What happened

Shares of Chipotle Mexican Grill, Inc. (CMG -1.34%) were unraveling last month, after the burrito chain turned in a woeful third-quarter earnings report, essentially signaling the end of the company's turnaround following the 2015 E. coli outbreak. According to data from S&P Global Market Intelligence, the stock fell 12% in the month, hitting lows not seen in five years.

The stock was up for the month before the Oct. 24 earnings report, but plunged after the results came out:

CMG Chart

CMG data by YCharts

So what 

Comparable sales in the quarter rose just 1% as the company struggled to bounce back from a July Norovirus outreak at a single Virginia location, and its widely anticipated release of queso in September turned out to be a disappointment. Factoring in the 21.9% comparable-sales decline in the quarter a year ago, Chipotle's two-year comps for the quarter were down more than 20%. The customer recovery it had experienced in the first half of the year came to halt. That's a big problem.

Chipotle noted that earnings per share more than doubled to $0.69, but that was below analyst estimates, and a far cry from the $4.59 it posted in the third quarter of 2015. Not surprisingly, the stock plunged 15% the day the report came out.

The exterior of a Chipotle location in Manhattan

Image source: Chipotle.

Now what 

Management offered little encouragement for investors who hoped the results were just a speed bump in Chipotle's recovery. It saw comparable sales growth in the low single digits for the fourth quarter, calling for full-year comp sales growth of 6.5%, down from a prior forecast in the high single digits. The company at one point aimed for EPS of $10 this year, but analysts now see just $6.77 in profit per share this year. 

Chipote dialed back its new store openings for 2018, a wise but belated move, and a sign that management still has more work to do to shore up operations.

The fast-casual chain's collapse over the past two years is nearly unprecedented in the restaurant industry, as the one-time stock market darling has lost two-thirds of its value and remains in crisis. The new store opening reset may help, but with queso flopping, there's little hope for a catalyst that will suddenly jump-start growth.