Chipotle Mexican Grill Q2 FY’16 Earnings Preview: Recovery In Top-line Likely To Be Weak

-1.74%
Downside
60.49
Market
59.44
Trefis
CMG: Chipotle Mexican Grill logo
CMG
Chipotle Mexican Grill

cmg

2

Key Trends:

Relevant Articles
  1. How Did Chipotle Stock Gain 20% This Year Despite Inflationary Headwinds?
  2. Up 17% This Year, Will Higher Pricing Boost Chipotle’s Stock Post Q2 Earnings?
  3. Where Is Chipotle Stock Headed Post Stock Split?
  4. Chipotle Stock Is Up 39% This Year. What’s Happening With The Company?
  5. Rising 25% Year To Date, Will Q1 Results Drive Chipotle Stock Higher?
  6. Up 11% Already This Year, Does Chipotle Stock Have More Room To Run After Q4 Results?

1) Chipotle’s top-line suffered in Q1’16 due to the continued impact of the E.coli controversy.

  • Food, beverage, and packaging costs declined the most, at 35% y-o-y.
  • Average spend per visit fell 8% y-o-y.
  • Comparable restaurant sales were down by a massive 30% y-o-y.

2) Sales recovery initiatives undertaken

  • Aggressive marketing campaign, targeting all of U.S. and Canada.
  • Introduction of new menu items like “Chorizo” and launch of a reward program.
  • Strengthening its digital ordering capabilities.
  • Implemented a food safety protocol.

3) Recovery underway

  • Improvement seen in comparable sales in the month of April due to Easter holidays.
  • Improvement in key measures such as admiration, consideration, first-time visits, and food quality.
  • Q2, seasonally a strong quarter for the company.
  • Marketing costs expected to be 3% – 4% of sales in the upcoming quarters.
  • Transitioning its traffic driving initiatives from freebies to purchase-oriented.

4) Industry-wide comparable sales continue to be weak

  • Same store traffic at -3.5% in April; worst in 2 years.
  • Comp sales at -0.3%, while same store traffic at -2.7% in May.


Have more questions about Chipotle Mexican Grill (NYSE: CMG)? See the links below:

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Chipotle Mexican Grill

See More at Trefis | View Interactive Institutional Research (Powered by Trefis)

Get Trefis Technology