Market Overview

Chipotle Settles Outbreak Claims, But Isn't Nearly Out Of The Woods Just Yet

Chipotle Settles Outbreak Claims, But Isn't Nearly Out Of The Woods Just Yet
Related CMG
What Should Concern Chipotle Investors The Most? The Pace Of Sales Trends
That's Rich: Highest-Paid Comics Who Laughed All The Way To The Bank, Thanks To Netflix

Chipotle Mexican Grill, Inc. (NYSE: CMG) has finally put to rest more than 100 claims related to its 2015 food safety issues. Late last week, the company agreed to financial settlements with customers who became ill after eating Chipotle food during several food safety outbreaks in the last year.

The terms of the out-of-court settlements are confidential, and Chipotle is hoping that avoiding a drawn-out court battle will allow the restaurant to move past the food health headlines that have plagued the company in the past year.

Related Link: How Does Bill Ackman's Chipotle Stake Compare To Other Activists In The Fast Casual Sector?

Chipotle’s sales were hit hard by the negative headlines, and revenues plummeted in Q4 of 2015 and Q1 of 2016. While revenue ticked back up in Q2, Chipotle’s stock hasn’t yet regained its traction.

Despite a recent boost from news that billionaire investor Bill Ackman has taken a sizable 9.9 percent of the company, Chipotle remains down 16.1 percent in the past six months.

Although the latest settlements are an important step in putting the disastrous outbreaks in the past, Chipotle isn't nearly out of the woods just yet.

Attorney Bill Marler, who represents Chipotle customers who became ill from the Chipotle incidents, says he still has one additional claim to settle.

In addition, the company is still facing a federal criminal probe related to food safety and a civil lawsuit over investor disclosures related to the outbreaks.

Posted-In: News Restaurants Legal General Best of Benzinga


Related Articles (CMG)

View Comments and Join the Discussion!