Chipotle posts higher profit; links sick worker to latest Norovirus outbreak

LOS ANGELES (Reuters) - Chipotle Mexican Grill Inc's quarterly profit more than doubled on stronger sales, fewer giveaways and lower labor costs, as the burrito seller tries to win back customers after several food safety lapses tarnished its brand. The company said on Tuesday it is retraining kitchen crews on food safety and implementing a zero-tolerance policy for non-compliance after identifying a sick employee as the cause of a Norovirus outbreak that caused the brief closure of a Virginia restaurant last week. "We believe someone was working while sick,” Chief Executive Steve Ells said on a conference call with analysts. That outbreak, along with a separate viral video showing rodents in a Dallas restaurant, sent Chipotle shares down 13 percent last week. It was a big setback for the burrito chain, which is fighting to rebuild consumer trust after a string of food safety lapses in 2015 battered its sales and brand. "Recent events ... have shown that we still have a lot of opportunity to improve our operations and deliver the outstanding experience that our customers expect," Ells said in a statement on Tuesday. Chipotle also reported second-quarter profit more than doubled for the quarter to $66.7 million, or $2.32 per diluted share, from the year earlier profit of $25.6 million, or 87 cents per diluted share. Restaurant-level operating margins improved to 18.8 percent from 15.5 percent a year earlier, helped by improved sales and reduced use of labor. Marketing and promotional expenses also declined as the company cuts back on giveaways aimed at luring back customers. Revenue rose 17.1 percent to $1.17 billion. Sales at restaurants open at least 13 months were up 8.1 percent increase in sales at restaurants open at least 13 months, less than the 9.5 percent gain expected by analysts polled by Consensus Metrix. The company's stock had flirted around $750 before sales-crushing food safety issues in 2015, where outbreaks of E. coli, Salmonella and Norovirus linked to its restaurants, sickened hundreds of customers in the United States. Chipotle shares were up 1.4 percent at $353.45 in extended trading. (Reporting by Lisa Baertlein in Los Angeles; Editing by Bernard Orr)