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Takeaway: This short is far from played out.

10,000 Workers Suing Chipotle (The Latest Sign This Company Can't Get Out of Its Own Way) - chipotle image

From E. Coli To Wage Theft, Bad news keeps on coming for chipotle

CNN just reported nearly 10,000 workers are suing Chipotle for allegedly cheating them on their pay in a class action lawsuit. 

 

"Current and former Chipotle (CMG) employees claim that the company made them work extra hours "off the clock" without paying them. It's a practice known as wage theft, and Chipotle is allegedly doing it all over the United States.

 

'Chipotle routinely requires hourly-paid restaurant employees to punch out, and then continue working until they are given permission to leave,' according to the class action lawsuit known as Turner v. Chipotle. It's named after a former Chipotle manager in Colorado, Leah Turner, who claims she had to work without pay and was told to make workers under her do the same in order to meet budget goals."

Hedgeye Restaurant analyst Howard Penney has been the bear on the Chipotle for some time, criticizing management for their hubris surrounding the E. coli scandal and then actually denying that any problem even exists at the company. 

Given this awful news today, it's clear management's issues run much deeper than we initially thought.

We're comfortable saying the Chipotle short call has yet to fully play out.