Chipotle Mexican Grill Inc. added spicy chorizo sausage to its menu last October, but it might prove to be only a limited-time offer.
The Denver-based burrito chain, which is preparing to possibly add queso to its menu as early as next month, is testing a menu without chorizo at restaurants in Colorado.
The company recently expanded its queso test to units in Colorado and Southern California. The Southern California test is coming without any other changes to the menu, so queso would make for a larger menu.
But in Colorado, the company is testing queso as an option on a menu without the spicy sausage.
The idea is to determine whether it would be better for the restaurants if the company kept operations from growing more complex with the addition of queso.
“In considering any chance in our restaurants, in this case the addition of queso, we want to be sure that our operations are still as smooth and efficient as they can be,” Chris Arnold, a company spokesman, said in an email. “We’ll glean what we can from this round of testing and incorporate that into what we decide to do next.”
The potential that chorizo could become an early menu-cutting casualty demonstrates the difficulties restaurants can have in judging the long-term prospects of a new item.
It also demonstrates the risk in counting on new products to lift sales.
Chipotle was careful in its chorizo test, which began in 2015, expanded to five markets in 2016 and was added nationwide in October.
“The reaction to chorizo in the cities that have had it has been overwhelmingly positive,” Steve Ells, the chain’s founder and CEO, said at the time.
But chorizo hasn’t proven to be a strong seller. It represents just 3 percent of entrée sales, making it an obvious candidate for the cutting floor if Chipotle opts to keep the menu steady.
Chipotle is looking to resurrect sales following a challenging 2016, when unit volumes fell by 23 percent in the aftermath of a series of foodborne illness outbreaks.
The company has regained some of those lost sales. Chipotle’s same-store sales increased 17.8 percent in the first quarter. But sales growth slowed in the second quarter, to 8.1 percent.
Investors are worried that sales will slow further, or fall, especially after a norovirus outbreak in Virginia reminded customers of the outbreaks. The company’s stock has fallen 18 percent year to date, and threatens to fall below $300 per share for the first time since 2012.
The stock has fallen nearly 60 percent since its 2015 peak of more than $740 per share.
Chipotle has overhauled its food safety practices and made considerable changes to its C-suite. The company let go co-CEO Monty Moran, giving Ells the lone CEO title. Chipotle also hired former Yum! Brands Inc. executive Laurie Schalow as chief communications officer, and former Arby’s executive Scott Boatwright as chief restaurant officer.
Contact Jonathan Maze at [email protected]
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