Chipotle is finally getting some good news: The Centres for Disease Control has declared the end of the dual E. coli outbreaks tied to its restaurants.
The outbreaks have sickened 55 people in 11 states, and sent the company’s sales plunging since October.
“These two outbreaks appear to be over,” the CDC said Monday.
Chipotle reports fourth quarter earnings after market close on Monday. The company has said same-store sales declined by 30% in December.
Even though the outbreaks appear to be over, the sales declines will continue for at least another year.
Credit Suisse analysts looked at five major food safety scares at McDonald’s China, Taco Bell, Jack in the Box, and Yum! Brands, and how they impacted sales at those brands.
In each of those cases, same-store sales remained depressed for four quarters, then turned positive when the “event quarter” — or the time period where the food safety scare was first reported — was lapped, analysts wrote.
This chart shows the same-store sales trends following the food safety scares that were studied:
The analysis suggests that Chipotle’s same-store sales will likely remain negative through the third quarter of 2016, “barring a heroic promotional/marketing effort to win back customers in the coming months,” the analysts write.
Credit Suisse is predicting an overall comp sales decline of 7.4% for 2016.
In most cases the brands made a full recovery in the years following the food safety scares. However, there’s a key issue in Chipotle’s outbreak that didn’t exist for any of the other chains.
“One key concern/difference in the [Chipotle] situation is that the source of the E coli outbreak(s) has yet to be found,” the analysts write. ” This likely makes the recovery process more difficult for [Chipotle]. In all of the five historical cases just mentioned, the cause of the food safety issue was determined relatively quickly.”
The historical cases that the analysts studied included a 1993 E. coli outbreak at Jack in the Box related to undercooked beef, a 2006 E. coli outbreak at Taco Bell related to shredded lettuce, improper use of antibiotics by two chicken suppliers for YUM China in 2012, and unsafe food handling practices at a China supplier that affect Yum China and McDonald’s China in 2014.
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