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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Chipotle pulls out the stops to win back customers

By Candice Choi Associated Press

NEW YORK – Chipotle saw a smaller drop in sales as it tries to win back customers, but the company says it doesn’t know how long it will take to fully recover after an E. coli outbreak and norovirus cases last fall.

“There’s never been a case like this,” Chief Financial Officer Jack Hartung said Thursday during a conference call with analysts.

For the April-to-June period, the company said sales fell 24 percent at established locations, less than the 30 percent drop stores saw in the first three months of the year when Chipotle posted its first quarterly loss as a public company.

So far in July, Chipotle said, sales are improving further after the launch of its first loyalty program that rewards people for frequent visits. The program reflects a change from better days, when Chipotle said it didn’t need such giveaways to get people to buy its bowls and burritos.

The “Chiptopia” program, which runs through the summer, reflects how the company has been forced to act out of character to win back customers. Chipotle is also spending more on marketing than ever before and expanding its famously simple menu to add chorizo. In restaurants where it has been made available, Chipotle said, the topping accounts for 6 percent to 7 percent of entree orders.

For the quarter ended June 30, Chipotle’s profit sank to $25.6 million, or 87 cents per share. Wall Street expected a profit of 91 cents per share, according to FactSet. A year ago, the company earned $140.2 million, or $4.45 per share.

Total revenue, which factors in new store openings, declined to $998.4 million. Analysts expected $1.05 billion.

Morgan Stanley said last week that it believes a full sales recovery back to Chipotle’s peak volumes could take years, based on a consumer survey it conducted.