Chipotle Mexican Grill, Inc. (NYSE:CMG) stock came tumbling in the market even on posting better than expected fourth quarter earnings. The Street took the stock lower in the market on growing concerns over the impact of a wider criminal probe into the firm’s recent food safety scare. Over the past few months, the fast food joint has been at the center of investigations over the E-coli outbreak in a good number of joints.
Revenue & Earnings Drop
The fast food joint faces an unprecedented future as it moves to rebuild its reputation in the industry. For the better part of the last few months, it has sent regulators on an elusive trail over the possible cause of the E-coli outbreak. But as it appears, investors are not buying its sentiments that it is past the E.coli mess.
A 44% drop in fourth-quarter earnings to $67.9 million was by all means expected. That is partly because customers shunned the company’s joints over food safety concerns. Revenue came in at $997.6 million a 6.8% drop from prior year levels. Earnings per share came in at $2.17 a share compared to $3.84 a share posted a year earlier.
New Food Safety Practices
Chief Executive Officer, Steve Ells is in agreement that they need to do more if they are to regain customers trust once more. In a bid to win customers back, Chipotle Mexican Grill, Inc. (NYSE:CMG) has overhauled its food safety practices as it looks to start on a clean slate this year. One of the changes involves changing how employees marinate meat.
Ells is also spearheading efforts that seek to enhance freshness and quality of ingredients used in joints. Stores are now required to cut tomatoes and other produce in house. Even with the cleansing efforts, Chipotle Mexican Grill, Inc. (NYSE:CMG) faces an uncertain future.
The cause of the E.coli outbreak is still riddled in mystery. That is despite the Centers for Disease Control and Prevention stating the outbreak was over. Federal prosecutors have now taken up the matter having asked Chipotle Mexican Grill, Inc. (NYSE:CMG) to furnish them with 3-years’ worth of information on food safety. It promises to be a tough year for Chipotle even as it tries to clear its name.
