Chipotle Mexican Grill, Inc. (NYSE: CMG)
Chipotle Mexican Grill has fallen on hard times as of late. Starting in October, the company has been the target of an investigation into two E. coli outbreaks. However, good news recently came in with regard to the company from the United States Centers for Disease Control and Prevention. Today, we’ll talk about the good news, whether or not Chipotle will be able to recover, and what we can expect to see from CMG moving forward. So, let’s get right to it…
Chipotle Gets Good News From The CDC
On Monday, CMG and its investors got the news that they wanted to hear. Finally, the investigation into the cause of E. coli cases after eating at the restaurant was over and the United States Centers for Disease Control and Prevention said that the outbreak has reached its end. This comes after several cases of E. coli have plagued the restaurant chain!
The problem started in October. Unfortunately people started to become ill after eating at Chipotle. All told, the first outbreak affected more than 50 people across 9 different states. However, it seemed as though after these issues, the outbreak was over. Sadly, that wasn’t the case. Soon, new cases started to emerge. This time, the cases of E. coli were secluded to one state, but more than 100 consumers became sick. To make matters worse, it was a completely different strain of the illness than what was recorded in the first breakout.
Can Chipotle Recover?
After the E. coli breakout, the big question on the minds of investors is “will CMG be able to recover?” In a statement, CMG CFO, John Hartung had the following to say in a call with analysts regarding their recovery…
“As we aggressively work to welcome our customers back, labor-management and P&L controls in general will not be a priority – instead our teams will schedule labor assuming a steep recovery because we would much rather be overstaffed and offer greater customer service than to risk being shorthanded as a result of trying to over manage labor costs…”
Based on the statement above, it’s clear that CMG is expecting a fast recovery, but will they be able to pull it off? Personally, I don’t think so. While I do think that Chipotle will recover, I don’t think that customers will be flocking to the restaurants any time soon. One of the biggest reasons for this is part of the statement made by the CDC. While the CDC did explain that the investigation into the outbreak and the outbreak seems to have come to an end, they also mentioned that they have not been able to pinpoint the starting point of the problem.
This will likely prove to be a big issue over the coming months. The reality is that without finding the source of the outbreak, it is going to be incredibly difficult to prove to consumers that they are not at risk when eating at the restaurants. This is likely to lead to an incredibly hard time for Chipotle sales in the near future.
With that said, Chipotle is a great company. Not to mention, their food is amazing. Yes, I absolutely love Chipotle burritos. Will I be eating them any time soon? No, probably not. I’d rather wait for a few months and see if anymore outbreaks happen. Nonetheless, I will be eating there again. The bottom line is that through the years, the restaurant has created an incredible name for itself, and I have no doubt in my mind that this year is going to be a year of slow and steady recovery for CMG.
What Do You Think?
Where do you think CMG is headed moving forward? Let us know your opinion in the comments below!