Chipotle's months-long food safety crisis did more than drain the company's sales and send customers walking. It also cost the fast-casual chain its bottom line.
Chipotle will have lost three years of earnings between fiscal year 2014 and fiscal year 2017 after suffering through multiple food-related illness outbreaks since last year, according to a research note out Thursday from J.P. Morgan. Analysts said they expect the company's earnings per share in fiscal year 2017 to roughly equal what they were in fiscal year 2014, despite the sales bump from adding roughly 700 stores over that time period.
Chipotle shares plummeted after E. Coli outbreaks and later, norovirus incidents, last fall. The business took a major hit; co-CEO Steve Ells said "the fourth quarter of 2015 was the most challenging period in the company's history," in Chipotle's fourth-quarter earnings statement out in February. Chipotle has upped its marketing spending to draw customers back to stores, offering buy one, get one free deals and other giveaways.
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Chipotle warns it's about to slip into the red
But the brand's short-term prospects are still weak. Chipotle is expected to post its first-ever loss when it reports first quarter earnings in two weeks. J.P. Morgan forecasts a 15% decline in sales at stores open at least a year.
Chipotle spokesman Chris Arnold did not address a request for comment regarding J.P. Morgan's note specifically, but said the company will issue an update on its recovery when it reports first quarter earnings.
The good news? The fallout isn't expected to be long-term. J.P Morgan analysts wrote that Chipotle is "a highly meaningful brand, that with time and expense can regain customer trust."