Chipotle Reports First Quarterly Results Since Food Scare
NEW YORK (AP) — Chipotle is likely to report its first quarterly decline in sales in at least a decade Tuesday after an E. coli outbreak linked to its restaurants sickened dozens of customers and damaged its reputation as a reliable place to get a fresh food.
The Denver company warned last month that it believes sales fell 14.6 percent at established locations. It would be the first drop-off since it went public in 2006, a dramatic turn for a chain whose explosive growth is partially due to its success in positioning itself as a superior alternative to fast food.
The Centers for Disease Control and Prevention said this week that the outbreak appeared to be over and Chipotle Mexican Grill Inc., which has more than 1,900 locations, is about to launch a campaign to win back customers.
In coming weeks, Chipotle will step up advertising and roll out deals to revive its sales and restore its reputation.
It's not clear how long that will take. In December, sales fell as much as 37 percent.
Chipotle has also already disclosed that it expects profit for its fourth quarter to be between $1.70 and $1.90 per share. The results include a number of unusual charges, including costs to replace potentially contaminated food in restaurants, lab analysis of food samples, the hiring of a food safety consultant, and preliminary estimates for legal claims.
The company has also been served with a federal subpoena tied to an investigation of a separate norovirus outbreak over the summer in California.
Whether or not all of Chipotle's customers will let bygones be bygones remains to be seen, but Wall Street appears ready to make up.
While shares have fallen 23 percent since word of the outbreak spread, shares have turned positive for the year, though just barely.
That's still a lot better than the Standard & Poor's index, which has fallen almost 7 percent in 2016.
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