Will the E. Coli Outbreak Affect Chipotle’s 1Q16 Revenue?


Apr. 19 2016, Published 12:36 p.m. ET

Revenue sources

Chipotle Mexican Grill (CMG) owns and operates all of its restaurants. Sales from these restaurants form Chipotle’s revenue. In 1Q16, analysts are expecting the company to register revenue of $868.8 million, a decline of 20.2% from $1.1 billion in 1Q15.

What Effect Will the E. Coli Outbreak Will have on Chipotle’s 1Q16 Revenue?

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Factors affecting Chipotle’s revenue

The decline of same-store sales growth is mainly responsible for analysts expecting a decline in Chipotle’s 1Q16 revenues. Since the outbreak of E. coli in October 2015, same-store sales growth has been declining. Customers were skeptical about the quality of food being served at Chipotle restaurants, which led to a decline in traffic and same-stores sales growth. Analysts were expecting Chipotle to add 40 more units in 1Q16, which is expected to offset some of the decline in revenue. We’ll talk about revenue drivers in the next article of this series.

In 1Q16, Chipotle’s peers, Panera Bread (PNRA), Shake Shak (SHAK), and Brinker International (EAT), are expected to post revenue growth of 3.9%, 37.8%, and 7.9%, respectively.

2016 outlook

With the intention of regaining customer loyalty, Chipotle has adopted several food safety measures. But analysts expect the revival to take time. They’re expecting revenue growth for 2Q16, 3Q16, and 4Q16 to be -7.6%, -0.9%, and 17.1%, respectively. For fiscal 2016, they’re expecting the company to post revenue of $4.3 billion, a decline of 3.4% from $4.5 billion in 2015. Chipotle forms 0.08% of the holdings of the SPDR S&P 500 ETF (SPY).

Next, let’s look at Chipotle’s rebuilding efforts and same-store sales growth.


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