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Chipotle Chokes On E-Coli ,"Rescinds" Guidance, Expects Up To 11% Collapse In Q4 Sales
- The bad news - CDC says Ecoli has been discovered in 9 states owing to Chipotle
- The reaction - Chipotle rescinds previous outlook, sees Q4 Comps down 8%-11%
- The silver-lining - $300 million buybacks - so BTFD you fools!!
One wonders how much of the plunge in sales took place before the E-coli scare was unveiled several weeks ago, and how much of this 8K was goalseeked to explain "other", far bigger problems with the company?
From CMG Filing:
This report is filed to provide an update regarding the impact of the recent E. coli incident associated with Chipotle Mexican Grill restaurants. The incident has had an adverse impact on financial and operating results thus far during the fourth quarter of 2015.
This report is also filed to announce that our Board of Directors has authorized additional repurchases of Chipotle common stock, with a total aggregate purchase price of $300 million, exclusive of commissions.
E. coli Incident Impact
If recent sales trends continue (as discussed below), we anticipate for the fourth quarter 2015:
- Comparable restaurant sales to be in a range of -8% to -11% (negative)
- Non-recurring expenses during the fourth quarter of 2015 in the range of $6.0 to $8.0 million
- The estimate of non-recurring expenses includes costs to replace food in select restaurants, lab analysis of food samples and environmental swabs, and retaining expert advisory services related to epidemiology and food safety; it does not include any estimate for legal claims and related expenses.
- Restaurant level operating margins of 22% to 24%
- Diluted earnings per share in the range of $2.45 to $2.85
- No impact to anticipated new restaurant openings during the fourth quarter of 2015
We are also rescinding our previously-announced 2016 outlook for comparable restaurant sales increases. In light of recent sales trends and additional uncertainty related to the E. coli incident, we cannot reasonably estimate 2016 comparable restaurant sales at this time.
Sales Trend Detail
Sales trends during the quarter so far have been extremely volatile. 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%.
If these sales trends continue, we believe comparable restaurant sales could be in a range of -8% to -11% for the three month period ending December 31, 2015. Future sales trends may be significantly influenced by further developments, including potential additional announcements from federal and state health authorities.
Food Safety Commitment
As a restaurant company, nothing is more important to us than serving our guests food that is delicious and safe to eat. Since this incident began, we have significantly increased our efforts to ensure that our teams are adhering to all of our food safety protocols, reassessed all facets of our food safety programs — from the farms that provide the ingredients we use, to the restaurants where we serve our customers — and made a number of improvements to help ensure that our food is as safe as it can be. Among the new or enhanced programs we have put in place include high-resolution testing where a series of DNA-based tests ensure the quality and safety of ingredients before they are shipped, end-of-shelf-life testing to be sure quality specifications are maintained throughout the shelf life of an ingredient, continuous improvement throughout our supply chain based on test results, and enhanced internal training to ensure that our teams understand and adhere to all of our food safety standards. Collectively, we believe these changes will put us at the forefront of the restaurant industry in terms of food safety practices. No Chipotle employees have been identified as having E. coli at any time during this incident, and we continue to serve more than 1 million customers on a daily basis.
Share Repurchase Authorization
This report is also filed to announce that our Board of Directors has authorized repurchases of Chipotle common stock with a total aggregate purchase price of $300 million, exclusive of commissions. This repurchase is in addition to previously announced repurchase authorizations totaling $1.0 billion. The Board’s authorization of the repurchase program may be modified, suspended or discontinued at any time.
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Shrewd. Though funny how they don't even attempt to BS about buybacks accomplishing anything other than manipulating stock price.
Smart. Add shit to the food... crash the stock price and then buy it back for pennies.
If the CEO was really really smart he would have bought a toilet bowl full of puts first.
.
The silver-lining - $300 million buybacks
It makes sense that the only shareholder going forward will be the company.
Sooooo,
Who knows the real story here? I am sure there is one.
They have their own supply chain I guess?
Are they tinkering with the supply chain to lower costs?
Purchasing from lower quality vendors?
GASP! Maybe sourcing shit food from China?
(BTW Wheres them cloned china cows going to show up? What eatery? Not on my fucking dinner table you can be sure of that!)
Thre is more to the story here, remember three times is enemy action.
If you say no to GMO's, YOU WILL SUFFER.
This is a payback by the GMO mafia.
Chipolte said no.
GMO's will kill anything. We should all take GMO supplements every day. If we take GMOs out of our food and eat healthy stuff- our trillion dollar health care industry would really suffer. Do you want the stock market to crash? This will do it for sure.
"No employees have been identified with e.coli..."
Lol. All humans are full of e.coli, and trillions of other bacteria and virus.
Kik cdroxi
Good riddance. Worst "mo-mo" rice stuffed burritos in the world.
Chipotle got slack with food standards - they blamed the customer and said the customer doesn't care about "sustainability" and "animal welfare" like they did when uncle McDonald owned them.
Over the summer in the mid-west they couldn't get lime's. Walk 20 feet to the grocery store and limes were $.50 each - dozens of them for the picking. They were constantly running out of pork and I swear they got cheaper cuts of steak to serve; may as well be marinated tendon, gristle with gristle and some muscle.
Line staff quality has plummeted. Last time I ate there was in August, I watched in awe and disbelief as a dozen or more people stacked up behind me because some minimum wage dolt let the rice run out.... And the peppers.... And the steak...And the cheese.... During a Friday night dinner rush. No manager anywhere to be found to right the ship as 3 idiots struggled to figure out what to do. It was a gong show.
Dont excessive bubacks beyond the needs to place employee stock options violate the concept of a publicly traded company? Do any of these public companies own more than 50% of their stock?
What was the source? Bad Suppliers, poor food prep/storage, or simply poor sanitation?
Well their customer sheep wanted 'all natural' -all natural - Mexcican (Tex Mex Cali in reality) and what could be more originally Mexican than taking a dump in the lettuce patch.
Far too much of our food source in now off shored. You'd be amazed where from many of your 'local' grocery store items originated.
I know a lot of gay men who hold positions in companies that if they were not gay would not be there. Its obvious...they have no kids, no drama from women and really the only thing in life that they can use to define themselves is by what they can achieve not on their own, but in the company of other straight men and women.
For the gay male, "fitting in" inside the corporate culture could probably be even more important than knowing themselves in the first place.
So getting back to the gay guys I knew in corporate American who used to hit on me, I would say this: Its like Monty Python. "tis but a scratch....comparable were -11 now only -4 AND we are buying back"
In their world, since this is corporate speak, they actually think this matters. Which is the irony in the whole thing. They live their lives as if what only matters to them is what matters to everyone else. So for them working along side straight guys and then making money is all that matters. Slip in sales? No issue. Just buy back more.
In this case CMG will be like the slow bleed we saw on BP with the oil spill. End of day the stock price will be down, the buybacks will not work and the CEO with nothing else to justify his interest on this planet will have to try something else to make himself and his shareholders feel good.
Chipotle expects 11% of their customers to collapse in Q4?
Or, Chipotle customers should expect to collapse 11% in Q4?
What is the answer to ecoli problems? NO MUSLIM EMPLOYEES, WAKE UP!
SAY NO TO GMO!
Buy the fucking Diahrrea