(Reuters) – Chipotle Mexican Grill Inc (CMG.N) will open fewer restaurants to get “fundamentals right” and posted unsatisfactory quarterly sales and benefit on Tuesday, as a association struggles to redeem from a bruising fibre of food reserve lapses.
Shares in a burrito sequence were down 9.5 percent in extended trade after executives reported somewhat weaker-than-expected sales during determined restaurants notwithstanding introducing a queso cheese drop in September. Chipotle also announced it would lift prices by roughly 5 percent in roughly 900 stores in November.
Chipotle gradual a 2017 foresee to call for new grill openings somewhat subsequent a low finish of a formerly disclosed operation of 195 to 210. It also pronounced it would open usually 130 to 150 new stores subsequent year.
“We’re going to delayed down only a tiny bit, though this is a proxy slack for 12 to 18 months,” owner and Chief Executive Steve Ells pronounced in an interview. “You have to get a fundamentals right first. Looking central and bargain where we done mistakes in a past helps we set adult for change.”
The news was a drag on a share price.
“When we revoke a expectations of what a destiny section expansion could be, it positively is a disastrous on a stock,” pronounced Evercore researcher Matthew McGinley.
Sales during Chipotle restaurants open during slightest 13 months rose 1 percent for a third entertain finished Sept. 30. Analysts, on average, approaching a arise of 1.2 percent, according to Consensus Metrix.
Executives pronounced those sales were down some-more than 2 percent before to a entrance of queso, that is sole as a standalone drop or a salsa for entrees, after an employee-caused norovirus conflict during a Virginia grill in Jul harm sales.
Costs enclosed 64 cents associated to a information confidence incident, 19 cents from a spike in avocado prices and 13 cents due to Hurricanes Harvey and Irma. Analysts on normal had approaching scarcely a dollar per share some-more in earnings, with a accord aim of $1.63, according to Thomson Reuters I/B/E/S.
Chipotle is doubling down on training and menu investigation after government changes, a house shake adult and millions of dollars in giveaway food giveaways unsuccessful to revitalise business following E. coli, salmonella and norovirus outbreaks in 2015.
Chipotle’s batch is down 53 percent from a start of 2015, contra a 75 percent burst for McDonald’s Corp (MCD.N) and a SP 500’s .SPX 25 percent gain.
More than 18 percent of Chipotle’s float, or shares accessible for trade, have been sole short. With some-more than $1.68 billion during risk betting opposite a shares, it stays a No. 1 brief in a grill sector, pronounced Matthew Unterman, executive during financial analytics organisation S3 Partners.
Chipotle has a tiny menu compared with other bondage and it cut sharp chorizo to make room for queso. The chain’s simple, singular menu underpins a quick use that primarily captivated business and Wall Street, though it also carries a risk of caf� burnout as a newness wears off.
Net distinction rose to $19.6 million, or 69 cents per diluted share, from $7.8 million, or 27 cents per share, a year progressing while income rose 8.8 percent to $1.13 billion.
Reporting by Lisa Baertlein in Los Angeles, Peter Henderson in San Francisco and Uday Sampath in Bengaluru; Editing by Lisa Shumaker