Chipotle Could Be In Bigger Trouble Than You Think

January 4th 2016

Alex Mierjeski

Chipotle Mexican Grill has so far dealt with multiple outbreaks of E. coli, a norovirus strain, and a public relations nightmare that could permanently tarnish the popular fast-casual restaurant's reputation.

As a result, the company's stock value has dropped by a third since reports of the bacteria began surfacing in October.

But some indications say the outbreaks could have a more drastic effect.

Chipotle Stock since October

Related: Chipotle is Desperately Trying to Fix its Cooking Methods

The company said that its same-store sales, which are measured in stores that have been open for at least a year, could drop by between 8 and 10 percent this quarter — a first in the chain's history, according to Business Insider. But independent analysts also worry about the long-term impact of the string of outbreaks. Earlier in December, JPMorgan analyst John Ivankoe downgraded the store, explaining that reports of contaminated food were more than just bad PR.

"At this point, even rational and informed consumers could potentially be given reason to pause when choosing Chipotle over the plethora of fast-casual competition in the marketplace," he wrote.

Chipotle Burrito Bowl

Ivankoe also estimates that the store's predicted same-store sales drops are the beginning of a trend, not necessarily a fluke occurrence. The analyst predicted that this quarter's sales would be down 13 percent from last year and continue to decline 12 percent, 7 percent, and 4 percent in next year's first three quarters, respectively, according to Business Insider.

Related: Chipotle Was Just Hit With Another Outbreak

The estimations come after the store was hit with a separate, rare form of E. coli found in stores in three states — an unfortunate addition to an earlier multi-state E. coli outbreak and a norovirus strain that sickened more than 150 college students in Boston. Following the outbreaks, Chipotle announced that it would restructure many of its methods of food preparation to better protect against food-borne illness.

"Since this issue began, we have completed a comprehensive reassessment of our food-safety programs with an eye to finding best practices for each of the ingredients we use," Chipotle spokesman Chris Arnold told Business Insider. "We are confident that we can achieve a level of food safety risk that is near zero."

Also: How Many Sick People Are Handling Your Food?