If you're one of the people still clamoring for Chipotle Mexican Grill (NYSE:CMG) -- and that's saying something after seeing year-over-year comps plunge 30% in December and 36% in January -- you were out of luck for lunch yesterday. The fast-casual chain closed all of its restaurants until 3 p.m., taking that time to offer its employees safety training.
I was skeptical of the safety training then, and I remain skeptical of it now. It seemed like little more than a publicity stunt, something that it could have done earlier in the day.
"Given the high employee turnover in the dining industry, it won't be long before your burrito is being rolled by an assembly line that wasn't there that day," I wrote when the training session was originally announced.
Hungry patrons approaching a shuttered Chipotle yesterday were greeted by a sign apologizing for the closure, offering a free burrito on a future visit for those texting the word "RAINCHECK" to the company.
There's no point in scrambling to score that free burrito now. The offer to claim the free meal ended at 6 p.m. yesterday. However, the offer did go viral. We live in a world of social media, and a lot more people than those who actually showed up to a local Chipotle were able to line up a free burrito from the comfort of their own smartphone.
Chipotle probably planned it that way, but it's obviously going to sting the bottom line. It not only had to forgo the peak lunchtime crowd yesterday, but now it'll be giving away a ton of free food that it will naturally have to pay for this quarter.
Chipotle had a rough holiday quarter, but Wall Street sees things getting a lot worse during the current quarter. Analysts see sales declining by 15.5% to $920.5 million for the first quarter, as brisk expansion will be no match for the sharp drop in comps that will make the fourth quarter's 14.6% drop seem like a small puddle.
Things are so much worse now because the fourth quarter benefited from a modest October before the publicity of the norovirus and E.coli outbreaks began to weigh on store traffic. November was tame compared to what followed in December and January.
Analysts who were holding out for a profit of $4.61 a share for the first quarter just three months ago have trimmed that all the way down to $2.10 a share a week ago -- and just $0.36 a share now. If Chipotle continues to offer freebies to entice customers back, it wouldn't be a surprise to see Wall Street pros forecast a deficit for the quarter. In fact, a couple of them do already.
The health scare appears to be over. Now it's time for Chipotle to restore the brand, and that will probably take longer than just getting through this lost quarter.