Reuters first with Chipotle Grill’s vulnerability to federal probe on use of illegal labor
Reuters West Coast team was first to report that fast-growing burrito chain Chipotle Mexican Grill, a darling of Wall Street, faced a widening federal immigration probe into its work force of 25,000. For analysts and investment funds that had enjoyed a 500 percent plus rise in the stock in the last two years, the extent of Chipotle’s immigration woes came as a surprise and spurred some rethinking about a company hailed for its exemplary management and “Food with Integrity” concept. Dogged reporting revealed on Feb 10 that an audit that had forced Chipotle to fire hundreds of workers with dodgy documents in Minnesota was being extended to two other states. Rival news sources had to quote our stories. The West Coast team followed up its exclusive with a stand-back piece on Monday how Chipotle’s woes were a wake-up call to the rest of the industry. In that piece, we broke news that a major investment fund was going to talk to the company about putting a better system into place. We also spoke to fired workers who told us just how easy it is to get false documents and work in the sector, while the Chipotle CEO told us how difficult it was to detect forgeries and called for reform to the system. That story was the most emailed on Yahoo for 24 hours. After a stellar earnings report analysts lowered their rating for the stock, citing the employment probe as likely to drive up labor costs.