December 5, 2015 / 1:09 AM / 2 years ago

Chipotle sales battered by widening E. coli outbreak

A logo of Chipotle Mexican Grill is seen on a store entrance in Manhattan, New York November 23, 2015.Andrew Kelly

LOS ANGELES (Reuters) - A widening U.S. E. coli outbreak has slammed sales at Chipotle Mexican Grill Inc, the company said on Friday, hours after federal authorities reported that people in nine states have now contracted food poisoning.

Shares in the popular burrito chain tumbled nearly 8 percent to $518 in extended trading after Chipotle warned that sales at established restaurants could drop 8 to 11 percent for the fourth quarter from a year earlier. This would be the first such decline in company history.

Investigators said the outbreak could widen again as local agencies upload data. Chipotle said in a regulatory filing that its sales could take more hits from "further developments, including potential additional announcements from federal and state health authorities."

The U.S. Centers for Disease Control and Prevention reported related E. coli O26 illness in three new states. Forty-seven of the 52 people sickened say they ate at Chipotle before falling ill.

The government investigators added Illinois, Maryland and Pennsylvania to a list of states that already included California, Minnesota, New York, Ohio, Oregon and Washington. There were seven more U.S cases, with four of those linked to Chipotle.

The company said it has been tightening its food safety procedures.

The source of the outbreak is still unknown. Investigators suspect a fresh produce item that was shipped from one location to multiple restaurants.

Two of the newly reported illnesses started in October, and five started in November, suggesting the outbreak was not as short lived as previously thought. Prior to Friday's report, the onset of most cases of illness had been in late October.

According to the CDC, most people infected with E. coli develop symptoms three to four days after contact with the germ. E. coli infections are spread by oral contact with fecal matter and can cause serious symptoms and even be life-threatening.

Chipotle said its enhanced its food safety efforts include testing all fresh produce before it is shipped to restaurants.

Chipotle spokesman Chris Arnold said in an email that "none of the ingredients that were in our restaurants at the time of this incident are still in our restaurants."

Chipotle and other restaurants have put greater focus on fresh, unprocessed food. While that may be good for nutrition, experts say it raises the risk of foodborne illness because cooking kills pathogens.

An estimated 48 million Americans get sick each year from foodborne diseases. Of these, 128,000 are hospitalized and 3,000 die, according to the CDC. Only about 40 percent of reported foodborne disease outbreaks from 2002 to 2011 were solved, according to the watchdog group Center for Science in the Public Interest.

Additional reporting by Ramkumar Iyer in Bengaluru; Editing by David Gregorio

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