Is the News Singling Out Chipotle Mexican Grill, Inc?

Last week, Chipotle Mexican Grill (CMG 6.33%) closed the doors to a Billerica, Mass. restaurant after four staff members fell sick -- one of whom so far has tested positive for norovirus. While details are uncertain, it's clear that news like this does nothing to help the fast-casual restaurant chain erase from the public's memory its spate of similar incidents that resulted in its stock getting clobbered.

In this MarketFoolery segment, Chris Hill and Bill Barker talk about why Chipotle is the only restaurant making headlines over health concerns even though other chains have had similar or worse episodes of food-borne illness.

A transcript follows the video.

This podcast was recorded on March 9, 2016.

Chris Hill: Let's start with Chipotle, which is seeing its stock down around 5%, after -- and stop me if you've heard this before--

Bill Barker: I was going to say, is this news in the sense of something new?

Hill: It's not new, except, it's just in a different location, in Massachusetts, where Chipotle has closed after four employees have gotten sick, and one has tested positive for a little something we like to call norovirus.

Barker: I saw. Time to stay away from Massachusetts, not Chipotle.

Hill: How dare you? How dare you say that about Massachusetts?

Barker: Do you consider yourself from Massachusetts or from Maine?

Hill: I'm from Maine, but I have great affinity for Massachusetts, because I lived there for a number of years.

Barker: How many relative number of years in each?

Hill: Number of years in Maine... I don't know, 19, 20, and another five or so in Massachusetts. Here's the thing. I spent enough years in Massachusetts that when I saw the news that Chipotle shut down a location in Billerica, I didn't have to scramble to try to figure out where Billerica is. It's northwest of Boston. Anyway, Jason Moser has used this phrase before about Chipotle, and it is the idea of, as long as the other shoe doesn't drop. They had this problem at the location near my alma mater, Boston College. A bunch of kids got sick, and they came out with all new health guidelines and all this stuff. And I'm a little surprised that the stock is not falling more than 5%.

Barker: Well, I think it's more like a shoelace dropping today, or a sock, than a shoe. So, you've got four employees. Did they get sick from eating at Chipotle? There's no information about that. This could be an employee who works closely with other employees, somebody gets sick, and they shut the restaurant down. There's no report of any customers getting sick, nobody getting sick from eating there.

Hill: Not yet.

Barker: Not yet, right. So, if it's just, "Hey, we shut down a store before anything could get into the food," well done. Although, any headline for Chipotle is not a good one where it brings up this kind of thing. So, we don't yet know enough of the details, so the stock sells off. But, it's one store, it's not customers, that's why I don't think you're seeing as much of a reaction as you've seen to more serious outbreaks in the past.

Hill: All I can think of is, when you drive by a construction site and they've got a sign up that lists the number of days since they last had an on-site accident. And in the case of Chipotle...

Barker: We're back to 0.

Hill: That sign has been reset to 0. And I continue to be a shareholder of this company, but I'm really hoping that they go the rest of 2016 and beyond without another incident like this.

Barker: Well, because, it's something that's in the headlines because it's Chipotle. Are there other restaurants in the country this week where they shut down a location somewhere because somebody's sick or something like that? I don't know, because it's not going to be reported if it's a Bojangles' or something, or, not to select them--

Hill: Not to pick on Bojangles.

Barker: Not to pick on Bojangles, which I don't want to pick on. I'm just talking about restaurants which are not in the headlines all the time. And there's always something going on somewhere, and hopefully this is an isolated incident that's got to do with an employee getting sick rather than the food itself causing anything, because there are dangers if they can't stop that being a problem.

Hill: Do you think this is because Bojangles doesn't hold itself up as having food with integrity? Because I think that's a very big part of it.

Barker: The schadenfreude part?

Hill: It's not even the schadenfreude, it's the, "We at Chipotle are holding ourselves to the highest possible standard in this industry." And you can do that as long as you continue to not close down locations because people are getting sick with airborne viruses.

Barker: I think that a couple of the stories were of sufficient magnitude that, it's a very popular restaurant, and it's a popular stock, and all that affects it. It probably would have been better if this were a private company dealing with this than a public company. So, is there some level of them holding themselves up as being a higher example of how to operate a restaurant and failing at one level? Perhaps. But I think it's really just got to do with body count.

Hill: Which they don't have yet.

Barker: Actual dead bodies, no. So, Jack in the Box had numerous -- I don't remember how many, but deaths.

Hill: More than one.

Barker: More than one, yeah. Multiple deaths.

Hill: E. coli. 

Barker: And it's 15, 20 some years.

Hill: I think it was the early '90s, I want to say it was 1991. But let's just say it was at least 20 years ago.

Barker: And they've had a lot of cycles since then, ups and downs, and they're still around, and they've never been as popular as Chipotle. Well, let's just hope nobody else gets sick.