So much for Chipotle's Queso-backed comeback plan: moments ago CMG has again done what it has become so good at in recent years after reporting earnings: it tumbled.
The company reported Q3 EPS of $0.69 and adjusted EPS of $1.33, both badly missing estimates of $1.63, on revenue of $1.13bn, also below the $1.14 bn expected. Chipotle blamed a $0.64 charge taken due to a data breach incident which took place in April, so about 2 quarters ago, as well blaming Hurricanes Harvey and Irma, which cost CMG a further $0.13 in bottom line addbacks. Chipotle also missed on comp store sales, which rose 1.0%, below the 1.2% expected, even as the company reported a modest improvement in labor and food costs.
Just in case it wasn't clear, CEO Steve Ellis was quick to once again blame the Hurricanes for the company's performance"
“We continued to make important progress to improve the guest experience at our restaurants during the quarter,” said Steve Ells, founder, Chairman and CEO of Chipotle. “Our strategic initiatives in operations, innovating our digital sales platform, new menu introductions, and marketing the brand are starting to take hold. Despite several unusual impacts during the quarter, including the impact of hurricanes, we maintained our focus and saw some encouraging signs. Our leadership remains focused on setting the foundation for future growth, and we are confident in our teams’ ability to deliver against those plans.”
Chipotle has been desperate to lure back customers in recent months following the food-safety issues, betting its latest turnaround strategy on the introduction of queso dip, also known as melted cheese which however has received mixed reviews from customers.
And while the success of Chipotle's "quesofication" remains to be decided, what traders were disappointed by was the company's full year guidance, which among other things forecast comp store sales of 6.5% below the 7.2% expected. CMG also predicted new restaurant openings "slightly below the low end of the previously-disclosed range of 195 to 210."
The result: stock is tumbling 8% in the after hours, after sliding 14% so far in 2017.