Chipotle Mexican Grill Inc. may incur legal fees or fines related to a U.S. Securities and Exchange Commission probe regarding work authorizations, said Stephen Anderson, an analyst at Miller Tabak & Co.
“There could be a fine of some sort” and “legal fees,” Anderson, who is based in New York, said today in an interview. “I seriously thought this was something they put behind them.”
Chipotle last week received a subpoena “requesting that we provide information regarding our compliance with employee work authorization requirements, our related public statements and other disclosures, and related information,” the Denver-based company said in a May 18 SEC filing.
The SEC hasn’t informed Chipotle as to the focus of its investigation, Chris Arnold, a company spokesman, said in an e-mail. John Nester, an SEC spokesman, declined to comment.
Chipotle rose 0.3 percent to $393.33 at the close in New York. The shares have gained 16 percent this year.
While the immigration investigation began in Minnesota in 2010, it has since spread to stores in Virginia and Washington, D.C. Last year, Chipotle said it was working with the U.S. Attorney’s office in Washington, in addition to U.S. Immigration and Customs Enforcement, to provide certain documents as part of a review.
The 1,260-store burrito chain fired about 450 Minnesota workers who couldn’t confirm the validity of their work documents. The firings affected store operations and resulted in a temporary increase in labor costs to train new workers, Chipotle said in a filing.
The additional labor expenses hurt 2011 profit by about 8 cents a share, Anderson said.
Chipotle, which provides language programs to help its restaurant workers learn English, has tried to promote store leaders from within its ranks. Almost 90 percent of salaried management and more than 95 percent of hourly managers come from internal promotions, according to a company filing.
Pei Wei Asian Diner, a restaurant chain owned by P.F. Chang’s China Bistro Inc., was forced to temporarily close locations last year after losing unauthorized employees following an investigation. The closings hurt sales by about $1.1 million, the Scottsdale, Arizona-based company said in a filing.