Chipotle Mexican Grill, Inc. (NYSE:CMG) Is Struggling Because It Became More Like the Fast Food It Was Better Than

Once a darling with high growth rates, Chipotle Mexican Grill, Inc. (NYSE:CMG) is trading just off its 52-week low of $397. The company has struggled to rebound after a number of food disease outbreaks including E. coli, salmonella and norovirus. Many reasons have been given for why traffic hasn’t returned as fast as they would like it and why the company continues to stagnate. These include people being bored with their menu or having lost trust in the brand.  The reality is a number of changes made for safety of food may be taking away from what made Chipotle distinguished from other fast food competitors.

A recent Yahoo Finance article discussed changes made to Chipotle’s steak, Chipotle is now making more preparations at off-site central kitchens to control food. These changes have resulted in Reddit threads like “What Happened to the Taste?

Chipotle has taken a number of steps to improve health safety including:
  • Precooking Steak before it arrives at restaurants then potentially overcooking at restaurants
  • Blanching bell peppers to kill germs
  • Using out of bag lettuce, instead of cutting at restaurants
  • Cutting some small suppliers to “make it easier for Chipotle to trace the origin of products” (Brand said it would still work with some small suppliers)

I often went to Chipotle because it offered a reasonably fast way to get lunch with quality fresh tasting ingredients. These changes have diminished that edge and are more consistent with the typical fast food way of preparing food before hand instead of fresh well-sourced food.

Changes for Food Safety Have Diminish Edge

The company may have suffered a temporary decline because of the food illness issues but to get back to where it was they need to make sure Chipotle is that place you get a lunch or dinner quickly with quality fresh tasting ingredients. The good news for Chipotle is these are things they can fix and not just people being bored with the menu or having lost trust in the brand. Fresh, good tasting food does not have to be unsafe. The other good news for Chipotle is there are signs that traffic is returning. They just need to make sure they are satisfied with their experience and keep returning.

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