It’s amazing how so many people vomited over themselves to get back into this name, thinking the worst was over. This companies brand is nearly ruined. To back up my claims are staggering -36% January same store sales and -26% for February.
Consequently, the stock is plunging.
If you enjoy the content at iBankCoin, please follow us on TwitterCMG expects Q1 EPS will be a loss of ($1.00) per share or worse, well below the Capital IQ consensus for earnings of $0.06.
Sales: February sales comps improved to (26.1%) from (36.4%) in January. Leap day added an estimated 2.6% to the February comp. Sales comps improved to (24.7%) for the last two weeks of February, excluding the extra leap day, from an average of (33.8%) during the first two weeks of February.
The sales recovery began the week of February 8, 2016, when we launched an aggressive marketing campaign that coincided with our National Team Meeting, to invite customers to dine at Chipotle via a free burrito offer. This sales recovery continued into March, as comparable restaurant sales were (21.5%) during the week ended March 7.
Results the second week of March declined to (27.3%), as they were affected by the temporary closing of a single Boston area restaurant which was the result of our restaurant teams fully following protocols. The restaurant reopened quickly with no customers affected.
Operating margin: Anticipates Q1 restaurant-level operating margin to be in the mid-single digit range.
“During the quarter we will incur higher expenses driven by increased marketing and promotions spend in other operating costs, which are anticipated to be significantly higher in the first half of 2016 compared to historic reporting periods.”
“We also anticipate higher food costs due to additional food safety protocols put into place, as well as higher food costs related to food waste, rejection rates related to high resolution DNA testing, and lower volumes. We have also incurred higher labor costs to ensure we were fully staffed as customers redeemed their free burrito offer.”
“We continue to expect that our margins and earnings potential will fully recover as our sales improve over time, except that we expect our food costs to be higher on an ongoing basis by about 200bps due to the food safety related actions we have taken.”
Chipotle will need to completely rebrand itself and start competing with real fast food shops like Hardy’s and Arby’s off of highways and in locations where people need food fast like strip malls and non-hip urban areas. Their clean, wholesome, organic, green BS is over.
I have been to Chipotle twice since their E-Coli disaster and both times it was a miserable experience. No customers, so the bins were half-full of old, stale ingredients. The employees didn’t give a shit about anything [this has been an issue for some time], least of all my experience. The burrito was not good.
When the Chipotles in Cambridge MA are empty at all times of day is when you know they have lost their audience.
Shake Shack should create a side branch called the Protein Shake Shack and have a base protein mix always running that could be poured into a quick blend, have all the fruits etc lined up assembly style for quick loading and blending, pop into an easy travel cup / bike friendly cup and bam, protein shake about a minute after ordering and on your way.