Fast-food chain Chipotle Mexican Grill, Inc. (NYSE: CMG) began the year on its back foot, as concerns about food safety plagued the company's bottom line and caused both customers and investors to head for the door.
However, in an effort to turn things around, the firm has been working to establish strict food-handling guidelines, which it says will make the chain the safest place to eat. The company also announced it would begin a wide-scale marketing effort this month in order to rebuild customer trust and get people back into the restaurant.
However, a criminal probe related to a norovirus outbreak in California has been expanded— something that could spell trouble for the Mexican food chain.
While the E. Coli scare that affected several of its locations at the end of 2015 grabbed most of the headlines, the firm also suffered some negative press when a location in California was found to be the source of a norovirus outbreak as well.
Initially, investigators were only looking into the food safety practices at that one location, but at the beginning of February, the probe was expanded to include all communications regarding the company's response to such problems around the country dating back as far as 2013.
What Does It Mean For Chipotle?
Criminal probes of this nature can have varying effects on a company depending on what information is revealed. If it turns out that Chipotle execs knew about the risk of contamination and did nothing, it could result in heavy fines and potentially even some jail time.
However, if the documents show that the company did everything it could to contain the effects as soon as it was aware of the problem, the probe will likely have little to no impact on Chipotle's comeback efforts.
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© 2016 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.