Disclosure: This writer likes Chipotle (CMG) food.

Oh, disclosure on stock ownership? No. Not a cent.

Too expensive as a starter, not a dramatic enough fall for the pros, and more than a few stung, reeling investors hoping for a quick spike to dump what they have and try to walk away with some gelt in hand until they can return at a lower price as conquerors and gods of commerce and industry.

Me, I just thought it was important to let you know the food I’ve had was satisfying and I have very much enjoyed those rare occasions consuming it. I think that counts, because it will play an important role in the future.

I do say “rare” occasions of enjoyment, however, as despite liking the food I:

a. Haven’t eaten it in at least 8 months, less due to fear of unleashing unspeakable gut horrors from a shoddily washed leaf of lettuce than my chief concern:

b. I tend to eschew an $8.00 lunch wrapped in a $15.00 “experience” (“experience” decoded: “we hope you’ll eat our priced up $8.00 lunch based on a business plan we cloned from Subway, but with Mexican style food because… um… Integrity?”).

No. But Chipotle has larger problems than my personal budget or distaste for corporatespeak.

CMG tasted its historical first quarterly net loss of $26.4 million, translating to $0.88 cents per share following a brutal year of customers laid low from various product impurities, unfazed by several stumbling yet not wholly unsuccessful attempts to salvage both reputation and sales. The stock is hovering uncertainly in the $412-$425 range.

Chipotle’s management performed a $600M stock buyback to send a message of confidence in the company’s ability to return to its previous prominence among the uncontested kings of fast food, but the public, and investors, still aren’t buying.

It feels bad to knock Chipotle. There’s no joy here, like the joy inherent in watching Peabody Energy disintegrate into a hell-bound puff of sucks-to-be-you.

I get that sense from other news outlets as well. I don’t think anyone is taking any genuine pleasure at Chipotle’s misfortune. The chain was and may yet be fairly beloved among its constituency. But if we want to talk about “feeling bad”, we need to acknowledge the 2015 Chipotle Hot Mess Scorecard:

E.coli: 53 people across nine states.

Norovirus: 374 people in Simi Valley, CA and Boston MA

Salmonella: 64 People in Minnesota

Chipotle had a loyal constituency and may yet build it back, but people appear to be finding it hard to get over the experience or the idea of having one’s family dinner or lunch break erupt into a Tarantino fight scene filmed at waist level. Particularly as this company always prided itself on its healthy practices and farm-to-table attitude, all of which went to heck when the very people who thought they could make the world a better place and still eat at a prominent restaurant chain, found themselves riding the porcelain bronco.

The initial sales strategy was to lure customers by giving away food to people who would have happily paid for it were there not a risk of turning their bowels into a shotgun. That plan ran the company somewhere around $62 million in coupons, none of which has led them back to their pre-bacterial maelstrom levels of success.

Chipotle then dialed it back and offered lower priced deals- not a bad idea, certainly in line with my attitude, but again, the present state of both sales and the stock suggests people are still squeamish.

New menu items were then offered to people who were already politely but firmly refusing free food. Adding Chorizo to the mix is fine on any random day with a restaurant full of hungry customers but right now consumer confidence appears to be solely concerned with not turning Taco Tuesday into an intestinal dice roll, even a year after the fires have been put out. Nothing hurts like a gut shot and folks don’t want to line up for that.


Or do they?

I was curious on a local level. The Chipotles (Chipotlii?) near my place of business have, in times past, been practically event dining, with people willing to kill anywhere from 15-30 minutes of their precious, precarious lunch break lined up for their food in a city where you are always a step away from an equally interesting or convenient cuisine. Price and time had combined to keep me away, but the lunch crowd I saw recently seemed to have no issues.

Indeed, walking into one of the places at 1:15pm showed customers dutifully lined up, the seating area filled to capacity and folks taking their bagged goods back to the office. There was even a homeless man rooting through the trash bin so, as a Manhattan lunch tableau, all appeared right in the world (in the sense that the eatery is doing what it’s supposed to do, not that there is a man in dire need of a meal that he will glean the leavings of others at an establishment synonymous with intestinal cramping).

Granted, this was hardly a controlled experiment, but it’s not like there are tumbleweeds bouncing amid dusty sneeze guards while the employees wait for that one hungry cowboy to saunter into their ghost town.

I believe there is a future here. Its an expensive, distant future as the company tackles their issue on multiple fronts- reputation rehabilitation, re-branding, quality control, plus all the usual boulders to push uphill in the unforgiving, capricious food service industry. But this isn’t some bullshit all-ideas/no-action company. They do have legs, and they’re walking, but they need to take it to a run. That’s a long game and I don’t know who’s going to play in the short term.

My picture of the CMP investor is a Silence of the Lambs Jaime Gumb type tilting their head down a well at the stock, waiting for it to waste away to that perfect size, which… well that’s hideously disturbing, but I think people want to see the bottom and then there’s gonna be a run (neither pun intended).

The question is, how low can you go? Do you get in now and wait for Q2? And if not Q2, when?

When would you put some confidence into consumer confidence breaking out again? Hint: it’s not gonna be Q2. It’s not gonna be any one quarter.

Chipotle’s resurgence will be a waiting game to see if the food quality process has its shit together (again, not intended), and if consumers find enough reasons to come back and stick around. I think they will.

Chipotle doesn’t have golden arches or a good jingle but it’s a brand that has its foot in the door with a battle tested product and it’s not going away. They’re still open, still serving, still a name, and at some point, people are going to shrug and get that burrito because that’s what people do, provided Montezuma feels Iike the score has been settled. When that day comes, and I don’t think you’ll see it in 2016, all the clouds that louered o’er our bowels will lift, and if Chipotle keeps standing until then, a resurgence in value will come.

For now? Save a buck. Eat at Moe’s.

–Marc Kandel

Written By:

Mark Dankel

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