Chipotle faces investor lawsuit over E. coli outbreak

Chipotle Image copyright Getty Images

Chipotle Mexican Grill is facing an investor lawsuit connected to an outbreak of E. coli in its restaurants in eight US states.

Investors allege the restaurant chain failed to reveal that "its quality controls were inadequate to safeguard consumer and employee health."

As a result, the company's stock price has been battered by the outbreaks of illnesses linked to its stores, the lawsuit said.

Chipotle declined to comment.

The firm is already facing lawsuits from individuals that contracted E. coli.

Chipotle is also facing a federal criminal probe connected to an outbreak of norovirus which was filed by the state of California.

The company's share price has fallen 35% since October and same-restaurant sales were down 30% in December.

The lawsuit seeks damages on behalf of investors who acquired Chipotle shares from February 2015 to January 2016.

It was filed in US District Court for the Southern District of New York.

It is another headache for the restaurant chain, whose sales have slumped since an E. coli outbreak made more than 50 people ill in nine states in October and November.

In an effort to address the situation Chipotle announced in December that it was changing its food preparation methods.

A statement on its website said: "We have taken aggressive actions to implement pioneering food safety practices."

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