What happened

Shares of Chipotle Mexican Grill (NYSE:CMG) headed lower, as the burrito chain continued to fall with the broader market over concerns about the spread of the coronavirus.

Restaurant chains are generally seen as vulnerable to an outbreak, since Americans are likely to avoid gathering places like eateries if the virus spreads. Chipotle, meanwhile, may have an additional obstacle to overcome, given its history with foodborne illness outbreaks, specifically the 2015 E. coli outbreak that hammered sales and took years to recover from.

The stock closed down 9% today after trading down as low as 10%, while the S&P 500 closed the day down 7.6%, its worst day since the financial crisis.

The exterior of a Chipotle restaurant in California.

Image source: Chipotle.

So what

There was no company-specific news out on Chipotle today, but on Friday, founder and former CEO Steve Ells stepped down from the board, passing his chairmanship on to current CEO Brian Niccol. The move signals that the changing of the guard is complete. Ells, a chef by trade, was widely regarded for creating the Chipotle concept and guiding its rocket-like growth through its first two decades. However, his reputation was marred by the company's handling of the E. coli outbreak in 2015, and the stock didn't recover until after Niccol took over in 2018.

Today, however, the sell-off seemed to be due to the broader market crash. Chipotle also trades at a lofty valuation for a restaurant stock, and investors tend to sell off growth stocks in such circumstances.

Now what

Chipotle stock is now down 28% since the coronavirus sell-off began on Feb. 24, compared with an 18% decline in the S&P 500. It's unclear if the company's sales have been affected by the outbreak yet, but most retailers that have reported earnings recently say they haven't seen a significant impact. While cuts in flights by major airlines have made it clear that Americans are traveling less, a meaningful impact on restaurants has not yet been reported.

Chipotle has made efforts to grow its digital and delivery business, which could give it a hedge in the case that diners don't want to eat in its restaurants. For now, though, it's clear that investors expect the stock to be a loser as the outbreak expands. Unless data comes out that contradicts that argument, the stock is likely to continue falling on coronavirus-related news.