Thread: Immigration probe raising Chipotle legal costs-CFO

Immigration probe raising Chipotle legal costs-CFO

Wed May 11, 2011 4:29pm EDT

* CFO says information requests "very significant"

* Will "touch" Q2 general and administrative line "a bit"

* Plans menu price increases in Q3 (Adds details on labor costs, ICE interviews, byline, share activity)

By Lisa Baertlein

LOS ANGELES, May 11 (Reuters) - Chipotle Mexican Grill Inc's (CMG.N) legal costs are starting to rise as the result of a federal probe into its hiring practices, Chief Financial Officer Jack Hartung said on Wednesday.

Chipotle executives in April said the criminal division of the U.S. Attorney's office for Washington, D.C. had opened an investigation and asked it to turn over documents related to U.S. Immigration and Customs Enforcement audits. [ID:nN20201127]

In the wake of ICE audits in Minnesota, Virginia and Washington, D.C., Chipotle has fired roughly 500 undocumented workers.

The popular burrito chain is the highest profile U.S. company to come under the scrutiny of ICE since it shifted enforcement to employers rather than workers in 2009.

Hartung, speaking at the Baird Growth Stock Conference in Chicago, said information requests related to the immigration probe have been "very significant" and that the additional legal costs would cause general and administrative expenses to be a bit higher in the current quarter.

He added that Chipotle continues to work in a "very open and transparent way with ICE and the Justice Department."

LABOR PAINS

Investors have flocked to Chipotle in large part for its soaring sales and ability to contain labor costs. As a result, many investors are keeping tabs on the financial impact of the immigration probe.

Audit-related terminations already have forced the company to spend money to train replacement workers.

ICE agents last week descended on about two dozen Chipotle restaurants in 15 states to interview employees as part of the criminal investigation, and some analysts are concerned that there will be more immigration-related turnover ahead.

Targeted locations included Georgia, Minnesota, Washington, D.C., and California -- which is Chipotle's largest market with about 165 units.

An attorney for the Chipotle said ICE gave the company advance notice of the interviews and that Chipotle sent a note to employees saying it wanted them to cooperate.

Legal experts said such warnings typically cause illegal workers to abandon their jobs. [ID:nN03143627]

Chipotle's labor woes come at a time when U.S. restaurant operators are weighing menu price increases to offset higher food costs against the risk of alienating diners, who are grappling with rising gasoline and grocery bills. [ID:nN20183536]

Chipotle plans to raise prices in the third quarter of this year to offset higher costs for ingredients like meat and avocados, Hartung said.

Chipotle shares closed up 1.6 percent to $274.30 on the New York Stock Exchange. (Reporting by Lisa Baertlein; Editing by Tim Dobbyn and Steve Orlofsky)

www.reuters.com

Related Threads Here

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http://www.alipac.us/ftopict-236866-chipotle.html

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http://www.alipac.us/ftopict-230744-chipotles.html

Chipotle's labor woes come at a time when U.S. restaurant operators are weighing menu price increases to offset higher food costs against the risk of alienating diners, who are grappling with rising gasoline and grocery bills.

You got away with cheap labor for God knows how long, YOU eat any increases! Shut up and pay up!

How many times have we heard "prices will rise if we deport illegal aliens away'? Well the illegals are still here and prices have been rising, how's that working out?

Chipotle plans to raise prices in the third quarter of this year to offset higher costs for ingredients like meat and avocados, Hartung said.

BS! Chipolte's is raising prices to pay for their legal defense, they are raising prices 'cause now they will have to pay taxes, workman's comp and all those other pesky LEGAL amenitites!

Chipotle's labor woes come at a time when U.S. restaurant operators are weighing menu price increases to offset higher food costs against the risk of alienating diners, who are grappling with rising gasoline and grocery bills.

I guess they haven't considered the cost of alienating customers by hiring illegals.

Guess they should have saved some of the money they saved from hiring blackmarket labor! Just wish ICE would look in to other resturants but really id much prefer it if they looked into manufacturing and all the different busnesses there! We need to boycott these busnesses that use black market labor. Every dollar you give them garentees they will not change their ways!

I have quit shopping and doing buisness with this kind of stores for a long time.The people that hire them know they are taking a chance,but hope they dont get caught and getting by on the cheap labor.They got caught now pay up.Its like telling a child you cant have a cookie then you catch them in the cookie jar you dont say well ok now that you have done it go ahead and eat it no you take it away and punish them sameway on this if nothing is done they will do it again.PAY UP!!!!