E. coli (and Salmonella and Norovirus) aftermath: Chipotle sales and revenue plummet in the second quarter

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Chipotle Mexican Grill reported a steep drop in second-quarter earnings Thursday and missed analysts’ estimates as the fast-casual restaurant struggles to regain its footing after a series of food safety scares, and the recent arrest of one of its executives for drug possession.

chipotle.earning.jul.16The restaurant chain’s profit plunged to $25.6 million in the quarter ended June 30, down 81% from $140.2 million from the same period a year ago. Revenue dropped to $998.4 million, off 16.6% from $1.2 billion compared to 2015. Analysts had expected sales of $1.05 billion, according to S&P Global Market Intelligence.

Earnings per share plummeted to 87 cents versus $4.45 per share in the second quarter of last year. That was also below earnings per share estimates of 90 cents.

Sales at stores open at least a year, a key metric for the industry, fell 23.6%. That was a slightly milder drop than than the nearly 30% fall Chipotle reported in the first quarter.

It’s been a slow climb back to normalcy for the Mexican restaurant, which has been aggressively trying to court favor with its formerly loyal fans.

“Our entire company is focused on restoring customer trust and reestablishing customer frequency,” said co-CEO Steve Ellis in a statement.

The company has employed an expansive comeback strategy, including using coupons, promotional discounts and even a short animated film about the perils of big food operations to get customers back buying burritos again. It implemented new food safety standards and shook up its long-unchanged menu with a new item: chorizo, a spicy chicken and pork sausage available in select locations.

Chipotle has moved away from testing some ingredients in central kitchens for pathogens because doing so resulted in lower quality, co-Chief Executive Steve Ells said on Thursday.

south.park.dead.celebrities.chipotle“Cutting bell peppers for testing in a central kitchen degraded the peppers,” Mr. Ells said, adding that the company has reversed testing for bell peppers, lettuce and other ingredients because its new food-safety czar James Marsden has developed other interventions to sanitize ingredients. The bell peppers are now blanched in the restaurants, a process Mr. Ells said kills pathogens.

Bell peppers and lettuce are now being chopped again in the restaurants and food quality complaints have decreased, co-Chief Executive Monty Moran said.