An E. coli outbreak linked to Chipotle Mexican Grill Inc. restaurants in two states is another setback for a company whose long success marketing healthful fare has recently hit slower growth and increased competition.

Nineteen people in Washington reported becoming sick after eating at Chipotle, along with another three in Oregon, state health authorities said on Saturday. No deaths had been reported, but eight people were hospitalized.

The current outbreak follows a salmonella outbreak involving tomatoes served at Chipotles in Minnesota in August and September in which more than 60 people reported getting sick.

While the source of the contamination in the latest outbreak hasn't yet been identified, some food-safety experts say the two episodes point up the challenges facing purveyors of fresh food like Chipotle, which has cultivated a loyal following based on its use of preservative-free, locally grown fare. Although other large restaurant chains have experienced foodborne-disease outbreaks, companies whose menus comprise mostly fresh produce grown by relatively small farmers may be more vulnerable, those experts say.

"A company like McDonald's tends to work with large-scale suppliers that have resources of their own to do the types of assessments" that can detect dangerous pathogens, said Craig Hedberg, professor of environmental health sciences at the University of Minnesota School of Public Health. "But if you're working with small, independent farmers, it requires a lot of effort to validate them."

Chipotle has acknowledged in regulatory filings that it could face higher risk of foodborne illnesses because of its use of fresh produce and meats from multiple suppliers cooked with traditional methods rather than automation.

The advantage for a company like Chipotle, which says it sources some ingredients from fields within 350 miles of its restaurants, is that any outbreaks that do occur can potentially be contained to a relatively small area. As of Monday, eight restaurants in the Seattle and Portland areas had been implicated in the E. coli outbreak, though Chipotle said it closed all 43 restaurants in those markets out of an "abundance of caution." The salmonella outbreak in Minnesota involved 27 restaurants there, plus one in Wisconsin. Chipotle has approximately 1,900 restaurants nationwide.

Other chains have faced bigger outbreaks. An E. coli outbreak at Jack in the Box in 1993 sickened more than 700 people and killed four who ate contaminated hamburger patties at 73 restaurants in four states. More than 70 people in four states reported becoming ill after eating E. coli-contaminated lettuce served at Yum Brands Inc.'s Taco Bell restaurants in 2006.

Large restaurant chains including McDonald's Corp., Taco Bell, and Subway have been announcing plans to remove artificial ingredients. As more restaurant and food companies remove preservatives from their products, foodborne illnesses may become more common, said Michael Doyle, director of the Center for Food Safety at the University of Georgia.

Mr. Doyle said he's noticed an increase in packaged-food recalls involving products that don't contain preservatives such as benzoate and sorbate, which can control the growth of harmful bacteria including botulism and salmonella.

"The more we as consumers demand fresh foods that contain less preservatives, the greater the potential risk of harmful microbes being present," Mr. Doyle said.

The move away from artificial ingredients and toward more fresh produce has been at least partly influenced by Chipotle, whose sales and stock price soared for years on its wholesome image. As rivals have begun emulating Chipotle, though, the burrito chain's sales growth has slowed.

Shares of Chipotle fell 2.5% to $624 on Monday.

If the E. coli outbreak remains relatively restricted and the restaurants don't stay closed for long, analysts say Chipotle's business likely won't suffer too much from the episode. The restaurants Chipotle closed account for just 2.2% of its total. "Foodborne outbreaks are not unusual for the fast-food restaurant industry and the impact of previous incidences has proven fleeting for restaurants generally and Chipotle specifically," Sanford Bernstein analyst Sara Senatore said in a note to investors.

Still, repeated incidents could dent Chipotle's image. The company in August also had an outbreak of norovirus sicken 80 customers and 13 employees in Southern California. A Chipotle spokesman said that incident wasn't tied to food but that the cause wasn't determined.

After the salmonella cases were reported in Minnesota, Chipotle switched tomato suppliers. A Minnesota health department spokesman said the investigation into the source of those tomatoes is ongoing.

Write to Julie Jargon at julie.jargon@wsj.com

 

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(END) Dow Jones Newswires

November 02, 2015 19:15 ET (00:15 GMT)

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