Consumer

Sarah Halzack is a Bloomberg Gadfly columnist covering the consumer and retail industries. She was previously a national retail reporter for the Washington Post.

Investors in Chipotle Mexican Grill Inc. experienced an unwelcome bit of déjà vu on Tuesday.

The burrito giant said a "small number" of illnesses had been reported by visitors to its outpost in Sterling, Va. Their symptoms, a spokesman told Bloomberg News, were consistent with norovirus.

Wall Street was spooked, sending the stock down as much as 7.6 percent, as the news prompted flashbacks to late 2015, when a spate of food-contamination issues dealt a devastating blow to the company's sales.

Norovirus News Not Going Down Easily
Chipotle shares sank after it said customers were sickened at one of its restaurants
Source: Bloomberg
Intraday times are displayed in ET.

Before the alarm bells start ringing too loudly, it's important to note how norovirus travels.  It can spread if someone comes in contact with a contaminated surface or infected person, or if someone ingests food that was touched by an infected person. It's highly possible the incident at the Virginia store was an isolated one, a blip that doesn't reflect the return of systemic problems in Chipotle's supply chain.

But still, it gives customers a reason to second-guess the safety of dining at Chipotle. And that's a dynamic the company can ill afford right now.

The burrito giant has spent the past year and a half trying to steady itself, launching an all-fronts war to win back customers. It appointed a senior officer in charge of food safety and implemented new procedures to help protect against contamination.

It also pulled out the stops to get diners to come back: It gave out millions of dollars' worth of free food, added new menu items and offered a temporary loyalty program.  

Headlines about diners getting sick at Chipotle again could reverse all the hard and expensive work the company has done to regain diners' trust.

Signs of a Fledgling Comeback
Chipotle looked as though it had put the worst of the food safety scare behind it
Source: Bloomberg

And this kind of issue could prove distracting for executives as they try to mend other problems in the business. Chipotle has been struggling with throughput -- moving customers in and out of stores quickly -- an issue executives have said is tied to another challenge: high employee turnover. Slow-moving lines are probably costing Chipotle sales and sapping customer satisfaction.

Plus, the chain still has more work to do to keep a lid on its food costs.

There's no evidence this latest group of sick customers is a sign of a more-extensive problem. For now, Chipotle should remind its restaurant managers to stick dutifully to the food-safety procedures it has instated. And it should continue to focus on the issue it had better hope is its biggest challenge in 2017 -- stealing back market share from a growing list of competitors.

Update: This story has been updated to more precisely describe norovirus transmission.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Sarah Halzack in Washington at shalzack@bloomberg.net

To contact the editor responsible for this story:
Mark Gongloff at mgongloff1@bloomberg.net