Chipotle posted its first quarterly loss as a public company as it fights to win back diners with free burritos following a series of food scares.
The Mexican food chain says sales tumbled 29.7% at established locations during the first three months of the year. The company’s sales have struggled since an E coli outbreak and norovirus cases that scared off customers starting at the end of October.
For the quarter ending 31 March, Chipotle lost $26.4m, or 88 cents per share. Analysts expected a loss of 98 cents per share. A year ago, the company earned $122.6m, or $3.88 per share. Total revenue fell 23% to $834.5m, missing Wall Street expectations of $867.8m.
Shares of Chipotle were down 4% two hours into after-market trading.
Since the second quarter tends to be seasonally better, Chipotle said it is not expecting to report a loss in its next earnings report.
“As our sales are on a gradual path to recovery, we remain focused on our mission of changing the way people think about and eat fast food,” said Steve Ells, founder, chairman and co-chief executive officer of Chipotle. “The best approach to rebuilding our business is to proudly serve safe and delicious food in our high-quality restaurants every single day, which is exactly what we will continue to do.”
Mid-quarter the company closed all of its US-based stores for four hours in order to hold an all-staff meeting. During the meeting, the company announced it was implementing new policies. These included changes to the way stores cleaned their produce and work stations as well as changes to store audits and inspections.
After the meeting, Chipotle launched a campaign offering free meals to its customers. That same day, staff could be found outside the restaurants handing out coupons with the offer. According to Chipotle, customers have claimed more than 6m free burritos and 1m free orders of chips and guacamole.
Redemption costs reached as much as $500,000 per day after the meeting. As the redemption leveled off, the number of paying customers went up, the company said. The company also said it might transition to other promotions, such as buy one get one free.
Compared to January, Chipotle stores have “more customers and energy”, the executives said. They also noted that Chipotle will be adding new items to its menu in the coming months, which have been tested in the past.
One of the items to be introduced will be chorizo, a spicy pork sausage, that was briefly tested in Kansas City prior to the outbreak. The company said it is not yet clear whether these new items will be permanent.
Right now is the good time to add these items to the menu “as a way to invite loyal customers back”. At the same time, however, the company said it will continue to emphasize its simplistic and fresh menu ingredients that distinguish it from its competitors.
The Associated Press contributed to this report.
