Can Menu Innovation Lead to a Chipotle Turnaround?

Even prior to Chipotle Mexican Grill's (NYSE: CMG) well-publicized food safety incidents of 2015, some analysts were worried that Chipotle's restaurant volumes were peaking. One of the reasons behind the concern was "menu fatigue." Since Chipotle had basically the same menu since its founding, analysts were worried if its fresh, customizable Mexican cuisine was getting old with customers. Still, Chipotle's management remained mostly steadfast in sticking with its mantra of offering a smaller, but great tasting, menu. Certainly, Chipotle's highly profitable business model had been predicated largely on the cost efficiencies associated with a lean menu.

However, the recent unveiling of Chipotle's NEXT Kitchen and new potential food items suggests Chipotle is changing its ways. Is this a smart strategy, or a sign of "desperation," as one analyst recently put it? Whatever the reason, one thing is clear: In light of new food safety incidents in Virginia last week, the company will need all the help it can get.

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Source: Fool.com