The Chain Gang

Chipotle’s Problems Dumped 3 Years of Growth Down the Drain

Are you ever getting back together?
Are you ever getting back together? Photo: Patrick T. Fallon/Bloomberg via Getty Images

There’s a brand-new context in which to consider Chipotle’s food-safety scare. Already, it’s been noted that the disaster cost its co-CEOs more than half their salaries, and that the “best-case scenario” is recovery by 2018. But in a new investment note, analysts at JPMorgan add you can also frame Chipotle’s mess as three full years of earnings growth down the drain in one brief season. Right now the chain’s earnings per share — basically the amount of money made divided by the average share price — are estimated at $13.90. In 2014, they were $14.13, so that means it’s managed to squander all of the gains that came from adding nearly 700 locations during three of its best years. Talk about a gut-punch.

Analysts also said Chipotle’s plan to get out of the red by giving away $62 million of free burritos strikes them as a “position of weakness,” and maybe even felt it’s an elaborate cry for help, because they threw out several suggestions in case the chain’s looking for other possible strategies for speeding up its comeback. One was to try limited-time menu items, since, like free-burrito coupons, they could lure people in but have the distinct upside of not being free. The other was to just go full fast-food and install drive-through windows at some stores.


Chipotle’s Problems Cost It 3 Years of Growth