Chipotle Reopens Ohio Restaurant Following Customer Illnesses

(Bloomberg) -- Chipotle Mexican Grill Inc. reopened a restaurant in Ohio on Tuesday that was temporarily closed after customers reported getting sick.

The restaurant, located in the city of Powell, was voluntarily closed for cleaning on Monday after local health officials and the company received reports of employees and customers complaining of nausea, diarrhea and cramping. The news sent Chipotle's shares down as much as 8.5 percent Tuesday as investors grappled with another round of negative headlines tied to the Mexican chain.

A spokeswoman for Chipotle confirmed that the restaurant had reopened. She earlier said the location had been closed out of an “abundance of caution” after the company was told by local officials of two customers complaining of illness.

Traci Whittaker, a spokeswoman for the health department in Delaware County, said they had received more than 100 calls related to the investigation. A cause of the outbreak hasn't been determined, but “if samples are given and delivered to the lab, we may have results by Friday or the beginning of next week.”

“They are complaints, but nothing can be confirmed without laboratory testing,” Whittaker said, referring to the calls.

After falling for three consecutive years, the Chipotle's shares had spiked 61 percent in 2018 prior to the news of the illnesses in Ohio. The biggest intraday slide in a month sent the stock as low as $425.88 on Tuesday. Bill Ackman's Pershing Square Capital Management is the chain's biggest shareholder.

The latest round of negative headlines comes amid renewed optimism on Wall Street that the chain can mount a comeback under Chief Executive Officer Brian Niccol, the Taco Bell veteran who took over in March. Prior to Tuesday, the Mexican chain had been recovering from a food-safety crisis that battered its brand. Chipotle recently posted same-stores sales that beat estimates for the second quarter as Niccol starts to reshape the company, with new menu items, increased marketing, a delivery push and store remodels.

The chain was upgraded to buy from hold by Andy Barish, an analyst at Jefferies, in a research note sent to clients early Tuesday. He cited the shift to digital sales and operational improvements that should help boost sales. Barish said Tuesday in an email that he was not changing his view on the company in light of the incident.

This “appears to be an isolated incidence in Ohio,” he said, calling it “obviously unfortunate but not indicative” of the changes and training improvements the chain has put in place.

Local health records available online indicate that restaurant inspectors visited the Ohio restaurant, located about 18 miles north of Columbus, on July 26 and found lettuce and beans that weren't stored at the proper temperature. The Delaware General Health District, the county agency, said it was notified about three days later that five patrons who ate at the restaurant were sick. They got an additional two reports the next day. The records also indicate that as many as five employees of the restaurant got sick.

Local official visited the restaurant on Tuesday and “did not find anything that would prevent them from opening.”

To contact the reporters on this story: Craig Giammona in New York at cgiammona@bloomberg.net;Shelly Hagan in New York at shagan9@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Lisa Wolfson

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