Foursquare Predicted Chipotle’s Sales Troubles 10 Days Early

Is Foursquare – and its associated service Swarm – about to change how businesses think about investing? Perhaps. In the last few days alone, after all, they’ve certainly managed to remake how the markets think about it.

It all started two weeks ago when Foursquare’s CEO posted the results of an internal study of foot traffic patterns at 1,900 Chipotle locations across the U.S. — and then compared that data to data from the same time last year. The point? To see if Foursquare could accurately predict if Chipotle’s sales would take a nosedive as a result of the various health and cleanliness complaints that broke out after various Chipotle customer were made ill with E. coli and norovirus outbreaks, which first surfaced in October 2015. Foursquare began looking at data in February, when the Centers for Disease Control and Prevention (CDC) gave it a clean bill of health.

After all the numbers were crunched, Foursquare forecast Q1 same store sales would drop by about 30 percent year-over-year.

Chipotle has announced its Q1 2016 earnings earlier this week — and guess what?
Foursquare’s guess was dead right. The chain saw a 30-percent drop in sales, marking its first-ever quarterly loss in history.
This is the second big publicly correct prediction Foursquare has made. Last September, Foursquare also correctly predicted that Apple would sell 13 million-15 million iPhones during the 6s and 6s Plus launch.
Apart from the victory lap on Medium, the public testing also acts as nice promotional material for its Place Insight product, which is where Foursquare sells this type of data.