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Why Chipotle Stock Is Down 17% in 2016

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Chipotle reported a 29.7% decline in comparable sales during the first quarter, driven by a 21.1% decrease in transactions. Restaurant-level operating margin was just 6.8%, down from 27.5% during the same period last year. Overall, the company posted a net loss of $26.4 million, its first quarterly loss as a public company.

Now what: It's impossible to say how long it will take for Chipotle to win back the trust of its customers. The company built its brand around the idea that its food is high-quality, natural, and locally sourced, a message that has worked extremely well. A series of health scares was the worst thing that could have happened, destroying in an instant the image that the company has worked so hard to cultivate.

I suspect that it will take longer than many people think for Chipotle to right the ship. The company's reputation is damaged, and plenty of fast-casual chains with a similar focus on quality have no doubt absorbed the business fleeing from Chipotle. Winning back customers will take time, and all the free burritos in the world won't change that.

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Timothy Green has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Chipotle Mexican Grill. Try any of our Foolish newsletter services free for 30 days . We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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