Popular Mexican cuisine restaurant Chipotle is under fire in the aftermath of masses of sick diners taken ill in 2015 by salmonella, E. coli, and norovirus outbreaks stemming from food sold by the food chain. Originally faced with customer lawsuits, declining sales, and then a federal criminal probe, investors have now banned together in a class-action lawsuit stating that Chipotle mislead them about the company’s food safety measures.
The company’s CEOs, Steve Ells and Monty Moran, have also been named personally as co-defendants in the suit. Plaintiff investors include those who purchased Chipotle stock between the time span of February 2015 and January 2016.
The civil lawsuit was filed on Friday in the U.S. District Court for the Southern District of New York. According to the suit, “Chipotle’s quality controls were inadequate to safeguard consumer and employee health.” It is also alleged that the company made “materially false and misleading statements,” made false public statements, and that its “quality controls were not in compliance with applicable consumer and workplace safety regulations.” The Chipotle lawsuit is spearheaded by investor Susie Ong.
Fortune reports that, since the beginning of its turn of fortune that began last fall with an E. coli outbreak, Chipotle’s stock price has fallen a whopping 45 percent. Along with this, the company has reported that sales have declined 30 percent since December.
It is also reported that a series of smaller pathogen outbreaks took place before the major ones that caught media attention, but no significance was attributed to them. As of this date, 350 people across 10 states have been documented to have been affected by eating Chipotle food over the course of the five major outbreaks. Forty of the chain’s locations were forced to shut down temporarily as the illnesses were being investigated. Currently, no deaths directly linked to the Chipotle outbreaks have been reported.
According to Take Part, although the chain has made a major overhaul to the company’s food safety protocols, some experts state that Chipotle was indeed in compliance with industry standards when the outbreaks took place.
When queried about the lawsuit, Chipotle spokesman Chris Arnold declined to comment, stating that the company’s policy is to remain silent on lawsuit issues during the course of active legal proceedings.
CEO Steve Ells has made multiple public apologies in regards to Chipotle food making diners ill, but this has done little to negate the hit that the company has taken to its sales numbers and reputation. In fact, the company’s public relations department has yet to come up with an effective strategy to redefine public perception of its image.
Before the pathogen outbreak, Chipotle enjoyed resounding success, even to the point of being dubbed as a “McDonald’s killer.” At its height, company sales had risen to 20 percent, and profits were reported at almost 50 percent through Q3.
Speculators have not yet been able to accurately surmise whether or not Chipotle will be able to rise from the ashes of its bad luck, but one thing is for certain: it is going to be a long road back to the top in light of all of its current troubles.
Chipotle.com states their primary marketing slogan as, “Putting the food back in fast food.” They were established in 1993 and specialize in burritos, tacos, and other traditional Mexican dishes. The site states, “Using high-quality raw ingredients, classic cooking techniques, and distinctive interior design, we brought features from the realm of fine dining to the world of quick-service restaurants.” Recently, the company extended their culinary fare into preparing dishes reminiscent of Asian and Italian cuisine.
[AP Photo / Gene J. Puskar]