Things looked so much better for Chipotle Mexican Grill when there was only worry about a "guac-alypse" from an avocado shortage. Now a criminal investigation has been launched into a norovirus incident at one of its restaurants.

So much for Chipotle Mexican Grill (CMG -0.71%) starting the new year off fresh. After a rash of illnesses related to E. coli and norovirus last year at restaurants stretching from the Pacific Northwest to the Eastern Seaboard, the chain and its investors were hoping to turn it around in 2016.

It still might be able to do so, but the fast-casual food chain stumbled right out of the gate, filing with the SEC on Jan. 6 a notice that it had received a federal grand jury subpoena related to "an official criminal investigation being conducted by the U.S. Attorney's Office for the Central District of California, in conjunction with the U.S. Food and Drug Administration's Office of Criminal Investigations" looking into a case of norovirus that occurred at a Simi Valley restaurant last August that reportedly sickened 234 people. The subpoena demands Chipotle produce records on how it responded to the incident, and the chain says it is fully cooperating, which you would expect.

Although it's always possible the investigation will result in the restaurant getting fined, its executives thrown in jail, and more restaurants getting closed out of an abundance of caution, prosecutions rarely materialize in these kinds of cases.

Of course, that doesn't mean Chipotle Mexican Grill's stock will bounce back right away. A prolonged investigation that keeps the foodborne illnesses in the headlines could result in more lost sales and a stock price that falls even further. co-CEO Steve Ells and Monty Moran getting tossed in the slammer is improbable; a protracted period where its stock remains depressed is quite likely.

A sickening spiral down
According to California county health officials, Chipotle had already closed, sanitized, and reopened the Simi Valley restaurant by the time it notified the agency, which came the day after Chipotle got its first reported case of a customer who fell ill.

Still, county health officials were surprised by the U.S. Attorney's Office contacting them for records of the case, as was a lawyer representing some of the sick customers, who, according to The Associated Press, said it was an unusual development for a single case at a single restaurant.

Chipotle Mexican Grill, whose motto is "Food With Integrity," has suddenly found itself under the investigatory microscope. Between the E. coli cases -- the source for which is still unknown -- and the norovirus, which also sickened dozens of Boston College students in Massachusetts, the restaurant has an alphabet soup of federal agencies investigating it, including the FDA, the CDC, and now the Justice Department.

An unhealthy diet of bad news
The foodborne illness cases have wrecked Chipotle's stock, which has lost more than 40% of its value since the fall, when the E. coli news first broke. Costco (COST -1.78%), on the other hand, was also hit by a number of E. coli illness cases, but its stock remained resilient -- until it reported weak December sales numbers, that is. In Costco's case, the CDC was able to quickly find the cause of the bacteria, and the warehouse club was able to correct it.

Because of the unknown origin of Chipotle's E. coli outbreak (though it's suspected to be one of its large suppliers because of the national scale at which the illnesses spread), the impact has lingered longer and the FDA's criminal investigation and involvement of the U.S. Attorney's Office indicate that even if such probes are not unprecedented, their rarity indicates this is something it can't easily dismiss.

Recently, the Justice Department began investigating how Blue Bell Creameries handled a listeria outbreak last year in its ice cream and whether the corporate response to the incident was criminally negligent. And last year the chief executive of Peanut Corp of America, a peanut-processing company that went out of business after it was found to be the source of one of the largest salmonella outbreaks, was sentenced to 28 years in jail for his role in covering up the company's involvement.

Aboveboard conduct
There's nothing to suggest Chipotle Mexican Grill's executives have been anything but forthcoming in these incidents. In the case of the E. coli outbreak, the fast-casual leader shut down 43 stores in the affected market even though only 11 were identified as a problem; it eliminated any ingredient that might have been a possible source of contamination; it sanitized everything; and it increased its safety testing across the entire chain -- all the while keeping regulators, investors, and customers apprised of the steps it was taking to resolve the problem and the costs it may incur.

The involvement of federal law enforcement probably has more to do with coordinating a coast-to-coast investigation than in thinking the restaurant was engaged in skullduggery.

Since the food illness scandals broke, finding a seat at a Chipotle Mexican Grill has been easy. Same-store sales collapsed 30% in December.

There's no way to know what will come of the criminal investigation, but the chain has already been hit by slumping sales. At the same time Chipotle announced the subpoena for the criminal investigation, it noted that its comparable-store sales plunged 30% in December, and it expects future sales trends will follow new developments in the cases. It has no idea when the situation will improve.

Still a good value?
But management apparently believes the fallout will ultimately be temporary, as the board of directors authorized a $300 million share-repurchase program on top of the $300 million program it authorized in December, when it bought back 401,000 shares at an average price of $527 per share.

Chipotle Mexican Grill's stock now trades more than $100 lower, and while it's likely this will be a transient issue in the grand scheme of things, investors may find they will be able to purchase the Mexican food chain's shares at even better prices still. It could be some time before the narrative changes on this company, and that may be enough of a concern to keep investors up at night.