Chipotle Is Still Suffering: Burrito Chain’s Profits Took a Nosedive in 2016
Chipotle is still feeling the financial effects of its disastrous 2015, when foodborne illness outbreaks and food safety lawsuits piled up for months. The 2016 fiscal year saw a 95 percent dip in profits for the fast-casual chain, with sales falling 4.8 percent during the fourth quarter.
However, analysts are optimistic. Although the year and even final quarter of the year showed a dismal outlook for the once-seemingly-untouchable fast-casual restaurant, a chart provided by Chipotle shows same-store sales picking up again from November 2016 onward. By December, the same-store sales have gotten out of the red and were up 24.6 percent in January.
"This represents a solid start for the year against Chipotle's easiest comparison," John Zolidis, an analyst with Buckingham Research Group, wrote in a research note Friday, according to CNBC. "Looking forward, we believe that the sales recovery will accelerate as management aligns store teams against revised customer-oriented goals and as digital and marketing efforts are brought to bear."
Chipotle CEO Steve Ells told investors that their strategy remains to improve restaurant operations, increase creative marketing ploys, and expand their digital sales.
A possible stumbling block for Chipotle would be the proposed 20 percent tax on goods from Mexico, from which Chipotle gets its avocados, cilantro, and jalapeños.