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Rodents reportedly fall from ceiling of Dallas Chipotle
July 20, 2017
Rodents were spotted at a Dallas-area Chipotle Mexican Grill on Tuesday. One customer told NBC DFW her lunch was "ruined by rodents falling from the ceiling."
A Chipotle statement said it was "an extremely isolated and rare incident."
Diners captured cellphone video inside the restaurant that show rodents crawling around the floor and one climbing up the wall. According to the story, customers claim the rodents fell from the ceiling.
A Chipotle spokesperson issued the following statement to the station:
"We immediately contacted professionals who identified a small structural gap in the building as the likely access point. We're having it repaired. Additionally, we reached out to the customer to make things right. This is an extremely isolated and rare incident and certainly not anything we'd ever want our customers to encounter."
One customer, Daniela Ornelas, told NBC DFW she was happy with how the employees handled the situation but would likely not return to the restaurant.
The chain has been struggling against outbreaks of food-borne illnesses, most recently earlier this month, at a Chipotle in Sterling, Virginia.
Its food safety director, Jim Marsden, said the "norovirus does not come from our food supply, and it is safe to eat at Chipotle." It can be transmitted by anyone who is sick, including customers, who visit the location.
Chipotle confirms norovirus is behind customer illness outbreak
July 20, 2017
Health officials have confirmed that norovirus is what sickened customers who ate at a Chipotle restaurant in Sterling, Virginia, last week, Chipotle told Business Insider Thursday.
At least 133 people fell ill after eating at the Sterling, Virginia Chipotle that's at the center of the latest outbreak, according to the website iwaspoisoned.com, which allows customers to self-report suspected foodborne illnesses.
Customers reported symptoms such as vomiting, diarrhea, severe stomach pain, dehydration, and nausea after eating at the restaurant.
The virus is highly contagious and causes symptoms like stomachaches, nausea, diarrhea, and vomiting. It's the most common cause of foodborne illnesses in the US, with about 21 million cases annually.
Cases of norovirus stemming from restaurants can often involve a worker who failed to wash his or her hands after going to the bathroom.
Chipotle has since reopened the Sterling restaurant after a two-day closure.
"While the restaurant was closed, multiple teams performed complete sanitizations of all surfaces," Chipotle CEO Steve Ells said in a statement Wednesday. "We also provided support to any customers or employees who had reported illness to ensure their well-being."
Chipotle has dealt with norovirus cases in the past. In December 2015, nearly 120 Boston College students fell sick after a norovirus outbreak at a restaurant close to campus.
Calls for CEO to resign. They learned nothing since the last time this happened. They didn't even apologize to their customers for giving them Montezuma's revenge.
Crossing 360 they broke key levels of support. More pain ahead.
Analysts polled by FactSet expect earnings per share of $2.19.
Estimize, a software platform that crowdsources estimates from buy-side analysts, hedge-fund managers and others, are also expecting EPS of $2.19.
Revenue:
The FactSet and Estimize revenue consensus is $1.19 billion.
What to watch for:
Before the norovirus reports, Chipotle same-store sales growth had momentum, with Wedbush analysts writing in a June note that its checks showed growth slightly ahead of consensus.
Chipotle consumers are abandoning the brand, and it could get worse
July 24, 2017
It's likely that diners have begun to avoid Chipotle Mexican Grill.
A confirmed case of norovirus at one location and a viral cellphone video of rodents falling from the ceiling at another has soured perception of the brand, according to Credit Suisse analyst Jason West.
Credit Suisse's online sentiment tracker, which measures how consumers feel about a brand, showed the perception of the Chipotle brand fell to near record lows following the two incidents last week.
"Not surprisingly, online sentiment plummeted in recent days," West wrote in a research note Monday. In the past, sales at the Mexican food chain tended to fall as opinions turned negative, he said.
Sentiment slipped from a score of 55 on July 17 to negative 11 on July 18, when the norovirus incident was first reported at a Virginia restaurant and the mice were spotted in a Dallas-area Chipotle.
These scores improved modestly on July 19 and July 20, reaching 12 and 16, respectively. West anticipates that for the month of July consumer sentiment for Chipotle will average around 35.
"By comparison, online sentiment averaged 24 during the month of Dec '15, the low point following the E. coli and Boston norovirus incidents," he wrote.
The average score was 56 during the second quarter of this year, West said.
"This sentiment data has had a 76 percent correlation with Chipotle's same-store sales since the 2015 food safety crisis," West wrote. "This data suggests [same-store sales] have likely fallen to at least negative 10 percent in recent days, if not worse."
While West retained his second-quarter same-store sales estimate for the company, he lowered his third- and fourth-quarter forecasts. He now sees Chiptole's same-store sales falling 2 percent in the third quarter and 3 percent in the fourth quarter. Previously, he expected the brand would see same-store sales rise 7 percent and 4 percent, respectively.
In addition, West slashed his price target by $100 to $325.
Shares of Chipotle slipped to a 52-week low of $336.52 following West's note, but have since recovered. On Monday, the stock was down about 1 percent, trading around $342.
Revenue for the quarter was $1.17 billion, up 17.1% from the second quarter of 2016. The increase in revenue was driven by new restaurant openings and an 8.1% increase in comparable restaurant sales. Comparable restaurant sales improved primarily due to an increase in customer visits, along with an increase in average check as a result of a reduction in promotional activity. We opened 50 new restaurants during the quarter, and closed two restaurants, bringing the total restaurant count to 2,339.
Food costs were 34.1% of revenue, a decrease of 10 basis points as compared to the second quarter of 2016. Higher avocado costs were offset by lower costs from bringing the preparation of lettuce and bell peppers back into our restaurants, as well as the benefit of menu price increases in select restaurants in the second quarter of 2017, and a decrease in paper usage and costs.
Restaurant level operating margin was 18.8% in the quarter, an improvement from 15.5% in the second quarter of 2016. The increase was driven primarily by sales leverage along with more efficient scheduling and deployment of our managers and crew. Marketing and promotional expenses were 3.7% of sales, or 70 basis points lower than the second quarter of 2016, due primarily to lower promotional costs and sales leverage.
General and administrative expenses were 6.0% of revenue for the second quarter of 2017, a decrease of 110 basis points over the second quarter of 2016 primarily due to sales leverage. In dollar terms, general and administrative expenses decreased $0.7 million compared to the second quarter of 2016 due to lower legal expenses, partially offset by increased bonus expenses and non-cash stock based compensation expense.
Net income for the second quarter of 2017 increased 161% to $66.7 million, or $2.32 per diluted share, compared to net income of $25.6 million, or $0.87 per diluted share, in the second quarter of 2016.
Outlook
For 2017, management targets:
Comparable restaurant sales increases in the high single digits
195 – 210 new restaurant openings
An estimated effective full year tax rate of approximately 38.4%
A self-identified Chipotle employee alleged in a Reddit post last month that a manager required them to work while sick.
A Chipotle employee from a different state told CNBC that it was only after the norovirus outbreak last week that their manager began enforcing the sick policy.
Chipotle's sick policy may not be the only one that managers are overlooking.
Chipotle discloses follow-up subpoena after Va. Illnesses
July 26, 2017
NEW YORK (AP) — Chipotle says it received a follow-up subpoena requesting information tied to illnesses associated with a restaurant in Virginia this month.
The chain says Wednesday it received the subpoena July 19 for information tied to what health officials believe was a norovirus outbreak at the Sterling, Virginia, location. Chipotle notes it received a subpoena last year in connection with a criminal investigation by the U.S. Attorney's Office for the Central District of California and the Food and Drug Administration.
That subpoena required documents tied to a California restaurant where a norovirus outbreak occurred in 2015. It came after Chipotle was hit with an E. coli outbreak and a separate norovirus outbreak later that year.
Chipotle noted that it doesn't know whether it would incur fines or penalties tied to the investigation.
CMG INVESTOR ALERT: The Law Offices of Vincent Wong Reminds Investors of an Investigation Involving Possible Securities Fraud Violations by the Board of Directors of Chipotle Mexican Grill, Inc.
July 26, 2017
The Law Offices of Vincent Wong notifies investors of an investigation concerning whether Chipotle Mexican Grill, Inc. (“Chipotle”) (CMG) violated federal securities laws.
Click here to learn about the case: Vincent Wong Law Offices. There is no cost or obligation to you.
On July 18, 2017, news outlets reported that Chipotle had closed a restaurant in Virginia due to a suspected norovirus outbreak. Then on July 20, 2017, Reuters published an article reporting that a county health department official had confirmed norovirus in a customer who ate at the Virginia restaurant. That same day, CNBC published an article reporting that rodents were spotted at a Texas location the previous day. Shares of Chipotle stock have fallen from a close of $392 per share on July 17, 2017, to a recent close of $356 per share.
Chipotle's Food Scares Could Be Due to Corporate Sabotage, Restaurant Consultancy Hints
July 26, 2017
Chipotle Mexican Grill (CMG) shares were rising Wednesday following the company's latest earnings beat, but the foodborne illness outbreak that tanked the stock last week was a suspicious turn of events, according to Aaron Allen of food consultancy group Aaron Allen & Associates.
"A lot of things stacked up that made it suspicious," Allen told Bloomberg following a LinkedIn post on the subject this week. "And when you look at it from a statistical point of view, even more suspicious."
Allen noted that normally food borne illness outbreaks occur between December and May. Chipotle's occurred between August and December.
Allen also noted that the number people sickened by the outbreaks are too high for the size and scope of Chipotle.
To justify its high stock price, Chipotle needs to keep growing like crazy while simultaneously regaining customers’ trust—that will be difficult to pull off
Aug. 9, 2017
Up until a couple of months ago, it seemed like Chipotle had put its problems behind it. After a series of food-safety problems in 2015, the company’s shares rose 25% in eight weeks this spring.
Then all of the gains unwound. In June, Chipotle warned that sales in the second-quarter for restaurants open for over a year would be lower than expected. Last month more than 135 customers reported getting sick in one of its restaurants in Virginia, and a viral video showed mice scampering around a Chipotle in Dallas. The company said business slowed as a result, and analyst estimates for earnings over the next year have fallen sharply.
Chipotle’s stock is down more than 30% from the high for the year hit in May. The problem is, at the current price, investors are still betting that Chipotle will grow strongly. The company’s shares trade at 34 times analysts’ expected earnings over the next year, according to FactSet. Jack in the Box , which runs Chipotle competitor Qdoba, has a price-earnings ratio of 19.
To validate that high P/E, Chipotle will need to grow fast—and it aims to. In the first half of this year the company opened 102 new restaurants, bringing its total count to 2,339, and it says it expects to open 92 to 108 more stores before the year is out. Ultimately, the company has said it thinks it can bring its U.S. total to 5,000, and analysts have penciled in more than 200 new restaurants next year.
In addition to opening a lot more restaurants, Chipotle will also need sales at its existing restaurants to keep rising strongly, and it will need to maintain high profit margins. Even without the company’s recent challenges, doing all those things would be hard. Chipotle will need to find hundreds of profitable locations each year, reverse the slowdown in same-store sales growth and keep a handle on costs when low unemployment is pushing restaurant wages higher. All of this in the intensely competitive fast-food industry.
For any of this to happen, Chipotle must prevent any further food safety problems and convince customers they won’t get sick from their next burrito. This is harder and more expensive for the chain, which uses fresh ingredients and prepares food in front of its customers.
That is a strong argument for Chipotle to reset its growth expectations. Investors ought to reset their expectations for the company, too.
Chipotle hits 4-year low after Deutsche Bank predicts even bigger stock price losses
Deutsche Bank tells clients Chipotle doesn't deserve a premium valuation due to its lack of progress since its food safety issues in 2015.
The firm lowers its price target for the restaurant chain to $250, which is 19 percent lower than Monday's close.
Chipotle shares hit a low Tuesday morning not seen since February 2013.
Aug. 22, 2017
A turnaround for Chipotle shares is nowhere sight, according to one Wall Street firm.
Deutsche Bank lowered its price target and reiterated its sell rating for stock of the burrito restaurant chain, saying it doesn't deserve a premium valuation anymore because of the company's lack of progress recovering from food safety issues that arose in 2015.
"Chipotle has remained under pressure for much of the last two years as investors' concerns over its fundamentals and share price uncertainty persists," analyst Brett Levy wrote in a note to clients Tuesday. "Many are still hopeful the company can regain its lost lustre, but we believe expectations assume lofty fundamental and valuation expectations, which have yet to consistently materialize … we continue to view significant risk in the story."
The issues started in the second half of 2015. Since the second quarter of that year, Chipotle has struggled to regain momentum. Sales are down 4 percent and profits are down around 70 percent in the 12 months ending this June compared with the same period in 2015.
"Given the recent sales and share price reactions to external factors, coupled with still sluggish internal results, we question whether the likelihood of a significant multiple expansion recovery would materialize in the near-term, even if results begin to show a meaningful acceleration," he wrote.
As a result, he lowered his price target for Chipotle to $250 from $315. The new target is 19 percent lower than Monday's closing price.
Chipotle shares hit a low Tuesday morning of $304.10, a level not seen since February 2013. By midafternoon, it was trading above $307 a share. The stock is down 18.2 percent year to date through Monday compared with the S&P 500's 8.5 percent gain.
An Analyst Likes What’s Cooking in Chipotle’s Test Kitchen
Queso is a particularly hot item, though it’s too soon to tell if it will become available at all Chipotle restaurants.
Aug. 24, 2017
After visiting Chipotle’s new test kitchen in New York, a bullish analyst has found more reason to be optimistic about the restaurant chain’s future.
Chipotle Mexican Grill recently opened its first test kitchen (called NEXT, no relation to Barron’s Next) that’s open to consumers, and Piper Jaffray analyst Nicole Miller Regan had a chance to observe consumer attitudes toward the experimental menu items there. She notes that queso -- a menu item that’s long been requested by consumers -- was “the primary focus of consumers visiting the store.” She believes that customers are adding queso “to the majority of entree items” and queso is also being purchased as an add-on to go with chips. Sometimes patrons are buying both queso and guacamole.
The chain is also testing other items, like frozen margaritas, salad with avocado dressing, and Buneulos, a Mexican-inspired dessert. There’s no guarantee that test items will ever make it out of the “lab.”
Though new menu options could reignite consumer enthusiasm around the brand, Miller Regan cautions investors against focusing too much on them.
“We believe the current discussion should be less about the short-term impact of new menu items (queso debate) and more about signaling a longer-term evolution in corporate strategy,” Miller Regan wrote. “Although we recognize the company is still in the early stages, the progress thus far suggests to us that a broader cross-functional shift is occurring in terms of menu/marketing innovation, digital/technology and operations.”
She’s particularly intrigued by the company’s efforts to speed up the process of filling orders that have been placed online, which could help grow adoption of mobile ordering.
Miller Regan rates Chipotle shares at Overweight with a $510 price target, about 40% above current levels. Chipotle stock was up 1.3% in early Thursday trading.
Man, Chipotle fought against queso for so long because it can't be made "naturally" and needs emulsifiers and binders and crap. Wonder if they're just giving the people what they want or if they found some way to make non-shitty queso.
Chipotle turnaround far off as survey shows consumers still don't trust the food, analyst says
Sep. 8, 2017
A turnaround for Chipotle is nowhere in sight, according to one Wall Street firm.
Cowen lowered its rating for the burrito restaurant chain to underperform from market perform, citing the firm's negative consumer survey results for Chipotle's brand.
"Proprietary survey data indicates Chipotle's quality and value perceptions remain near trough levels, leading us to believe the sales recovery will continue to trail investor expectations," analyst Andrew Charles wrote in a note to clients Friday. "We are concerned upcoming efforts to drive sales are not enough to improve these measures and in turn will not drive upside to investor same store sales expectations."
Charles lowered his price target for Chipotle shares to $250 from $370, representing 21 percent downside from Thursday's close.
The company's stock has underperformed the market this year. It is down 16 percent year to date through Thursday compared with the S&P 500's 10 percent gain.
Chipotle's problems with E. coli food safety issues in 2015 resulted in a steep drop in revenue and its stock price. In addition, the chain also faced a norovirus incident at one of its restaurants in July earlier this year.
Charles cited how his August 2017 survey of 2,500 consumers revealed the "food quality and trustworthiness" perception for Chipotle was back near its lowest levels since the 2015 food safety crisis.
As result, the analyst lowered his second half 2017 same-store comparable sales growth estimate to 0.75 percent from 3 percent.
"Looking ahead to 2018, we believe management's plans to take 5% pricing over the next 2-4 quarters will weigh on traffic in a fragile industry backdrop," he wrote. "We fear Chipotle is looking to drive comps through pricing given the difficulty of regaining traffic over the last 18 months."
Reports Q3 2017 results on Tues. Oct. 24.
Options pricing a +/- 7% move
Q3 2017 analyst estimates
- EPS of $1.70 (EPS was $0.27 a year ago.... badly missing analyst estimates of $1.59)
- Revenue of $1.1 billion (revenue was $1.0 billion a year ago.... missing analyst estimates of $1.09 billion)
- Same store sales of +2.1% (was -21.9% a year ago)
- Operating margin of ? (was 14.1% a year ago)
Q4 2017 analyst expectations for guidance
- EPS of $1.81
- Revenue of $1.1 billion (flat quarter-to-quarter revenue growth)
The burrito chain’s sales are likely to underwhelm Wall Street, one analyst suggests.
Oct. 11, 2017 12:31 p.m. ET
Chipotle’s comeback seems to be taking place even more slowly than expected.
Wedbush analyst Nick Setyan thinks sales at established Chipotle locations actually shrunk in the most recent quarter, despite the company’s efforts to recover after a food-safety scandal. Wedbush checked on activity at Chipotle restaurants and found it underwhelming. He estimates a 0.2% drop in Chipotle’s same-store sales, a measure of sales at locations that have been open at least a year, which is below the 2.1% rise predicted by Wall Street.
Queso likely restored a bit of buzz for the brand, but it was only added to the menu in mid-September, which was late in the quarter. Setyan thinks that prior to that launch, the company’s sales trends were even weaker.
Looking ahead, he worries about Chipotle’s ability to introduce the additional price hikes it’s been hinting at. That’s good news for customers, but it doesn’t bode well for the company’s margins, a measure of profitability. Setyan expected Chipotle to raise prices slightly at some point during the current quarter, but he now thinks that the company will have to push back those plans if “transaction trends” don’t improve enough.
Setyan remains on the sidelines regarding Chipotle shares, which are about flat in the last month. He rates the stock at Neutral and lowered his price target to $290.
Analysts worry that the Mexican chain’s labor costs are rising and its sales are weak.
Oct. 18, 2017 1:50 p.m. ET
Doubts about Chipotle are piling up higher than a double order of guacamole as the Mexican chain gets set to release its latest earnings report next week.
Analysts released several notes on Wednesday that questioned the company’s ability to jumpstart sales again. Investors were bullish on Chipotle earlier this year, but have grown increasingly grim despite the introduction of a relatively popular new queso dip.
Wedbush analyst Nick Setyan is worried that Chipotle’s sales will be underwhelming, because of “tepid transaction growth trends.” If the company can’t get more people into its stores, it may have to delay anticipated price increases.
Without price increases, Chipotle could have a harder time expanding its profit margins, given rising labor costs, noted Bank of America analyst Gregory Francfort, who downgraded Chipotle stock to Underperform. The company has tried to hold the line on costs, according to Francfort. But it still won’t be enough: he thinks that Wall Street’s 2018 and 2019 earnings estimates will need to drop by 10%.
Deutsche Bank also released a report examining possible reasons to like Chipotle in the longer-term -- including the possibility that queso or other products bring in more customers -- but kept its sell rating because “brand, operational, financial and valuation issues may continue to weigh on the shares.”
Chipotle stock fell 2.9% in midday trading on Wednesday. It reports third quarter earnings on October 24.
DENVER--(BUSINESS WIRE)--Oct. 24, 2017-- Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for its third quarter ended September 30, 2017.
Overview for the three months ended September 30, 2017 as compared to the three months ended September 30, 2016:
Revenue increased 8.8% to $1.13 billion
Comparable restaurant sales increased 1.0%
Restaurant level operating margin increased to 16.1% from 14.1%
Net income was $19.6 million, including the after-tax impact of an $18.2 million estimated liability related to the data security incident announced in April 2017, an increase from $7.8 million
Diluted earnings per share was $0.69, net of a $0.64 impact from estimated charges recorded related to the data security incident and approximately $0.13 of impacts from Hurricanes Harvey and Irma, an increase from $0.27
Opened 38 new restaurants, and closed or relocated 3 restaurants
Chipotle Mexican Grill shares tumbled after the restaurant chain reported quarterly earnings that missed analysts' expectations.
Here's how the company did compared to what Wall Street expected:
EPS: $1.33 vs. $1.63, according to Thomson Reuters -- miss
Revenue: $1.13 billion vs. $1.14 billion, according to Thomson Reuters -- miss
Same-store sales grew 1 percent vs. expected growth of 1.2 percent, according to StreetAccount -- miss
"Despite several unusual impacts during the quarter, including the impact of hurricanes, we maintained our focus and saw some encouraging signs," said Steve Ells, founder, Chairman and CEO of Chipotle, in a press release. "Our leadership remains focused on setting the foundation for future growth, and we are confident in our teams' ability to deliver against those plans."
07-19-2017, 10:04 AM
