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Chipotle's E. Coli Scare

Updated on December 23, 2015

So in late October of 2015, there was evidence of an E. coli outbreak in Chipotle food in Washington and Oregon. Now....word of another potential scare in three different states: Kansas, North Dakota, and Oklahoma. Here we go all over again.

Upon this news, shares of Chipotle (CMG) fell 4% today (12/22), and dipped below $500 for the first time since May 2014. The CDC brought up the new potential outbreak in the three aforementioned states.

According to the CDC, they're investigating a strain of E.coli that has a "different, rare DNA fingerprint". All 5 people in the report said they ate at a Chipotle in the week before they got sick. The illnesses started between November 18 and 26th. The CDC says since these occurred far enough away from the previous October outbreak, that they're treating it as a second one altogether. More damning: there are now 53 reported illnesses in 9 states.

For their part, Chipotle CEO Steve Ells has been out and about on programs including NBC's Today show this December to tell Matt Lauer about some of the ways his company has been trying to identify the source of the bacteria.

Chipotle is now in full damage control mode (as they should be), but I have to say it's not working. Investors are jumping off the ship about as quick as they can, with the stock heading downward 22% since the first reports came out. The new low is also 34% below the all time high the company hit in August of this year.

So what does this mean for you and I? Much like the Blue Bell incident from earlier this year, it's time to back away from the Chipotle burrito bowl. Two outbreaks, multiple states.....there are some strains of E.coli moving through Chipotle's chain at this point, and now it's just whack-a-mole time before you and I hit the jackpot. I'd probably look at alternatives such as Qdoba, Panera Bread, or Zoe's Kitchen if you have them. Not to say that these other organizations are perfect, but for now....go with something that has the better track record. Chipotle doesn't have a history of this, so once they right the ship, I feel like it'll be back to normal.

While I don't usually use Wall Street as a barometer on my eating decisions....when the investors feel like you can't right the ship due to a tarnished rep...that means they don't have faith in your plan to restore it, which means fixing the problem at its source.

Until they what Monty Python's Holy Grail comrades do best. Run away.


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