Market Overview

What Should Concern Chipotle Investors The Most? The Pace Of Sales Trends

Share:
What Should Concern Chipotle Investors The Most? The Pace Of Sales Trends

Analysts at BTIG held on to their Neutral rating on Chipotle Mexican Grill, Inc. (NYSE: CMG) after meeting with the restaurant chain's head of investor relations and treasury, Mark Alexee. The firm's Peter Saleh maintains a Neutral rating on Chipotle's stock with no assigned price target.

Saleh's main takeaway from the meeting was that the casual fast food restaurant chain is "rethinking" aspects of strategy and operations. The company is also pursuing various sales drivers that management previously shunned as being "un-Chipotle" such as menu innovation (salads, dessert, margarita, quesos) and TV advertising.

Some of these changes could provide long-term benefits to Chipotle the fact is any initiatives won't be enough to offset the near-term impact from last month's food scare incident, the analyst continued. Specifically, sales trends in July before the norovirus incident were positive by 3 to 4 percent but immediately following the outbreak, same-store sales trends weakened by roughly 550 basis points to a negative low-single digit.

Chipotle's management believes that it can recover only half of its lost sales within a few weeks once the food scare incident can be confirmed to be over, Saleh added. But the remaining half of sales usually takes another year to recover.

"This commentary would imply that the lasting impact from this latest norovirus incident could be 250–300 bps for the next 12 months, assuming that this historical pattern holds," Saleh emphasized.

Bottom line, the analyst is recommending investors stay on the sidelines until "we have greater confidence in sales trends and the initiatives mentioned above take hold."

Related Links:

A Review Of Chipotle's Recovery Finds Challenges Remain

Meet Patrick Quade: The Man Who Exposed Chipotle's Norovirus Outbreak

Latest Ratings for CMG

DateFirmActionFromTo
Dec 2019Initiates Coverage OnSector Perform
Nov 2019UpgradesMarket PerformOutperform
Oct 2019MaintainsSell

View More Analyst Ratings for CMG
View the Latest Analyst Ratings

Posted-In: Chipotle Food Scare Food Scare norovirusAnalyst Color Reiteration Restaurants Analyst Ratings General Best of Benzinga

 

Related Articles (CMG)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
EVFMH.C. WainwrightReiterates11.0
CORVH.C. WainwrightDowngrades
JKHYEvercore ISI GroupDowngrades114.0
AKSUBSUpgrades3.5
FTICitigroupUpgrades
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

White Supremacy And Domestic Terrorism: A Look At The Legacy Left By Timothy McVeigh

Looking Beyond Fees With ETFs