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Chipotle: The Story Of A Lost Cause

Chipotle’s recovery is not going as well as expected. Those who bought the dip made the investment with the expectation that Chipotle would be able to swiftly recover from its great downfall during the E. Coli and Norovirus outbreak. The fallout was not initially handled well and customers have become dependent on freebies, promo codes and games in order to win free food, rather than simply a return of trust in the brand. Management essentially threw everything at the wall to see what stuck, yet nothing has been extraordinarily effective. Besides the lackluster recovery, further headwinds include the rising cost of avocados and potential import tariffs from Mexico. The main focus is of course bringing customers back, however the added effects of the price increases do not help margins.


Before the crisis there was an intangible brand value along with growth prospects that investors were willing to pay a premium for. The brand value is the one thing that is the hardest to quantify. Chipotle, before the illness, was the trendy and hip fast-casual restaurant that the millennial demographic was proud to indulge in. The allure of the brand has vanished along with their sales growth. The stock continues to support extremely expensive multiples, making the hope of a full recovery appear to be priced in

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