No doubt, Chipotle Mexican Grill Inc. had been experiencing bad days since months – a pathetic era where its stock prices sunk and revenue rates decline. Despite of that analysts are looking forward towards its recovery.
Upon analysts’ statement regarding, “the quarter was without question the most challenging in our history.” company’s CEO Steve Ells gave a full acknowledgement.
Not to mention, Co-CEO Montgomery Moran said the California grand jury investigation that was announced in early January had broadened to a national inquiry:
“The new subpoena requires us to produce documents and information related to company-wide food safety matters dating back as far as January 1, 2013.”
Wells Fargo upgraded Chipotle stock from ‘market perform’ to ‘outperform’ – historical analysis over the past 20-plus years shows that restaurants that have experienced a food-safety issue tend to rebound. In a note, the cited as:
“Peak same-store sales declines can be cut in half six months after the incident, and sustained same-store sales growth can return 12 to 15 months after the incident.“Although we acknowledge the meaningful incremental cost pressures and sales deleverage that Chipotle will see in 2016 trying to win back lost customers, our work indicates a strong precedent for Chipotle’s share price to closely track demonstrated same-store sales recovery, even in the backdrop of reduced near-term profitability.”
Reported laid forward by Bank of America cited:
“Informal visual restaurant checks suggest that sales remain down significantly year over year but improved from the down 37% pace in late December.”
Analysts said they expect volatility, but the results of a survey of 1,000 people conducted by the bank indicate that many customers are ready to make a return to restaurant, while others never left.
