Chipotle Mexican Grill Inc. on Tuesday reported its first quarterly loss as a public company, but said sales are on a gradual path to recovery.
Same-store sales for the March 31-ended first quarter decreased by 29.7 percent, primarily as a result of declines in transactions after the Denver-based chain suffered months of foodborne illness outbreaks at the end of 2015. The company said restaurant transactions dropped 21.1 percent.
Declines in average check, primarily from the impact of freebies and sales promotions to bring guests back, also contributed to the comparable sales slide.
Net loss was $26.4 million, or a loss of 88 cents per share, compared with net income of $122.6 million, or $3.88 per share, a year ago.
Revenues decreased 23 percent to $834.5 million, and restaurant level operating margin was 6.8 percent, compared with 27.5 percent a year ago.
“As our sales are on a gradual path to recovery, we remain focused on our mission of changing the way people think about and eat fast food,” said Steve Ells, founder, chair and co-CEO of Chipotle, in a statement. “The best approach to rebuilding our business is to proudly serve safe and delicious food in our high quality restaurants every single day, which is exactly what we will continue to do.”
Food costs went up about 1.4 percent to 35.3 percent of revenue, which the company blamed on increased food testing and waste costs, and the higher cost of pre-cut produce — though lower beef prices offered some relief.
Arguing that Chipotle has the competitive advantage of employing some of the best workers in the industry, Monty Moran, Chipotle’s co-CEO, said the chain would continue to invest in its people culture to help expedite the next stage of growth.
“Our restaurants and leadership teams have worked hard to overcome the challenges of the first quarter,” he said in a statement. “What is most important is that we continue to build teams of top performers in our restaurants and among our field leadership, which will allow us to continue to improve on our already high standards and exceptional customers experience.”
Chipotle opened 58 new restaurants during the quarter, for a total count of 2,066.
For the year, the company is expecting to open between 220 and 235 new restaurants.
Correction: April 27, 2016 An earlier version of this story misstated the day Chipotle reported first-quarter earnings. The company reported on Tuesday.
Contact Lisa Jennings at [email protected]
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