DENVER -- Chipotle Mexican Grill Inc. said sales decreased more than 30% for December 2015 after it experienced a series of E. coli and norovirus outbreaks in the fall at its restaurants, and that it has been served with a federal grand jury subpoena as part of a criminal investigation, the company said in a regulatory filing with the U.S. Securities & Exchange Commission (SEC).
Following the announcements of the outbreaks and related national media attention, comparable restaurant sales were down 30% for December. “Future sales trends may be significantly influenced by further developments,” it said.
The company also said that it was served in December with a federal grand jury subpoena from the U.S. District Court for the Central District of California 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 & 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, Calif., that experienced an isolated norovirus incident during Aug. 2015. 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,” Chipotle said in the filing.
The emergence of a criminal investigation after a norovirus outbreak is unusual, Bill Marler, a food safety lawyer representing Chipotle customers who were sickened in Simi Valley, told the Associated Press. Outbreaks at restaurants are typically caused by an infected employee. Marler couldn’t think of a reason for a federal investigation, other than employment violations.
Chipotle spokesperson Chris Arnold told the news agency that the company does not discuss pending litigation, but that it intends to cooperate fully with the investigation.
Doug Beach, a manager of the food program at Ventura County’s Environmental Health Division, said the U.S. Attorney’s office requested records from the his office regarding the Chipotle case about a month ago.
“That was a first for us,” Beach told AP.
He said Chipotle had been cooperative with the county’s investigation, which uncovered issues such as unclean equipment and employees without the necessary food handling permits.
He also noted that Chipotle started getting complaints about illnesses on Tuesday, Aug. 18, and shut down its restaurant the following Friday. Yet the company did not alert the county of the matter until Saturday--after it had already reopened the restaurant, Beach said.
To rehabilitate its image, Chipotle has taken out full-page ads apologizing to customers in dozens of newspapers around the country. It also vowed changes to step up food safety at its restaurants, in part by tweaking its cooking methods and increasing testing of meat and produce, said the report.
Co-CEO Steve Ells has said the company will likely never know what ingredient was to blame for the E. coli cases.
Click here for Chipotle’s website update on the situation, a letter from Ellis and a statement about the company’s commitment to food safety.
Denver-based Chipotle operates more than 1,900 Mexican restaurants nationwide.
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