Over the first week of 2015, Morgan Stanley conducted a survey of approximately 2,000 U.S. Chipotle Mexican Grill (CMG) customers, showing that 15 percent of those consumers say they will never return the beleaguered fast foot chain. Analysts Courtney Yakovonis, John Glass and Christopher E. Carril pointed out that the near-term impact on sales caused by the E. Coli scare is likely to be “dramatic.”
More than 70 percent of the people surveyed were aware of the health concern issues that have been surrounding Chipotle. However, key brand metrics such as taste, food quality and value remained at the same levels, or even higher, than they were in 2015. Analysts consider this a good sign for long-term recovery.
Chipotle stock closed at $416.19 on Thursday, down 2.46 percent, following price target cuts at many firms. The lower prices came a day after the chain announced that those same stores’ sales had declined by 14.6 percent during the fourth quarter of 2015, following the E. Coli and norovirus outbreaks. More than 50 people in nine states were affected by the E. Coli outbreak, and more than 100 people were sickened by the norovirus incident which occurred in California in late August.
Chipotle Mexican Grill stock has lost about 40 percent of its value in the last five months. However, Investor Place warns that CMG stock is no bargain, citing the fact that, not only are hoards of investors leaving, but crowds of customers are departing as well.
CMG will be buying back $300 million of its own stock in an attempt to inspire investor confidence in a demonstration of management faith. It may be too little, too late.
The Chipotle Careers website is active today, with 3,882 jobs found and many new restaurant openings announced.