Today, Chipotle reported its much anticipated third-quarter earnings. The big takeaway: After a string of food-safety issues, the restaurant chain is not out of the woods yet.
The company reported revenue of $1 billion, down 14.8% year-over-year. Same-store sales, a key metric of restaurant health, decreased 21.9%. Analysts had expected quarterly revenue of $1.09 billion and comparable restaurant sales to decline roughly 18%. In the first and second quarter of 2016, Chipotle’s same-store sales dropped 29.7% and 23.6%, respectively, suggesting slight improvement in the third quarter compared with these previous quarters, but not as much as Wall Street had anticipated.
As we charted in our new feature on Chipotle, which explores the company’s ups and downs following a series of devastating food-safety incidents it experienced in late 2015, the chain has struggled to rebuild consumer trust. Restaurant sales plummeted in the first half of this year, leading co-CEOs Steve Ells and Monty Moran to rethink the company’s approach to its menu, supply chain, marketing, and, of course, food safety. But with Chipotle’s stock continuing to hover around 45% below its peak before the outbreaks, observers were looking to this afternoon’s earnings as an indicator of whether more radical change is needed to win back customers as well as investors.
Despite the earnings miss, after-hours trading fluctuated and initially jumped higher on the news, likely reacting to Chipotle’s guidance for future quarters, including estimates that 2017 comparable restaurant sales would increase to the high single digits. But those gains have since been eliminated as shares have slumped.