By Nick Turner and Leslie Patton, Bloomberg News
Chipotle Mexican Grill Inc. warned investors that it’s spending more on marketing and promotions as it tries to bounce back from a food-safety crisis.
The burrito chain expects the expenses to rise by as much as 0.3 percentage point from the previous three months, according to a filing on Monday. The Denver-based company doesn’t anticipate that food costs will change, accounting for about 34 percent of sales.
The outlook sent Chipotle shares down as much as 3 percent to $445 in extended trading. They had been up 22 percent this year through Monday’s close, lifted by optimism that the company can execute a comeback.
Chipotle has had to work harder to get customers in the door since a string of foodborne illnesses were linked to its restaurants in 2015. Its efforts have included offering free food in addition to the broader advertising campaign. It’s also made adjustments to its menu, such as selling dessert.
Same-store sales began to recover in the most recently reported quarter after declining for five straight periods, raising hope that a turnaround is underway. But it suffered another setback this spring, when a malware attack struck its point-of-sale technology. The company said last month that it had successfully removed the malicious code from its systems.
For the full year, Chipotle reiterated a forecast for same-store sales in the high single digits. It expects to open as many as 210 new restaurants.
To contact the reporters on this story: Nick Turner in New York at nturner7@bloomberg.net, Leslie Patton in Chicago at lpatton5@bloomberg.net.
To contact the editors responsible for this story: Nick Turner at nturner7@bloomberg.net, Jonathan Roeder
