Shelly Banjo is a Bloomberg Gadfly columnist covering industrial companies and conglomerates. She previously was a reporter at Quartz and the Wall Street Journal.

No news is usually good news when you're a restaurant trying to overcome a food-safety crisis. But Chipotle may be going a little too far. 

The burrito chain has recently taken a less-is-more approach to updating investors about sales in the wake of last year's norovirus and E. coli outbreaks, and its share performance is starting to suffer as a result. The stock closed below $400 this week for the first time since July 2013.

Wall Street analysts, relying on their own estimates and traffic checks for signs of a sales recovery at Chipotle, have recently issued a handful of price-target reductions and downbeat research reports.

How Low Can It Go?
Chipotle's shares sink below $400 for the first time since 2013
Source: Bloomberg

Chipotle's next regularly scheduled earnings report won't come until July, when investors will learn whether the company will report a quarterly loss for the second time in its history.

After drastic sales declines began last year amid the crisis, Chipotle had started releasing periodic sales updates in between its regular reports. That practice ended a couple of months ago, stoking suspicion its numbers continue to be disappointing. If the results are good, some investors seem to think, then why won't the company release them? 

Of course, you could also read something good into the silence: Maybe Chipotle is keeping quiet to surprise everybody with better-than-expected numbers in July. The company hasn't exactly embraced media attention, blaming much of its sales malaise on news coverage. It's also still contending with a handful of lawsuits over the outbreaks, as well as a federal criminal investigation.

But the evidence so far suggests Chipotle still has a ways to go in attracting people to its restaurants. Its free burrito giveaways in February drew customers in the short term. But the benefits didn't last, according to Placed, which uses smartphone location data to track where people eat and shop. Traffic at the chain was down about 5 percent this May from the year before, according to Placed.

Burrito Boom and Bust
Change in the percentage of the U.S. population visiting Chipotle from a year ago
Source: Placed

Chipotle's brand perception has actually improved in recent weeks. But nearly a year since the first major outbreaks were reported, more people still report having a negative image of Chipotle than a positive image, according to data from YouGov Brand Index -- and that's after a decade of the brand never notching a negative favorability rating. 

Bruised Brand
Chipotle's brand and quality perceptions have improved, but remain tarnished. An index score above zero is positive, below zero is negative.
Source: YouGov BrandIndex
Note: YouGov interviews 4,500 American adults each weekday. Buzz asks if what you've heard about brand was positive or negative. A score is compiled by subtracting negative feedback from positive. A zero score means equal positive and negative feedback. Score ranges from 100 to -100

Meanwhile on Wall Street, the percentage of investors betting the company's stock price will fall is at its highest point ever . The short interest in Chipotle as a percentage of float is now around 13 percent, compared to a median of 4 percent (and an average of 7.5 percent) for U.S. retailers and restaurants valued at more than $100 million. 

Betting Against Chipotle
Short interest in Chipotle has risen to its highest point ever
Source: Markit and Bloomberg
Note: Percentage of short interest since Chipotle began trading in a single class of stock. The company converted all its outstanding shares of Class B common stock into shares of Class A common stock in December 2009.

Yet the stock remains relatively expensive: It still trades at 50 times forward earnings, compared to competitors such as Panera and Potbelly, which have multiples of around 30. 

And while Chipotle struggles, customers looking for healthier lunch options are heading to some of those competitors. They are picking up Chipotle defectors at a fast clip and gaining ground on technology and other store improvements while Chipotle is distracted.

Even if Chipotle manages to boost sales, its margins will keep hurting. For one, it will likely get increasingly difficult for Chipotle to attract customers without discounts once they get used to them, according to Bloomberg Intelligence analyst Jennifer Bartashus. And if it can't raise prices, it won't be able to compensate for what it's spending on food-safety improvements and advertising blitzes.

It may be a while before Chipotle investors get much good news.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

  1. *since Chipotle began trading under one share class in December of 2009

To contact the author of this story:
Shelly Banjo in New York at

To contact the editor responsible for this story:
Mark Gongloff at