Permanent damage

Analyst worries Chipotle may never recover from that whole E. coli thing

Chipotle may never recover from that whole E. coli thing

About a year ago, Chipotle had legions of fans on Wall Street and Main Street. Now the Denver-based burrito chain may be looking at long-term brand damage after its series of food-safety problems.

First there were reports of investigations into E. coli outbreaks linked to Chipotle stores in Washington and Oregon in October 2015. Those reports eventually prompted the chain to close 43 stores across the Pacific Northwest late last year. Then there was an E. coli issue in the Midwest, followed by a norovirus problem in Boston this past February.

It wasn’t a good look. Sales dropped sharply.

chart-1-c

The 23-year-old company did eventually get a handle on the issues, putting in place a number of new food procedures and naming a new executive director of food safety. But despite those operational changes and a number of efforts to woo customers with discounts and promotions, Chipotle’s numbers just haven’t bounced back at its more than 2,000 restaurants.

Some think the brand damage could be long-term. Compared to the prior year, sales and profits have declined sharply over the last three quarters, and in a note published Tuesday, an analyst from Raymond James suggested that the 20 percent decline in sales since the initial E. coli outbreaks “could prove to be more permanent in nature.”

We’ll find out soon. Chipotle is due to report its third-quarter results next week.

M-F 7:30PM HBO