Lettuce heal now
Chipotle in the black, stock blue
Chipotle Mexican Grill is taking baby steps toward a recovery.
After posting its first-ever quarterly loss in April, the beleaguered burrito chain said on Thursday that it returned to profitability, making $25.6 million in the second quarter ended June 30 — due to 58 new restaurants opening.
The troubled eatery also said it slowed its sales declines from the previous quarter, reporting a 16.6 percent decline in revenues, to $998.4 million, compared with a 23 percent decline in the first quarter while comparable sales decreased by 23.6 percent, compared with a 30 percent decline in the first quarter.
“We are seeing some improvement,” Co-Chief Executive Steve Ells said during an earnings call with analysts. “We are focused on a number of initiatives to increase customer frequency.”
Chipotle’s three-week-old customer reward program, Chiptopia, snagged 3.6 million participants. While consumers are coming to the restaurants more frequently, Chipotle’s average check has declined by 3 percent as they scoop up freebies. Management said it’s exploring a more permanent rewards program once Chiptopia ends this summer.
But Chipotle also conceded that it’s not just customers who have abandoned its restaurants. Workers are leaving at a “fairly high” rate, said co-CEO Monty Moran.
“Our crew turnover is in the 130- percent-plus range and kitchen management turnover has gone up,” he said.
Shares dropped 7.1 percent after hours, to $411, on Thursday. They are off 13 percent year to date.
The company was rocked this month by a scandal involving its chief creative development officer, Mark Crumpacker, who was swept up in a drug sting in New York City for buying cocaine.
“We were surprised to learn of his personal issues and placed him on a leave of absence,” Ells said during the call.
The company named two insiders, Mark Shambura and Carolyn Anderson, to oversee Crumpacker’s marketing and development roles.