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The worst may be over for Chipotle (NYSE: CMG).While its numbers are well below where the chain stood before its food-safety scandal, the Mexican eatery showed tentative signs that customers are returning when it reported Q4 results. That was enough to send shares more or less higher throughout the remainder of the month.
After opening in January at $379.11, shares closed the month at $421.44, an 11% increase, according to data from S&P Global Market Intelligence.
Image source: YCharts.com.
Chipotle sales have been in free fall since the company was hit with multiple instances of its food being tainted with E. coli more than a year ago. In Q4, the company began to show some signs that it started putting the food safety issues in the rearview mirror.
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For the period, revenue increased 3.7%, to $1 billion year over year, and while comparable sales dropped 4.8% for the quarter, they were up 14.7% in December versus the same month a year ago. That last number is especially heartening when you consider that comparable-restaurant sales for the full year decreased by 20.4%.
CEO Steve Ells said in the Q4 earnings release:
We are energized and focused to achieve our goals in 2017, and to return to a path of long-term value creation for our shareholders. Returning to our roots of what originally made Chipotle great has helped refocus all of our strategies toward the guest experience. In the upcoming year, we intend to continue to simplify and improve our restaurant operations, utilize creative marketing to rebuild our brand, and further the roll-out of our digital sales efforts.
Chipotle has seen some of its customer base come back. Image source: Chipotle.
Chipotle may have put the worst behind it, but the company still has a way to go before it reaches its former heights. These numbers, however, are so encouraging that, given enough time, the company should make it back.
Going forward in 2017, the chain has relatively easy comps, and that should continue its momentum. This scandal lasted longer than many would have expected, and Chipotle certainly paid a price. Now, however, it appears that customers are starting to remember why they liked the chain in the first place. That should help its comeback continue.
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