Chipotle Mexican Grill, Inc. (NYSE:CMG) stock rose the most in more than five months after the reassuring the Street it will not succumb to the food-safety crisis. The ICR conference in Orlando Florida provided a perfect opportunity for Chipotle to reassure analysts that it had everything under control.
Opening Of new Stores
Last year was not the best of years from the fast food joint, and if it does not play its cards well, the situation in 2016 could become dire. The embattled fast food joint says it is working on winning back the trust of customers as it also seeks to restore its industry leading margins by 2017.
Chipotle Mexican Grill, Inc. (NYSE:CMG) will not be slowing down the pace of new restaurant openings amidst the ongoing food crisis. It is planning to open as many as 235 stores this year that it says will help restore its margins going forward.
Impact of E.coli Outbreak
The remarks should help rebuilt the stock’s sentiments on the street having shed more than $10 billion in market value last year over food safety concerns. Same-store sales were down by 30% year-over-year in December, mostly hurt by consumers shunning the restaurant over the E.coli outbreak concerns.
The E.coli outbreak has dented Chipotle’s image in the industry having billed itself as the got-to place for food made with locally sourced fresh ingredients. Its shares are currently trading at around $432 a share from all-time highs of $757.77 prior to the E.coli outbreak.
The company says it has initiated new protocols that it hopes will help avert food-safety concerns among customers. The company has also apologized for making customers sick. It is now hoping the Center for Diseases and Control investigating the E.coli outbreak will give it a clean bill of health.
Chipotle will carry out an aggressive marketing campaign starting February as it tries to win customers back. Even with the measures, analysts maintain sales could remain negative until 2017. Increased spending on the opening of new stores could also affect margins going forward.
