A Chipotle store in Bellerica, Massachusetts closed on Tuesday and may remain closed on Wednesday due to possible Norovirus cases amongst the store’s employees. The news comes just months after previous Norovirus and E.coli outbreaks dragged the company’s stock price down by more than 20%. The Chipotle Norovirus news comes at a bad time.
Just last week William Blair noted:
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We have conducted monthly surveys of roughly 800 adults since November after the initial E. coli outbreak to understand consumer willingness to eat at Chipotle. Overall, it appears that sentiment bottomed in January, with willingness to eat at Chipotle increasing after the company’s digital coupon for a free entrée spurred improved traffic in the latter half of February (the coupon was valid from February 8 through February 24).
However, not everyone was convinced. In a note from Credit Suisse (March 7th) analysts opined:
Lowering forecasts ahead of 1Q update: We expect CMG to provide an update on 1Q sales in the next 1-2 wks. Lowering ests. ahead of this update as aggressive promotional efforts have likely helped traffic in recent weeks, but at the expense of “real” sales. Consensus calls for -25% SSS for the full 1Q, implying ~-20% for Feb/Mar combined. We believe CMG is unlikely to achieve this level of sequential improvement from Jan (-36%) given the impact of couponing. We are lowering our 1Q SSS forecast to -30% from -25%, which now embeds ~-30% SSS for Feb and ~-25% for March.
Current CS and consensus forecasts call for -25% SSS for the full 1Q. This would suggest an improvement to ~-20% SSS over the Feb/Mar period combined. We believe CMG is unlikely to achieve this level of sequential improvement from Jan given the coupon impact
See the following visualizations which highlight a number of relevant figures regarding Chipotle and the company’s troubled past year.
Chipotle Norovirus – Chipotle Mexican Grill Inc. (CMG) Stock Price – 1 Year
2015 E.coli Cases Linked to Chipotle
Most Common Bacteria & Viruses in Foodborne Illness Outbreaks