Market Overview

Chipotle Haters Are Coming Back

Chipotle Haters Are Coming Back

Chipotle Mexican Grill, Inc. (NYSE: CMG) shares gained 3 percent after a market survey showed willingness to eat at the burrito chain is increasing, according to a CNBC report.

Chipotle is the owner of fast-casual concepts, including its namesake brand – the second-largest fast-casual restaurant concept in the United States in terms of domestic system-wide sales.

The report, which was based on a survey conducted by William Blair, "suggests that Chipotle's recovery process has begun" after the eaters turned away from the restaurant due to food-safety issues.

Related Link: Chipotle Stores Set To Reopen Following Nationwide Staff Meeting

The survey found that the number of people who are indicating a change in eating patterns at Chipotle since the food-safety outbreak "has been slowly but steadily improving." And while there remains a high "percent of rejecters," there's been a turn in sentiment and the chain's "regaining lost customers."

The survey added that the company's digital coupon for a free entrée improved traffic in the latter half of February.

The E. Coli Crisis Still Haunts

Separately, PRWeek reported that Chipotle has hired Burson-Marsteller as its U.S. agency of record as the company tries to rebound from the E. coli crisis that damaged its reputation and weighed on its fourth-quarter earnings.

Chipotle's stock was battered after outbreaks of norovirus and E. coli at its restaurants sickened customers last year. Chipotle is facing a criminal probe at one of its Southern California locations, stemming from a norovirus outbreak last summer. In October, people who ate at Chipotle started showing symptoms of E. coli. Late January, Chipotle was served with a subpoena broadening the scope of the previously-announced criminal investigation related to the outbreak.

The events have hurt shares and financial performance has taken a beating. The company's fourth-quarter comparable restaurant sales decreased 14.6 percent and sales fell 6.8 percent to $997.5 million due to lower footfalls.

Shares have plunged 25 percent in the last six months, but have recovered some losses this year. Year-to-date, they have gained 12 percent after the Centers for Disease Control and Prevention said last month that the E. coli outbreak was over.

Chipotle shares were up around 1.5 percent at $532.00 in the afternoon trade on Friday.

Image Credit: Public Domain

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