over so many different states. Chipotle’s recent increase in unprocessed food is great for healthier nutrition, but it increases the risk of illness since foodborne pathogens are killed by cooking.

Most people don’t develop symptoms from E. coli for 3 to 4 days after contact with the germ. The vast majority of strains of the bacteria are harmless, but some can cause serious illness and even death.

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