1 Reason Queso Won't Save Chipotle
Shares of fast-casual pioneer Chipotle Mexican Grill (NYSE: CMG) are still struggling to recover after a norovirus outbreak in one of its restaurants brought back memories of the disastrous food-safety crisis of 2015. The stock has shed about 38% of its value since peaking a few months ago, hitting levels not seen since 2013.
Chipotle expects this year to mark the beginning of its comeback, with the company's outlook calling for comparable sales growth in the high single-digits. After comps tumbled 20% in 2016, the restaurant chain needs to put up strong numbers for the next few years to claw back those lost sales. The bottom line may be slower to recover, with Chipotle ramping up its marketing spending in an effort to win back customers.
Chipotle hasn't historically relied on the kind of frequent menu additions that are common practice in the fast-food industry, instead driving growth through customer loyalty. With that loyalty upended by a never-ending string of food-safety issues, the company is starting to look to its menu to goose sales. The most hyped-up new menu item, and one that's expected by some to have a major positive impact on the company's results, is queso. The gooey cheese sauce is a staple at Tex-Mex restaurants and other Chipotle-like chains, and now Chipotle is finally jumping on the bandwagon.
Source: Fool.com