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Cleanup of Massachusetts Chipotle complete after norovirus illnesses

Richard Verube, the Director of Public Health in the town of Billerica, speaks toe reporters outside the temporarily closed Chipotle restaurant in Billerica, Massachusetts March 9, 2016. REUTERS/Brian Snyder

By Brian Snyder and Lisa Baertlein

BILLERICA, Mass./LOS ANGELES (Reuters) - A health official on Wednesday commended Chipotle Mexican Grill Inc for its handling of norovirus infections at a Boston-area restaurant, saying employees prevented more problems by calling in sick rather than report to work and that a cleanup of the restaurant was done.

Shares of Chipotle fell as much as 6.1 percent before easing, down 3.5 percent to $506.12 in afternoon trading.

The closure of the Chipotle in Billerica, Massachusetts, was seen as a test of a new food safety system rolled out after a series of illnesses hit the fresh burrito chain last year.

"They did the right thing," said Howard Penney, who covers the chain for Hedgeye Risk Management. However, he argued that Chipotle was still a "broken company" and that it would take years to return to its peak performance.

One employee was confirmed ill with norovirus and two more are suspected to have the virus, the top health official of the town of Billerica said.

The cleaned restaurant was scheduled to reopen on Thursday, Billerica Public Health Director Richard Berube told reporters, adding that the employees suspected of having the virus did not come to work on Wednesday.

"They called in sick so that was very fortunate," he said outside the closed restaurant.

Berube, the company and the Massachusetts Department of Public Health all said no customers were known to be sick.

Chipotle is trying to repair its reputation after a series of food-safety incidents. Those include two E.coli outbreaks linked to its restaurants that sickened more than 50 people in 10 states, as well as separate outbreaks of norovirus, a highly contagious virus known as the "winter vomiting bug", in Massachusetts and California that involved more than 350 diners.

Berube said Chipotle has been "very proactive." Remaining staff at the burrito restaurant would be screened for norovirus, he added.

Chipotle spokesman Chris Arnold said the company closed the restaurant after four employees called in sick. Berube said three employees were sick or suspected of being sick.

The restaurant closure comes as Chipotle has tried to lure back diners with coupons for a free burrito and other food.

Chipotle sales have fallen sharply since the E.coli outbreaks came to light late last year. The stock traded above $750 last summer.

Sales at established Chipotle restaurants tumbled 14.6 percent in the fourth quarter, including a drop of 30 percent in the month of December.

"The publicity around this news announcement will be another negative data-point that may affect consumer demand," CRT Capital analyst Lynne Collier said in a client note.

Chipotle temporarily closed all of its U.S. restaurants on Feb. 8 during prime lunch hours to hold staff meetings on food safety.

Up to Tuesday's close of $524.69, the company's stock had fallen about 18 percent since the first E.coli outbreak was reported on Oct. 31.

(Reporting by Brian Snyder in Billerica, Mass. and Lisa Baertlein in Los Angeles. Additional reporting by Subrat Patnaik in Bengaluru; Editing by Ted Kerr and Jeffrey Benkoe)