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Chipotle’s Profits Plummeted by 95 Percent in 2016

It was a painful year for the burrito chain

Chipotle To Close Restaurants For Few Hours For Food Safety Meeting Andrew Renneisen/Getty Images

Yesterday, Chipotle revealed its financial results for the last quarter of 2016, painting investors an overall picture of a grim year for the chain that suffered through multiple E. coli and Norovirus outbreaks starting in fall 2015. Compared to the previous year, 2016 sales figures for the battered and bruised burrito chain were staggeringly weak: Profits plummeted 95 percent, from nearly $476 million in 2015 to just $23 million.

Of course, those setbacks didn’t prevent the company — which was once a favorite among consumers — from expanding: In 2016 it opened 240 new locations. (That’s despite the fact that experts have said Chipotle’s rapid growth was at least partially to blame for its food safety woes.)

CEO Steve Ells said in a statement yesterday the company is “energized and focused to achieve our goals in 2017 and return to a path of long-term value creation for our shareholders,” and based on its fourth quarter sales, it seems things are looking up slightly. Same-store sales were up nearly 15 percent in December compared to the previous year, when it was in the throes of its food safety debacle.

But food safety issues aside, Chipotle could be facing some major new challenges in the year ahead. If the Trump administration implements a 20 percent tax on Mexican imports, the chain will be paying significantly more for much of its produce: It gets as many as 90 percent of its avocados from Mexico, according to Nomura-Instinet analyst Mark Kalinowski, along with all of its limes, most of its jalapeños, and smaller amounts of other items such as tomatoes and cilantro. Ells didn’t comment on what is, for now at least, a hypothetical situation — but if the import tax goes into effect, “guac is extra” could take on a whole new meaning.

In the meantime, Chipotle’s hoping to bolster its recovery with an increased focus on customer service, ramped-up advertising campaigns, and new menu items, such as a dessert that it has yet to fully spill the beans on.

You’ll Pay More for These Foods if Trump Taxes Mexican Imports [E]
Say Goodbye to Free Chipotle Burritos in 2017 [E]
More Chipotle Coverage [E]

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