Back in November when Chipotle’s woes centered solely on a six-state E. coli outbreak, stock analysts predicted the company’s sales would be down for the fourth quarter. Now, with the addition of another rare strain of E. coli sickening five customers in two additional states and more than 150 students sick from norovirus in Boston, analysts are anticipating declining sales for the fast casual restaurant until at least September 2016.
Business Insider reports that the recent string of food safety issues at Chipotle could result in prolonged sales declines for the company.
While Chipotle warned previously that same store sales could fall 8% to 11% in the current quarter – the first decrease in sales for the company in its history – JPMorgan predicts the slide could be just the beginning.
Analyst John Ivankoe tells BI that he believes Chipotle’s same-store sales will decline for at least the next five quarters, ending September 2016.
As part of the prediction, Ivankoe says that sales at stores that have been open for at least a year will fall 13% this quarter, and then 12%, 7% and 4% throughout the first three quarters of 2016.
The prolonged sales decline comes as Chipotle contends with news of a second E. coli outbreak affecting five customers in Kansas and Oklahoma and a norovirus outbreak that sickened more than 150 customers in Boston. That store recently reopened.
“The new news flow shows the impact continuing and more importantly a management team that seems to be scrambling for answers,” Ivankoe writes in a research notes.
Chipotle’s sales decline is just beginning [Business Insider]
by Ashlee Kieler via Consumerist