Chipotle Executive Indicted -- WSJ
July 01 2016 - 3:03AM
Dow Jones News
By Pervaiz Shallwani and Julie Jargon
Efforts to regain customer trust at Chipotle Mexican Grill Inc.
could suffer a setback as the restaurant chain put its top
marketing executive on administrative leave after Manhattan
prosecutors unveiled an indictment involving the executive and a
cocaine drug ring.
While the indictment, made public on Thursday, has nothing to do
with Chipotle itself, the involvement of an executive seen as the
architect of its efforts to win back wary diners after an E.coli
outbreak last fall could have a damping effect.
Mark Crumpacker, Chipotle's chief creative and development
officer, was one of 18 alleged buyers indicted in the drug ring and
is expected to be arraigned in the coming days, according to a
law-enforcement official.
Mr. Crumpacker, 53 years old, couldn't be reached for comment.
His lawyer couldn't immediately be identified.
Among the others indicted was Fox Business Network producer
Katie Welnhofer, who couldn't be reached for comment. A Fox
Business Network spokeswoman declined to comment.
21st Century Fox and News Corp, owner of The Wall Street
Journal, were until mid-2013 part of the same company.
The 18 alleged buyers are each charged with a single count of
criminal possession of a controlled substance in the seventh
degree, which is a misdemeanor offense.
Chipotle spokesman Chris Arnold said the company has placed Mr.
Crumpacker on administrative leave. "We made this decision in order
to remain focused on the operation of our business, and to allow
Mark to focus on these personal matters. Mark's responsibilities
have been assigned to other senior managers in his absence," he
said.
In court documents related to three drug traffickers indicted on
a charge of allegedly selling more than $75,000 worth of cocaine
during the course of a year, Mr. Crumpacker's name was redacted
because he hasn't been arraigned but his Manhattan apartment street
address was listed several times in connection with the purchase of
cocaine.
The indictment marks the latest blow for a company still reeling
from a series of disease outbreaks that left Chipotle's sales and
share price battered.
An outbreak of E. coli tied to Chipotle that surfaced last
October sickened 55 people across the U.S., and a smaller E. coli
outbreak sickened five more There were also salmonella cases in
Minnesota that sickened 64 and outbreaks of norovirus traced to
Chipotle restaurants in California and Boston last year that
together sickened hundreds.
Late last year, Chipotle was served with a grand-jury subpoena
as part of a federal criminal probe seeking information on the
California norovirus outbreak and the investigation's scope has
since widened to include companywide food-safety matters dating
back to Jan. 1, 2013. Chipotle has said it is cooperating with that
investigation.
To get customers back, the company has been giving away burritos
and other items. Earlier this month the chain introduced its
first-ever loyalty program to reward frequent customers.
Mr. Crumpacker has been the public face of the company's
marketing efforts. In April he told investors that a nationwide
advertising campaign featuring the quality of its food "is the
largest media spend in our history."
Despite some success in drawing in guests with the free food,
Chipotle's same-store sales dropped more steeply than expected in
the first quarter and it posted its first loss as a public company.
The company is scheduled to report second-quarter results on July
21.
When he addressed investors in April, Mr. Crumpacker sounded
upbeat, saying he was encouraged by the response to some of the
company's new marketing efforts and said, "We expect that we will
see continued progress in these areas going forward as customers
regain confidence in us and remember what it is that they always
loved about Chipotle."
Write to Pervaiz Shallwani at pervaiz.shallwani@wsj.com and
Julie Jargon at julie.jargon@wsj.com
(END) Dow Jones Newswires
July 01, 2016 02:48 ET (06:48 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Chipotle Mexican Grill (NYSE:CMG)
Historical Stock Chart
From Aug 2024 to Sep 2024
Chipotle Mexican Grill (NYSE:CMG)
Historical Stock Chart
From Sep 2023 to Sep 2024