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Why Is Chipotle (CMG) Stock Falling Today?

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Shares of Chipotle (CMG - Free Report) were down nearly 7% through early morning trading Tuesday after the fast-casual Mexican chain closed a restaurant in Ohio following reports that customers had fallen ill after eating there.

A total of 105 reports, with more than 170 customers indicating that they felt ill after eating at the Chipotle in Powell, Ohio, have been received by iwaspoisoned.com—a website that tracks foodborne illnesses—since July 29.

The website saw an influx of reports in the wake of Business Insider’s report from late Monday which said that Chipotle has closed the restaurant due to customer sickness complaints. The local health department arrived at the restaurant on Monday for an inspection after receiving complaints from seven customers on July 29 and July 30.

“We take all claims of food safety very seriously and we are currently looking into a few reports of illness at our Powell, Ohio restaurant,” Chipotle spokesperson Laurie Schalow told Business Insider. “We are not aware of any confirmed foodborne illness cases, and we are cooperating with the local health department.”

Chipotle voluntarily closed the location on Monday to conduct deep cleaning. The restaurant is scheduled to reopen on Tuesday.

When local health officials arrived to inspect the Chipotle, the location had already been closed. The restaurant reported that it had received four or five illness complaints from customers and that two to five staff members had called in sick on the dates in question.

The veracity of reports on public reporting pages is difficult to judge, but illness complaints heard by local health departments and restaurant employees are a legitimate cause for concern for Chipotle investors.

Chipotle has continued to face headwinds in the wake of several foodborne-illness outbreaks linked to its restaurants, dating all the way back to 2015. Since then, the company’s stock has tumbled significantly, falling as much as 65% from its all-time highs.

The fast causal pioneer was able to rebound in 2017, with full-year revenues improving by nearly 15% on the back of 6.4% comps growth. However, those year-over-year comparisons were made easier by the company’s dismal 2016 results, and investors did not reward the company for its efforts.

But things have been moving in the right direction for the stock in 2018, with the introduction of former Taco Bell chief Brian Niccol as CEO and continued recovery evident in financial results helping lift investor optimism.

Just last week, the company reported Q2 earnings of quarterly earnings of $2.87 per share, beating the Zacks Consensus Estimate of $2.78 per share and improving nearly 24% from the year-ago period. Comparable restaurant sales surged 3.3% in the quarter.

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