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Chipotle Modifies Its Plans in the Wake of Lower Feb. 2016 Sales

Just two days ago I called Chipotle’s 2015 “tumultuous.” I think it’s fair to say that 2016 has also seen a whirlwind of news activity regarding the popular Mexican quick-service chain, with information leaking about food-safety changes, co-CEO pay, outstanding burrito coupons and even a new food safety executive.

The company is reportedly thinking about stepping back from some of the food-safety changes it pushed after it contended with a number of foodborne illness outbreaks. Specifically, the company is looking into the efficacy of high-resolution DNA-based testing on all of its ingredients, potentially dialing back or eliminating pathogen testing of many ingredients.

The company noted that sales began the long road to recovery in February, but were still down 26% for the month. The company expects to report a loss for the first quarter, which would be the first quarterly loss for the Denver company since it went public in 2006. It previously expected its per-share results to be “around break even.” The financial woes of the company led to the co-CEOs taking a pay cut this year.

The plan to reverse its financial fortune won’t be easy for Chipotle. The company is relying upon free food to lure back “top loyal” customers, who dine at the chain at least 25 times a year. They also account for up to 20% of its sales each year. A free burrito promotion, launched earlier this year, may be enough to lure back those top loyal customers, but casual customers who are more concerned about the brand’s health and hygiene may need more persuading before placing their trust back with the chain.

That trust may be hard to obtain. On March 8, a Boston-area Chipotle location shut down after four employees became ill. The store was closed quickly and voluntarily for a full sanitation effort, but one of the workers reportedly had a confirmed case of norovirus. Chipotle’s stores in the region were hit with the same illness in 2015, part of the overall food safety scare that got it to this point in the first place.

A storm’s a-brewin’. It’ll be interesting to see how Chipotle continues to right the ship throughout the rest of 2016.