Chipotle shareholders slam the restaurant chain with lawsuit as the chain has allegedly misled the public and shareholders on food safety practices.
The lawsuit filed with the U.S. District Court for the Southern District of New York is the first shareholder lawsuit against the Denver-based restaurant chain. During last year, a major E.Coli outbreak that has sickened dozens of Americans has been tracked to Chipotle restaurants. The foodborne illness has brought about a resounding media campaign.
With each case of E.Coli traced back to the fast food restaurant chain, Chipotle shares took a deeper plunge. Investors and shareholders became weary. The public lost confidence in Chipotle and Chipotle products.
Thus, Chipotle shareholders slam the restaurant chain with lawsuit. For now, attorneys filed a civil complaint. However, it is possible that this will spark a class action lawsuit on behalf of Chipotle investors who bought the Chipotle shares in the period between February 2015 and January 2016.
In addition to the E.Coli outbreak, Chipotle shareholders have added that the norovirus outbreak also linked to the Denver-based restaurant chain are solid proof that food safety practices aren’t a strength in Chipotle’s case. Food safety should be the prime concern of any local serving food. Two major outbreaks in one year have led to consumer confidence dropping at alarming rates.
The E.Coli outbreak wasn’t confined to just one restaurant, but it hit restaurants of the Chipotle chain across the country. In addition, the company has only recently revealed that is is also under investigation at the federal level for the norovirus outbreak that struck California last year.
Since October, the stock of Chipotle has dropped by 45 percent. On Friday, shares closed at 3.04 dollars.
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