Chipotle reports first-ever quarterly loss

by Erica Shaffer
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Chipotle earnings are still struggling after foodborne illness outbreaks.  

DENVER – Chipotle Mexican Grill Inc. reported its first quarterly loss as a company. For the first quarter ended March 31 the company reported a net loss of $26.4 million or 88 cents per diluted share, compared to net income of $122.6 million, or $3.88 per diluted share in the year-ago quarter.

Revenues dropped 23.4 percent to $834.5 million, driven by a 29.7 percent decline in comparable restaurant sales, the company said. New restaurant openings partially offset the decline. “Comparable restaurant sales declined primarily as a result of a decrease in the number of transactions in our restaurants, and to a lesser extent by a decline in average check, including an impact from sales promotions,” Chipotle said in an earnings release.

Chipotle launched free burrito offers via mobile and direct mail in an effort to win back customers after a series of foodborne illness outbreaks last year hurt the chain’s customer traffic. The Atlanta-based Centers for Disease Control and Prevention on Feb. 1 declared the outbreaks to be over, but Chipotle is still recovering from the incidents of last year.

“As our sales are on a gradual path to recovery, we remain focused on our mission of changing the way people think about and eat fast food,” said Steve Ells, founder, chairman and co-CEO. “The best approach to re-building our business is to proudly serve safe and delicious food in our high-quality restaurants every single day, which is exactly what we will continue to do.”

As part of the company’s push to improve its food safety practices, Chipotle hired James Marsden, PhD., as executive director of food safety.  Dr. Marsden previously was on the faculty at Kansas State Univ.’s Animal Science and Industry Dept. the Regent’s Distinguished Professor of Food Safety and Security. He also served as the associate director of the Biosecurity Research Institute at the university.

 
Chipotle comparable store sales. 
Other food safety protocols implemented by the company include high-resolution testing of ingredients; blanching lemons, limes, jalapeños, onions and avocados to significantly reduce germs on the skin without affecting flavor; and using sous vide method to cook proteins. These steps, among others, led to an increase of 140 basis points in Chipotle’s food costs, which the company said accounted for 35.3 percent of revenue in the first quarter. Lower prices for beef partially offset higher food testing and waste costs and higher costs for pre-cut produce, the company said.

 

“Our restaurants and leadership teams have worked hard to overcome the challenges of the first quarter,” Monty Moran, co-CEO, said in a statement. “What is most important is that we continue to build teams of top performers in our restaurants, and among our field leadership, which will allow us to continue to improve on our already high standards and exceptional customer experience. We have some of the best employees in the industry, which continues to serve as a competitive advantage, and we will continue to invest in our people culture to help expedite the next stage of growth for Chipotle.” 

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