Headline of the week: Chipotle’s decision to open a burger joint is ridiculously stupid

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Chipotle has fooled so many people for so long it can say and do almost anything.

But when investors sour, shit gets real.

chipotleBrian Sozzi  of The Street wonders what Chipotle is thinking.

The bruised and battered better burrito joint confirmed Thursday that the first Tasty Made burger restaurant will open this fall in Lancaster, Ohio. Chipotle said the Tasty Made menu will be limited to burger, fries and milkshakes.

Here is why Chipotle’s decision to try and play the role of a bootleg Shake Shack is ill-conceived.

The core Chipotle brand is far from fixed.

Chipotle’s well-paid management team should be 1,000% focused on returning its namesake brand to full health in the wake of several high-profile food safety incidents last year. Judging by Chipotle’s second quarter results, efforts to restore large amounts of goodwill among consumers via free food giveaways, intensified marketing and a new rewards program are not working to a sizable degree.

The company’s second quarter earnings nosedived 80% from the prior year to 87 cents a share. Wall Street estimated earnings of 93 cents a share. Revenue fell 16.6% to $998.4 million, missing Wall Street’s $1.05 billion estimate. Same-store sales plunged 23.6% in the quarter, and are down about 21% so far in July.

Hadley Malcolm of USA Today writes the company’s first burger joint, Tasty Made, is set to open in the fall in Lancaster, Ohio. With it, Chipotle will draw on the game plan it’s banked on for years: a simple menu featuring fresh ingredients. The only items diners can order will be hamburgers, french fries and milkshakes. Burgers will be made from fresh, not frozen beef; the buns will be preservative-free.

Adam Chandler of The Atlantic writes that last week, analysts at the financial-services firm Stifel downgraded its recommendation on Chipotle to “sell” and warned that the company could lose half of its value in the coming months.

“Chipotle was really vulnerable because of their heavy reliance on their claims about their food,” Chris Malone, the co-author of The Human Brand, a book on consumers’ connections to companies, told Business Insider last week. The steady refrain of purity and the constant trill of its motto, “Food With Integrity,” left little room for a contaminated supply chain.