Chipotle E. coli outbreak ‘appears to be over,’ says CDC

Posted at 1:14 PM, Feb 01, 2016
and last updated 2016-02-01 13:14:17-05

The CDC said Monday that the E. coli outbreak at Chipotle “appears to be over.”

The cause of the outbreak is still unknown. The Centers for Disease Control and Prevention indicated that it was likely due to “a common meal item or ingredient” served at the popular Mexican food chain.

“When a restaurant serves foods with several ingredients that are mixed or cooked together and then used in multiple menu items, it can be more difficult for epidemiologic studies to identity the specific ingredient that is contaminated,” according to the CDC release.

In a statement, Chipotle said it was pleased that the investigation is over.

“Over the past few months we have taken significant steps to improve the safety of all of the food we serve, and we are confident that the changes we have made mean that every item on our menu is delicious and safe,” Chipotle said.

The CDC also confirmed that a second, separate strain of E. coli in late November was tied to Chipotle.

Fifty-five customers in 11 states were affected by the first outbreak, and another 5 people in three states were sickened as a result of the second outbreak.

The CDC added that it “cannot say with 100% certainty that there will be no more illnesses associated with this outbreak” because the cause still has not been identified. But no additional illnesses have been reported since December 1.

Chipotle shares surged nearly 5% on the news. They initially rose earlier Monday following a report in The Wall Street Journal suggesting that the CDC would soon make the announcement.

Chipotle has been reeling as a result of the E. coli outbreak. The company will report its fourth quarter results on Tuesday — and they will not be good.

Chipotle has already warned that same-store sales plummeted in the fourth quarter as the E. coli outbreak caused some customers to stay away.

Wall Street is expecting that overall sales fell 6% in the fourth quarter and that earnings per share plunged more than 50%.

Chipotle said in January that it expects to incur between $14 million and $16 million in charges during the fourth quarter due to the outbreak.

That includes costs to replace food in some restaurants, lab analysis of food samples, hiring a food safety expert, increased marketing expenses and preliminary estimates for legal claims.

Chipotle’s stock is down nearly 30% since the initial reports of the outbreak, and is trading 40% below last summer’s all-time high.

The company was already faced with slowing sales before the E. coli outbreak — partly due to separate health incidents.

More than 200 customers became sick as a result of a norovirus in Simi Valley, California in August. A salmonella outbreak tied to tomatoes in Minnesota in August and September made more than 60 customers ill as well. Then there was another norovirus episode at a restaurant in Boston in December — at the height of the E. coli concerns.

But shares have bounced back about 15% from their lows in recent weeks. Chipotle has taken several steps to address food safety problems.

The company is even planning to close down all its restaurants on Monday Feb. 8 for a few hours to have meetings about the issue with employees.

Now Chipotle needs to convince customers that it’s time to come back for its trademark burrito bowls. Chipotle is planning big discounts for Super Bowl parties this weekend.

But some analysts feel that it will take some time before Chipotle truly regains the trust of consumers.

Wall Street is predicting another sizeable drop in sales and profits for the first quarter.

Chipotle also faces tough competition from the likes of Mexican food rival Qdoba — which is owned by hamburger chain Jack in the Box — fast casual king Panera and even a resurgent McDonald’s. Mickey D’s used to own a stake in Chipotle.