By Jamie Coulson and Jeff Batt | firstname.lastname@example.org
Chipotle Mexican Grill, the fast-food restaurant with a cult-like following, has taken a beating in recent weeks.
Its stock has plunged by 21 percent since Oct. 13 over concerns about lower-than-expected earnings and slowing sales. And that’s not the only bad news in the burrito bowl.
In August, a $5 million class-action lawsuit accused Chipotle of falsely claiming its food is free of GMOs. And in October, an E. coli outbreak linked to Chipotle restaurants in Washington and Oregon made at least 37 people sick. Thirteen of those people were hospitalized and additional cases are under investigation, the Centers for Disease Control and Prevention reported on Tuesday.
“…investors may want to find a new favorite restaurant,” Jeff Reeves, executive editor of Investor Place wrote on Wednesday.
Chipotle closed 43 restaurants after the E. coli outbreak. Those restaurants were opened last week.
“The safety of our customers and integrity of our food supply has always been our highest priority,” Steve Ells, chairman and co-CEO of Chipotle, said in a statement. “If there are any opportunities for us to do better in any facet of our sourcing or food handling – from the farms to our restaurants – we will find them. We are sorry to those affected by this situation, and it is our greatest priority to ensure that we go above and beyond to make certain that we find any opportunity to do better in any area of food safety.”
The GMO lawsuit accused the restaurant of deceiving its customers. It stated, “Chipotle has plastered its GMO-free message on television commercials, billboards, social media, store fronts, and in-store signage. Chipotle represents to customers that, if they eat at Chipotle, they will not be eating GMOs. But as Chipotle told consumers it was ‘G-M-Over it,’ the opposite was true. In fact, Chipotle’s menu has never been at any time free of GMOs. Among other things, Chipotle serves meat products that come from animals which feed on GMOs, including corn and soy. Chipotle’s tacos and burritos are also usually served with sour cream and cheese from dairy farms that feed animals with GMOs. And, Chipotle also sells Coca-Cola and other soft drinks that are made with corn-syrup—a GMO.”
Lawyers for Chipotle denied the accusations, stating in a court document, “Chipotle has been upfront and honest with consumers regarding what it is serving to them. Chipotle’s representation that the food that it prepares is made with only ‘non-GMO ingredients’ is true and not misleading.”
Chipotle spokesman Chris Arnold said:
“All of our ingredients are non-GMO. Someone filing a lawsuit is completely meaningless. A lawsuit is nothing more than a collection of allegations and is proof of absolutely nothing.”
Chipotle was founded in 1993 and operates more than 1,931 restaurants.
The company reported revenue of $1.2 billion for the third quarter, which ended on Sept. 30. That was a 12 percent increase over the same period last year.
The company’s stock price as dropped, however, from $750.42 per share on Oct. 13 to $594 per share on Nov. 19.
The GMO lawsuit was filed on behalf of Colleen Gallagher of Piedmont, California, and other California residents who eat at Chipotle restaurants.
In the lawsuit, Gallagher said that she ate at Chipotle because of the restaurant’s long-running, “Food With Integrity” ad campaign and the company’s promise to stop using GMOs.
She said that the company posted a disclaimer on its website saying some of their soft drinks were raised on GMO grains, but did not label the ingredients online.
According to GMO Building Blocks at the University of Georgia, a GMO is produced when farmers raise their crops and take specific traits of the meat or vegetable to mechanically modify it, which could change its ingredients or appearance.
In some cases, GMOs are used to make the colors of foods appear more vibrant or the taste a lot more pungent than what they normally would.
Chipotle has stressed it uses natural ingredients, which sets it apart from such restaurants as Taco Bell or McDonald’s.
Chipotle’s website states: “When it comes to our food, genetically modified ingredients don’t make the cut.”
Gallagher contends that Chipotle has violated the Food, Drug and Cosmetic Act by misbranding its food.
Edward McGinley, a professor of biology at Flagler College, said any harmful effects of GMOs haven’t been well documented.
“Based on what I have seen in the scientific literature, there is no link between GMOs and any health concerns,” he said. “All the studies that have found some ‘link’ tend to be fatally flawed, or extremely biased. This technology has, in some cases, been extremely helpful and life-saving.”
Victoria Lee, a senior at Flagler College who has lived in Hong Kong and Canada, has been going to Chipotle for many years. She said the restaurant is a nice break from McDonald’s and other fast-food chains that are popular in many countries.
“They’ve challenged the fast-food powerhouse with fast casual where you feel like the food you’re getting won’t make you regret eating it after you finished the meal. You can see what you’re getting,” said Lee.
Kerrie Piccolo, a Flagler College student and a weekly visitor to Chipotle in St. Augustine, says she doesn’t care about the accusations about GMOs.
“The GMO rumors haven’t kept me from going to Chipotle because I don’t really eat healthy to begin with and I don’t really base my meal decision on where the food is from,” she said.
Many students eat at Chipotle between classes.
“I think that it’s still a healthy alternative to some of what they offer in the dining hall of Flagler College, even though some students are on a budget,” said Bailey McCune, a junior at Flagler. “But mostly I appreciate that there are more healthy restaurants in the area to splurge at if need be. As far as the GMOs go, I don’t think they’d keep me from eating there but they certainly raise concern for someone who does look for healthy, non-GMO options.”
Flagler student Megan Rojer disagrees.
“I had it for the first time today and loved it, but if I found out Chipotle was disrespecting their customers by lying to them, I would stop eating there because GMOs are not good for you,” she said.