CHIPOTLE MEXICAN GRILL $390.31 (New York symbol CMG; TSINetwork Rating: Extra Risk) (303-595-4000; www.chipotle.com; Shares outstanding: 29.2 million; Market cap: $11.5 billion; No dividends paid) is a Denver- based Mexican restaurant chain. It charges slightly higher prices than fast food companies, but it focuses on décor, service and better quality food, including naturally raised meat.
Chipotle’s shares are down over 42% since October 2015. It continues to struggle to rebuild customer traffic after last year’s E. coli and norovirus outbreaks.
In the three months ended March 31, 2016, sales fell 23.4%, to $834.5 million from $1.09 billion a year earlier. The company’s restaurants attracted fewer customers, which lowered its same-restaurant sales by 29.7%.
Chipotle opened 58 new outlets in the quarter, bringing its total to 2,066. Even with its difficulties, it still plans to open another 177 locations this year.
In the quarter, the company lost $26.4 million, or $0.88 a share, compared to a profit of $122.6 million, or $3.95 a year earlier. The loss came from lower sales but also higher costs: Chipotle sharply increased its advertising spending to bring back customers; and it implemented new food-safety training for employees.
The company still needs to regain the confidence of consumers outside of its loyal customer base. However, traffic is slowly improving. That should boost sales and allow it to cut advertising costs.
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