Chipotle’s weaker-than-expected second quarter earnings caused the fast-food chain’s stock to drop in after-hours and early morning trading on Friday (July 22), but the stock rallied and shot back up by the afternoon, suggesting that investors and analysts might see a silver lining.
According to Forbes, Chipotle’s revenue fell about 16.6 percent to $998.4 million from $1.2 billion in the second quarter of last year. Most analysts expected revenue to dip but had pegged Chipotle’s sales figures at around $1.1 billion. Chipotle had a net income of $25.6 million, or $0.87 a share, which was down from $140.2 million, or $4.45 a share, in the same quarter of last year.
Chipotle has opened 58 new restaurants since the second quarter of 2015.
Chipotle’s brand, reputation and stock have all taken a massive hit after a case of norovirus reported at one of its Boston locations sickened more than 6o customers nine months ago. The hits kept on coming for Chipotle, however, when E. coli was reported at several of the restaurant’s locations across the country.
The value of Chipotle’s stock has dropped from $747.82 per share on Oct. 12, 2015, to just under $400 per share in June.
Chipotle has been doing its best to repair its reputation and win back its customers, but it has proven to be an uphill battle for the brand.
As a way to entice customers to return, Chipotle claims it has given away more than 6 million free burritos and over 1 million sides of chips, salsa or guacamole. Chipotle has also stepped up its advertising and promotional efforts, including using mobile ads and direct mailers.
Chipotle said it believes its efforts are working, and it expects customer traffic to return and sales figures to climb in the coming months.
Chipotle bought back $116 million of its stock last quarter, according to U.S. News & World Report.
Chipotle stock had increased more than 5 percent by the end of trading on Friday.