In what is becoming a common refrain in the Food Institute offices, it appears Chipotle Mexican Grill just can't catch a break.
As Jennette expertly opined on last week, Chipotle is contending with a new norovirus outbreak that appears to have stemmed from a location in Sterling, VA. The outbreak was reminiscent of the 2015 outbreak at one of the chain's Boston locations, and the news spurred investors to once again take a negative view of the company's future outlook.
Following the blog post from Jennette, the Loudoun County Health Department confirmed that a customer tested positive for norovirus after eating at the Sterling location. The department received reports of 60 illnesses from customers who ate at the location, reported Yakima Herald-Republic (July 20).
Now, the company is facing a class action lawsuit on behalf of shareholders who seek damages for alleged securities violations. The lawsuit, filed by Bronstein, Gewirtz & Grossman LLC , is linked to the company's food safety issues and alleges that Chipotle made false and misleading statements after the food poisoning events in 2015, and made inadequate improvements to protect workers and consumers as well. The suit includes both the Boston and Sterling norovirus outbreaks.
To make matters worse, a class action lawsuit was filed against Chipotle alleging breach of contract, breach of duty and negligence. The plaintiff claims the chain failed to protect customers' personal information after hackers were able to access the restaurant chain's point-of-sale system. The case alleges that credit and debit card information was stolen, reported Legal Newsline (July 19).
It's worth noting that Chipotle has managed to bounce back before. Although nowhere near the glory of their heyday before the 2015 food safety issues, Chipotle was working on a number of initiatives to improve their bottom line, including new menu items, a loyalty program and a number of promotional deals. It remains to be seen what will happen with the new lawsuits, but you can be sure we will keep you up-to-date with the latest developments.
Ninety-eight bankruptcies were filed by companies with at least $50 million in liabilities year-to-date, the highest since 2009, reported Bloomberg (May 28).read more
Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at firstname.lastname@example.org to talk about anything food-related.
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