Chipotle receives grand jury subpoena

by Jeff Gelski
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Chipotle in Simi Valley, Calif.
A Chipotle restaurant in Simi Valley, California experienced an isolated norovirus incident in August 2015.

DENVER – The fall-out from an E. coli outbreak continues for Chipotle Mexican Grill in the forms of a grand jury subpoena and an expected drop in fourth-quarter sales.

Denver-based Chipotle in December was served with a federal grand jury subpoena from the U.S. District Court for the Central District of California, according to a Jan. 6 Securities and Exchange Commission filing from the company. The subpoena is in connection with an official criminal investigation being conducted by the U.S. Attorney’s Office for the Central District of California in conjunction with the U.S. Food and Drug Administration’s Office of Criminal Investigations.

“The subpoena requires us to produce a broad range of documents related to a Chipotle restaurant in Simi Valley, California, that experienced an isolated norovirus incident during August 2015,” Chipotle said in the S.E.C. filing. “We intend to fully cooperate in the investigation. It is not possible at this time to determine whether we will incur, or to reasonably estimate the amount of, any fines, penalties or further liabilities in connection with the investigation pursuant to which the subpoena was issued.”

Also in the S.E.C. filing, Chipotle said it anticipates comparable restaurant store sales to be down 14.6% in the fourth quarter. Non-recurring expenses in the fourth quarter should be in the range of $14 million to $16 million. This estimate includes costs to replace food in select restaurants, lab analysis of food samples and environmental swabs, increased marketing expenses, retaining expert advisory services related to epidemiology and food safety, and preliminary estimates for legal claims and related expenses.

Chipotle is scheduled to give its fourth-quarter and fiscal-year results on Feb. 2.

Chipotle experienced an incident involving norovirus at a restaurant in Brighton, Mass., during the week of Dec. 7, which worsened the adverse financial and operating impacts experienced from previous E. coli incidents in October and November, according to the S.E.C. filing.

The Centers for Disease Control and Prevention, Atlanta, on Dec. 21 said the outbreak had infected 53 people from nine states.

“The epidemiologic evidence available at this time suggests that a common meal item or ingredient served at Chipotle Mexican Grill restaurants in several states is a likely source of this outbreak,” the C.D.C. said. “The investigation has not identified what specific food is linked to illness.”
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