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Chipotle subpoenaed in federal criminal investigation of norovirus outbreak

Chipotle subpoenaed in federal criminal investigation of norovirus outbreak
Chipotle's fourth-quarter 2015 sales fall 14.6% after December sales plunge 30%.

Things continue to worsen for Chipotle Mexican Grill Inc., according to the company’s Jan. 6 Securities & Exchange Commission filing. The company not only reported that fourth-quarter 2015 sales were expected to be down 14.6%, but it also said it was recently subpoenaed in a federal criminal investigation for a norovirus outbreak that occurred in California.

“In December 2015, Chipotle was served 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 company said in the filing.

Chipotle said the subpoena requires it to produce a broad range of documents related to a Chipotle restaurant in Simi Valley, Cal., that experienced an isolated norovirus incident during August 2015. Officials said approximately 80 customers and 18 employees became ill after eating at the restaurant.

“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,” the company said.

According to Chipotle, another norovirus outbreak on Dec. 7, 2015, at one of its restaurants in Brighton, Mass., “worsened the adverse financial and operating impacts we experienced from an E. coli incident associated with a number of Chipotle restaurants in October and November.”

For the full month of December, comparable restaurant sales plunged 30%, and the company said future sales trends may also be significantly influenced by further developments. As such, the company also announced in the filing that its board had authorized the repurchase of $300 million in Chipotle shares.

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