Chipotle considers giving away more burritos

Published 12:00 am Thursday, March 17, 2016

Chipotle said Wednesday it is considering ramping up offers for free burritos as its sales are slow to recover following a rash of food-safety outbreaks.

Speaking at an investor conference, executives said they may increase the number of free burritos or “buy one, get one free” promotions they offer, as they forecast the company’s first-ever quarterly loss. Chipotle said late Tuesday it expects to report a first-quarter loss, as poor sales are compounded by higher costs for food safety procedures and marketing. Sales declines at established restaurants last month averaged 26.1 percent. That’s an improvement from January’s 36.4 percent but still worse than Wall Street was expecting.

At least two analysts significantly cut their earnings expectations following the report. Nomura analyst Mark Kalinowski cut his forecast for this year and next by nearly half, as did Oppenheimer analyst Brian Bittner.

“We continue to sit on the sidelines until visibility into sales/profit recovery improves,” Bittner wrote.

The Wall Street Journal also reported late Tuesday that Chipotle is considering rolling back some of the extra food-safety procedures that it promoted earlier this year, including high-resolution DNA-based testing of some ingredients. It wasn’t clear whether the changes will be scaling back or cutting the procedure altogether, the newspaper said, citing anonymous sources.

“Our commitment to establishing Chipotle as a leader in food safety is fully intact. Over the last few months, we have implemented a number of programs and procedures to enhance food safety … Any changes we may make to our initial plans will be to strengthen what we are doing,” said Chris Arnold, a spokesman for Chipotle.

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