Same-store sales fell 26.1 percent in February, from a 36.4 percent decline in January.
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Company officials said Leap Day added an estimated 2.6 percent to the February comparable sales trends, and during the last two weeks of the month, same-store sales improved to a decrease of 24.7 percent. Increased promotion costs, higher food costs due to new food safety protocols, and higher labor costs to staff up as customers redeemed burrito coupons all weighed on the quarter, it said.
Sales at established locations, or those open at least 13 months, are seen as an important gauge of financial health because they remove the volatility of newly opened and closed locations.
The company is trying to fix its reputation after a series of food-safety incidents, including two E.coli outbreaks and two outbreaks of norovirus. Steve Ells, Chipotle’s co-chief executive, now is tasked with delivering on a promise he made to consumers that new food-safety procedures would make Chipotle the “safest restaurant to eat at” and bring outbreak risks to “near zero”. It said the recovery continued into March, with its sales decline easing to 22 per cent for the first week.
But in the second week of March, a restaurant in the Boston area was temporarily closed after workers were reported to be sick. Finally, Factory Mutual Insurance Company acquired a new stake in shares of Chipotle Mexican Grill during the fourth quarter valued at $9,597,000.
Credit Suisse analyst Jason West has noted Chipotle’s promotions for free entrees could be eating into sales. “As a result of the sales impact from the food-borne illness incidents and the additional costs described above, we believe that our net income will be at approximately break-even levels in the first quarter of 2016”, wrote Chipotle in the report filed February 5. Chipotle’s losses are also being driven by higher legal expenses linked to a criminal investigation from the Department of Justice. A representative for the office in California has declined to comment on the case. Ltd. now owns 7,726 shares of the company’s stock valued at $3,707,000 after buying an additional 4,500 shares in the last quarter. Equities research analysts forecast that Chipotle Mexican Grill will post $8.16 EPS for the current fiscal year. He’s also the father of actor James Marsden.
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In after-hours trading, shares of the company slid more than 3 percent to $485.98.
