Chipotle Sued For Not Disclosing Food Quality Control Problems To Stockholders

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Customers don’t trust fast-casual Mexican-ish restaurant Chipotle very much right now, after a series of foodborne illness outbreaks in different parts of the country. The outbreaks of e. Coli, Salmonella, and norovirus were unrelated to each other, but demonstrated problems with the chain’s food-handling procedures. Now an investor has filed a lawsuit on behalf of shareholders who bought stock in the company in the lsat year, claiming that the company should have known about the problems with its food handling processes, and disclosed them.

The company’s food safety woes have undermined customers’ confidence in the chain, and sales are down 30%, according to Chipotle’s most recent quarterly report. That has hurt the company’s share price, making the value of customers’ investments fall even further than their sales–down 35% as of Friday afternoon.

According to Reuters, the lawsuit claims that the burrito chain hurt investors by failing to let them know that “quality controls were inadequate to safeguard consumer and employee health,” something that its own management evidently didn’t know. While the eatery has changed its cooking and chopping procedures since the outbreak, it hasn’t yet regained the public’s trust despite the company founder and co-CEO going on a national media apology tour.

All that was needed to cause an outbreak of the massively contagious norovirus in Boston was for one manager to not force a sick employee to go home. The food safety failures may have been chain-wide, or may have been caused by one person somewhere in the company failing to do his or her job just one time. All its victims know is that the company’s “food with integrity” slogan is rather hollow when you’re in gastrointestinal distress.

The company declined to comment to Reuters about the lawsuit.

Chipotle sued for misleading investors over food safety [Reuters]

by Laura Northrup via Consumerist