Chipotle Mexican Grill’s linkage to an ongoing E.coli outbreak is having a significant impact on the company’s sales, according to a just-released SEC disclosure, in which the company describes sales in the last three months of 2015 as “extremely volatile.”
The statement says:
October comparable restaurant sales were positive in the low-single digit range. When we announced the closure of 43 restaurants on November 3, company-wide comparable restaurant sales dropped for the ensuing few days to approximately -20%. The severity of the national impact was temporary, and when we announced the re-opening of restaurants in Oregon and Washington on November 10, 2015, comparable restaurant sales over the next several days quickly improved to approximately -9%. On November 20, 2015 the U.S. Centers for Disease Control and Prevention (CDC) announced four additional cases linked to the same E.coli incident; following this announcement and related negative publicity, daily comparable restaurant sales trended down to approximately -22%. Over the past five days,comparable sales have gradually improved to an average of approximately -16%. For the full month of November,comparable restaurant sales were -16%.
Chipotle warned that if current trends continue, same-store sales could be down between 8% and 11% compared to the prior year. It also warned: “Future sales trends may be significantly influenced by further developments, including potential additional announcements from federal and state health authorities.”
For context, in the nine months ending in September, same-store sales had increased 5.5% year-over-year.
Chipotle shares dropped 4.6% in Friday’s trading session, on the news that an E.coli outbreak linked to the burrito retailer had spread to three additional states. The shares fell a further 6.5% after the release of its statement which followed the close of trading.