Chipotle Slides for Six Straight Days on Concern About Slow Recoveryby
Chipotle Mexican Grill Inc. shares have suffered six straight days of declines as a food-safety crisis continues to haunt the burrito chain.
The stock slipped as much as 2.3 percent on Tuesday to $384.77, the lowest the shares have traded since July 2013. They have now dropped in 11 of the past 13 trading days, hurt by lingering concerns about an E. coli outbreak from last year. On Monday, they closed below $400 for the first time in almost three years.
Before this week, Chipotle’s closing low for 2016 came when the stock hit $404.26 on Jan. 12. The recent slide reflects the difficult road the chain faces as the Mexican chain reassures customers that its food is safe. Chipotle has relied on a marketing push and coupons, including some for free burritos, to lure Americans back to its restaurants. Company executives have insisted that the chain can regain its industry-leading margins and sales once customers return.
The E. coli outbreak, which surfaced in November, affected California, New York, Ohio and other states. Since many of Chipotle’s locations are in states with confirmed cases, it’s been difficult to regain sales momentum, according to Jennifer Bartashus, an analyst at Bloomberg Intelligence. The recovery may take 12 to 18 months, she said.
Chipotle is expected to post a third straight quarter of declining same-store sales next month. Stephen Anderson, an analyst at Maxim Group, said a survey of restaurants indicated the chain hasn’t seen a sustained rebound so far.
“The slow recovery in traffic, which was boosted earlier this quarter by a free burrito promotion, seems to have lost momentum in the past few weeks,” Anderson said in a note. “We do not believe this has led to a broad-based sustainable turnaround in traffic.”