Food Business News - May 3, 2016 - (Page 13)

Chipotle Mexican Grill in the midst of a slow recovery DENVER - Comparable store sales tumbled 30% at Chipotle Mexican Grill, Inc. in the first quarter of fiscal 2016, signaling the fast-casual chain's food safety crisis that began last fall is far from over. Still, results have slowly improved since the beginning of the year, said Steve Ells, founder, chairman and co-chief executive officer of the Denver-based company. For the quarter ended March 31, Chipotle recorded a loss of $26,432,000, which compared with net income of $122,641,000, or $3.95 per share on the common stock, in the same period a year ago. Revenue declined more than 23% to $834,459,000 from $1,089,043,000, reflecting a 21% decrease in transactions in the quarter. "We began to see sales recover in the second half of the first quarter as our transaction trends reversed course from the lows we saw in January," Mr. Ells said during an April 26 earnings call with financial analysts. "While we have used promotional programs to entice many of our customers to return, we are encouraged to see signs that the promotional traffic has translated into repeat paying customers. Return of customers to our restaurants improved our same-store sales comps by 11% from January to recent levels." During the quarter, the company issued more than 5 million free burrito offers, two-thirds of which were redeemed, said Mark Crumpacker, chief creative and development officer. "Throughout the year, we will continue to be more aggressive than usual with our marketing, and we are considering two programs aimed at driving traffic among our loyal customers and lapsed customers, that is, customers who have not been to Chipotle in three months or more," Mr. Crumpacker said. "Additionally, we are considering adding menu items that will appeal to our loyal or lapsed customers." One such menu item is chorizo, a spicy chicken and pork sausage, which was tested in Kansas City restaurants last year. May 3, 2016 "We were prepared to expand that to a second market right as we came into this foodborne illness situation, and we tabled it so that we could put all of our focus on correcting the problem," Mr. Crumpacker said. On Feb. 1, the Centers for Disease Control and Prevention said it had concluded its investigation of two E. coli outbreaks linked to Chipotle that sickened dozens in October and November. In the midst of those outbreaks, more than 120 Boston College students were sickened with norovirus after eating at a nearby Chipotle restaurant. The company faced another setback in March, when it temporarily closed a Boston area restaurant after four employees fell ill. "Unfortunately, some stories referred to this as another outbreak, and those headlines interrupted our sales recovery," said Jack Hartung, chief financial officer. "This was a disappointing setback, which caused our nationwide comp sales to worsen to around negative 27% for a few weeks before recovering to the low- to mid-negative 20% in late March... "The impact of the headlines concerning Boston taught us that the recovery can be fragile and that we need to rebuild trust with our customers, every single customer, every single day at every single restaurant." For the first three weeks of April, comparable store sales were down 22%, or 26% excluding the benefit of the Easter shift, Mr. Hartung said. "The sales recovery has been uneven throughout the country," he said. "Through the first three weeks of April, our traffic comps, excluding the Easter benefit, were negative 15% in the middle of the country, the Southeast and the mid-Atlantic, whereas they were down 20% company-wide, again, excluding the benefit of Easter. That is about a 16-point recovery as compared to January, which means we recovered about half the lost visits in these areas." FBN ingredients custom blends innovation national distribution B.C. Williams Bakery Service BCW Food Products 1-800-527-4104 FOODBUSINESS NEWS ® 13

Table of Contents for the Digital Edition of Food Business News - May 3, 2016

Food Business News - May 3, 2016
Dr Pepper pivoting with the consumer
New front opens in the battle over sodium
Beverage Business News - Beverage makers capitalizing on dairy
Table of Contents
Web Contents
Editorial - Vermont’s immediate impact is becoming clearer
Three meals a day still the American way
Mondelez battling weakness in biscuit market
Pinnacle picks Mondelez exec as new c.e.o.
Chipotle Mexican Grill in the midst of a slow recovery
Hormel sells Diamond Crystal Brands
Starbucks sets forth single-serve strategy
PepsiCo initiating transformational innovation agenda
McCormick acquires Australian herbs company
Costco eyes Nebraska for new poultry plant
Hershey still seeking answers to slow growth
Nestle, R&R to create world’s third largest ice cream company
Saputo details succession plan for presidency
Papa John’s removes HFCS from menu
Danone building strength in yogurt
Dannon to go non-G.M.O.
Taco Bell to limit antibiotics in chicken
Dr. Praeger’s focused on keeping brand fresh
PepsiCo appoints new global food service leader
NatureBox moves from snail mail to retail
Market Insight - The good and bad of El Nino, La Nina
Ingredient Trends - Clean label gains momentum
Food packaging and clean label
Ingredient Innovations - Red means go in color innovation
Specialty dairy ingredients used in beverages
New Food Products
Ingredient Market Trends - I.G.C. forecasts world wheat stocks at new record in 2016-17
Ingredient Markets
Supplier Innovations and News
Ad Index
Food Business in the News

Food Business News - May 3, 2016