Chipotle Mexican Grill, Inc. (NYSE: CMG)
Chipotle Mexican Grill has had a rough few months to say the least. The company has dealt with incredibly bad press surrounding E. coli, sending their sales and their stock tumbling downward. However, we’ve reached a pivotal moment for the stock recently and investors aren’t sure if they should be buying or selling. Today, we’ll talk about the issues that CMG has faced, what has come of the issues, and whether or not now would be a good time to get involved in the stock. So, let’s get right to it…
CMG Has Faced A Battle With E. Coli
The problems that Chipotle has been facing started back in October of 2015. Unfortunately, during the month, several consumers started to come down with E. coli. Soon, an investigation took place, and it was found that all of the people that had become ill had eaten at Chipotle shortly before the symptoms came up. Soon enough, the amount of consumers that got sick was tallied at 50 consumers over 9 different states. Of course, the news covered the story in its entirety, leading to consumers being scared to eat at the restaurants and sales plummeting.
As worries started to fade, CMG ran into another road block. Unfortunately, more people started to become sick in November. This time however, the strain of E. coli had a completely different fingerprint than the strain in the original breakout. This time, more than 100 people found themselves sick. Luckily, this breakout was contained to one state.
What Came Of The Breakouts
As a result of the E. coli breakouts, the United States Centers for Disease Control and Prevention decided to get involved, performing their own investigation in an attempt to figure out where the issue was coming from. In January, the CDC came to its conclusion. In the month, the CDC announced that it has concluded its investigation. While they concluded that the breakouts were over, they explained that they were unable to find the root cause of the breakouts.
Is It A Good Time To Invest In CMG?
This is a very interesting question. The truth is that I don’t see Chipotle climbing in a big way any time soon. However, that doesn’t mean that it’s not a good time to invest. The truth is that when it comes to picking a time to invest, one of the best times to do so is just after a crisis. The reality is that CMG is a great company, and I have to say that I absolutely love their burritos, as many others do. Over time, I have no doubt in my mind that the company, and therefore its stock, will recovery. Here’s the dilemma…
Consumers know that several people got sick after eating at CMG. As a result, they are going to be very standoffish when it comes to eating at the restaurant. As a result, we’re likely to continue seeing a trend of relatively poor sales in the short term. However, as time passes, and consumers start to see that people aren’t getting sick anymore, they are going to be more willing to start going to the restaurants again. Sure, this is going to take quite a bit of PR and investment on the side of CMG. However, over time, I’m expecting to see a full recovery, and buying now would get you in on the gains at a very low price.
What Do You Think?
Where do you think CMG is headed moving forward and why? Let us know your opinion in the comments below!
[Image Courtesy of Wikimedia]