Two weeks ahead of Chipotle's earnings report, Foursquare predicts the chain will report its same-store sales dropped in the neighborhood of 30 percent, year-over-year for the first quarter of 2016. In a post on Medium, Foursquare CEO Jeff Glueck writes that poor earnings will largely be the result of backlash from consumers as a result of its multi-state E. coli outbreak, which began in 2015.
Foot traffic into Chipotle locations has dropped 23 percent.
Based on an analysis of foot traffic patterns at 1,900 U.S. Chipotle locations over the past ten months, Foursquare's research found that same-store foot traffic has declined by about 23 percent. That same analysis showed that once-loyal Chipotle customers were 50 percent more likely than the average diner to stop going to the fast-casual burrito chain, and 25 percent less likely to return afterwards. "We believe the 23% decline in same store foot traffic is the more meaningful number that shareholders should focus on, rather than the 30% decline in sales," writes Glueck. "It shows that Chipotle is building trust back with customers, which is more important to its success long-term."
Foursquare based its earnings projections on Chipotle's own publicly-reported weekly sales for the first ten weeks of Q1. "Taking into account reported sales, redeemed coupons and other factors, along with Foursquare foot traffic data, we estimate that Chipotle ended Q1 2016 with same store sales down roughly 30% year-over-year (which we expect to be confirmed by Chipotle when it reports earnings on April 26)," writes Glueck. It's important to note that Foursquare data does not depend upon users who check in to each location. The app (anonymously) tracks users movements and whereabouts even when it's not open.
An April 1 report from Goldman Sachs also suggests a longer road to recovery for the company. In the report, Goldman removed CMG from Americas Buy List, arguing that "increased concerns about the cadence and costs of the comp recovery now fully offset our confidence in longer-term upside." Among the firm's key concerns was a recent Norovirus incident in Boston, which the financial firm said signals that Chipotle can't control all of its risk. In a survey of 2,000 consumers, Goldman found 78.8 percent were aware of food safety issues regarding Chipotle. Consumers who were aware of the food safety incident said they were less likely to recommend the restaurant to other diners.