We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Chipotle Banking on Strategic Initiatives to Improve Sales
Read MoreHide Full Article
On Dec 5, we issued an updated research report on quick-casual and fresh Mexican food restaurant chains operator, Chipotle Mexican Grill, Inc. (CMG - Free Report) .
Chipotle has underperformed the Zacks categorized Retail–Food & Restaurants industry year to date with an average negative return of 17.4% compared with a decline of 0.2% witnessed by the latter.
We note that Chipotle has been reeling under negative publicity related to the E. coli and norovirus outbreak since the end of 2015. As a safety measure, the fast casual chain was forced to close several outlets. Although these were reopened later with fresh ingredients and extensive cleaning and sanitizing activities, the incidents dealt a severe blow to Chipotle’s sales. In fact, the company’s earnings and revenues have been under tremendous pressure since then.
Nonetheless, Chipotle’s recovery plan to restore its economic model and customers trust to build sales, along with efforts to enhance guest experience augur well. Improvement in food handling, testing and food preparation procedures is the company’s top priority. To achieve this, Chipotle has significantly expanded training, food safety inspections and third-party as well as internal audits at its restaurants.
Moreover, various sales-building initiatives undertaken by the company like menu innovation, better operations including faster throughput and more aggressive brand marketing, including television should aid in bringing back customers.
Also, the company is moving aggressively to make digital ordering more appealing to its customers and more efficient for its restaurants, in order to drive digital sales.
We believe that these new brand-management efforts along with sales-building initiatives would help it counter the challenges posed by the E. coli and norovirus outbreak.
However, high labor costs along with elevated marketing and promo expenses are expected to hurt margins while a soft consumer spending environment in the U.S. restaurant space might limit revenue growth.
The Zacks Consensus Estimate for Papa John’s 2016 earnings moved up 2.4% over the last 60 days. Meanwhile, for the full year, EPS is expected to improve 19.9%.
The Zacks Consensus Estimate for McDonald's 2016 earnings climbed 2.3% over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 6.16%.
Wendy’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 28.38%. Further, for 2016, EPS is expected to grow 23.6%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Chipotle Banking on Strategic Initiatives to Improve Sales
On Dec 5, we issued an updated research report on quick-casual and fresh Mexican food restaurant chains operator, Chipotle Mexican Grill, Inc. (CMG - Free Report) .
Chipotle has underperformed the Zacks categorized Retail–Food & Restaurants industry year to date with an average negative return of 17.4% compared with a decline of 0.2% witnessed by the latter.
We note that Chipotle has been reeling under negative publicity related to the E. coli and norovirus outbreak since the end of 2015. As a safety measure, the fast casual chain was forced to close several outlets. Although these were reopened later with fresh ingredients and extensive cleaning and sanitizing activities, the incidents dealt a severe blow to Chipotle’s sales. In fact, the company’s earnings and revenues have been under tremendous pressure since then.
Nonetheless, Chipotle’s recovery plan to restore its economic model and customers trust to build sales, along with efforts to enhance guest experience augur well. Improvement in food handling, testing and food preparation procedures is the company’s top priority. To achieve this, Chipotle has significantly expanded training, food safety inspections and third-party as well as internal audits at its restaurants.
Moreover, various sales-building initiatives undertaken by the company like menu innovation, better operations including faster throughput and more aggressive brand marketing, including television should aid in bringing back customers.
Also, the company is moving aggressively to make digital ordering more appealing to its customers and more efficient for its restaurants, in order to drive digital sales.
We believe that these new brand-management efforts along with sales-building initiatives would help it counter the challenges posed by the E. coli and norovirus outbreak.
However, high labor costs along with elevated marketing and promo expenses are expected to hurt margins while a soft consumer spending environment in the U.S. restaurant space might limit revenue growth.
Zacks Rank & Stocks to Consider
Chipotle currently has a Zacks Rank #3 (Hold). Better-ranked stocks in this sector include Papa John's International Inc. (PZZA - Free Report) , McDonald's Corp. (MCD - Free Report) and The Wendy's Company (WEN - Free Report) . All these stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Papa John’s 2016 earnings moved up 2.4% over the last 60 days. Meanwhile, for the full year, EPS is expected to improve 19.9%.
The Zacks Consensus Estimate for McDonald's 2016 earnings climbed 2.3% over the last 60 days. The company’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 6.16%.
Wendy’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, with an average beat of 28.38%. Further, for 2016, EPS is expected to grow 23.6%.
Zacks' Top Investment Ideas for Long-Term Profit
How would you like to see our best recommendations to help you find today’s most promising long-term stocks? Starting now, you can look inside our portfolios featuring stocks under $10, income stocks, value investments and more. These picks, which have double and triple-digit profit potential, are rarely available to the public. But you can see them now. Click here >>