There's some more bad news for Chipotle Mexican Grill: the company plans to close all 15 of its ShopHouse restaurants, ending its attempt to expand into Asian fusion. The company previously explored other options for the spinoff chain, but ultimately decided to sell it, reported Modesto Bee (March 9).
The move represents the latest in a string of negative news stories for the company. Same-store sales dropped 4.8%, according to the company's latest earnings report. And the company could contend with increased avocado prices as new trade deals are cemented by President Trump: the company uses 45,000-lbs. of the fruit annually at its 2,200 restaurants. A proposed 20% border tax could significantly increase its operating costs, reported MarketWatch (Feb. 2).
It's not all bad news for the iconic chain. The company recently placed in the top ten of 2017 Temkin Experience Ratings, and was ranked in the top five allergy-friendly restaurant chains by AllergyEats. The company also rolled out Smarter Pickup Times technology to all its restaurants in February. The technology is designed to cut wait times for customers who order digitally. Clearly, the customer experience for those still visiting its restaurants remains high. The problem is, not enough customers are visiting.
Additionally, a judge dismissed a lawsuit against Chipotle Mexican Grill, ruling that the company didn't improperly conceal the seriousness of the 2015 food-borne illness outbreaks, and executives didn't commit fraud by selling shares months before the first outbreak. The lawsuit claimed investors were not informed that Chipotle's "quality controls were inadequate to safeguard consumer and employee health," reported Denver Business Journal (March 9).
It remains to be seen what the future will look like for Chipotle. The company is planning to launch its first advertising campaign on TV in years in April, and executives expect solid growth for same-store sales this year. However, as we've reported in the past, the company has already explored avenues to increase sales, and so far, the results have been lackluster.
Chris is a business writer and market analyst that focuses on the Markets, Legal and Washington sections of the Food Institute Report. In addition, he assists in compiling data for various Food Institute publications throughout the year. He invites you to contact him via email at firstname.lastname@example.org to talk about anything food-related.
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