The Chipotle Corporate Sabotage Theory Returns

Deena Shanker | Bloomberg | July 25, 2017

Some people see a simple case of foodborne illness. Others see corporate sabotage.

Yet another outbreak of foodborne illness last week at Chipotle Mexican Grill did what it usually does to the burrito chain: The stock price plummeted. It's bad news—particularly for the patrons who got sick—but it's a boon for anyone that had the foresight to short the stock. The latest outbreak was first noted by iwaspoisoned.com, a website that crowdsources reports of customer illnesses following visits to restaurants. The goal, it says, is "safer food, safer communities and a healthier economy." Yet, as Bloomberg reported last week, hedge funds looking to profit from others' bad luck can also access a "souped up" version of the site for a $5,000 monthly fee.

Aaron Allen, principal at Aaron Allen & Associates, a restaurant industry consultancy, posited in a LinkedIn post on Monday morning that the Chipotle illness might not just be a matter of luck. "A lot of things stacked up that made it suspicious," he told Bloomberg in an interview on Monday, "and when you look at it from a statistical point of view, even more suspicious." His group has no financial interest in the chain, Allen said, and he has previously lauded the chain's pre-scandal marketing.

He's not the first to publicly speculate about the possibility that corporate sabotage is behind Chipotle's woes.  (There was even a recent plot line on Showtime's "Billions" in which a hedge fund manager contaminated the customers of a fictional company, Ice Juice, whose stock he had just shorted.) A similar theory—which was largely dismissed—circulated two years ago when the chain was hit by outbreaks of E. coli, norovirus, and salmonella. The stock price plummeted at the time, costing the company billions of dollars in market capitalization...