Chipotle stock (CMG) dropped more than 15% over the past five trading days, falling to $32.14 as news of a salmonella outbreak linked to its restaurants surfaced. Despite the stock decline, the burrito chain managed to identify and remove contaminated jalapeños days before federal health agencies issued official recall notices.

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Health officials first warned Chipotle that customers were falling ill after eating guacamole. Rather than waiting for government agencies to finish testing every ingredient, Chipotle tracked its supply chain internally and identified a single grower in Mexico supplying affected stores. Confident in its findings, the company ordered restaurants to destroy all jalapeños from that supplier.

Chipotle Uses a Special System to Ensure Quality

To carry out the recall, Chipotle relied on automated emergency systems developed after past food safety incidents. The system sends repeated alerts across text messages and phone calls until store managers confirm that bad ingredients have been destroyed.

Company practice runs helped staff clear tainted batches within roughly two hours. After pulling the jalapeños, Chipotle replaced them with peppers from different suppliers. The Centers for Disease Control and Prevention later confirmed that Chipotle's quick action removed any ongoing risk for diners eating at its locations.

Past Incidents Drove Chipotle to Act Fast

The fast response comes from lessons Chipotle learned during major food safety issues between 2015 and 2018. After losing sales and customer trust back then, the company spent millions on new tracking tools to catch food problems early.

Large restaurants are taking matters into their own hands when bad food pops up. Rather than waiting on official government warnings, chains use tracking apps to find bad food batches, throw them out. This helps them protect their business.

Is Chipotle Still a Good Stock to Buy?

Despite short-term market pressure from the outbreak, Wall Street analysts maintain a positive long-term view on Chipotle stock. On TipRanks, CMG stock continues to carry a Strong Buy consensus, based on 24 analysts issuing ratings in the past three months. This is based on 21 Buy and three Hold ratings. The average 12-month CMG stock price target is $44.96, implying about 39.9% upside potential from the current price levels. (See CMG stock forecast)