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Chipotle earnings plummet in fiscal 2016

Net income falls 95% as the operator reeled from foodborne illness outbreaks

Chipotle Mexican Grill Inc.’s net income fell more than 76 percent in the fourth quarter, as the company reeled from the impact of a series of foodborne illness outbreaks a year ago.

Net income in the quarter ended Dec. 31 was $16 million, or 55 cents per share, falling from $67.9 million, or $2.17 per share, a year earlier.

That was modestly lower than the 57 cents per share Wall Street expected, according to analysts, sending the company’s stock down more than 3 percent in after-hours trading.

Still, it was Chipotle’s best profit performance of what was a very challenging year. For the full year, net income was $22.9 million, or 77 cents per share, down 95 percent from 2015, when it generated net income of $475.6 million, or $15.10 per share.

Same-store sales were the major culprit. For the year, same-store sales fell 20.4 percent, leading to a decline in revenue of 13.3 percent in 2016, to $3.9 billion, from $4.5 billion. The company offset the same-store sales decline with new units, adding 240 locations on the year. The Denver-based burrito chain now has 2,250 locations. 

Same-store sales improved in the fourth quarter, to a decline of 4.8 percent, including a 14.7-percent increase in December as Chipotle began lapping the worst of the post-outbreak months of 2015 and 2016. 

Chipotle said it expects sales to improve this year, increasing in the “high single digits,” and it plans to open another 195 to 210 new locations. But it didn’t provide any earnings guidance for the year.

“We are energized and focused to achieve our goals in 2017 and return to a path of long-term value creation for our shareholders,” Chipotle CEO Steve Ells said in a statement.

Contact Jonathan Maze at [email protected]

Follow him on Twitter: @jonathanmaze

TAGS: Fast Casual
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