The report showed that the company’s shareholders have sold out approximately 10% of its stocks due to not being up to the mark. The shareholders looked rather disappointed by this Mexican food chain’s slow growth rate. Chipotle (NYSE: CMG) itself has not revealed a very hopeful future for itself by setting the prediction for year 2015. The company’s management expects only a moderate single digit small growth as it plans to increase the charges of its beef and barbecue dishes to cover the rising meat cost.
Over the past Chipotle (NYSE: CMG) has increase its prices by 6.3% yearly and though in its fourth quarter it increased its prices by 16%, the restaurant was not able to cover its full cost due to 7.5% inflation on food. This has led to about 1% drop in Chipotles (NYSE: CMG) traffic growth. Chipotle (NYSE: CMG) plans to increase its prices once again making itself less affordable for its customers. Despite these increasing prices Chipotle’s (NYSE: CMG) earning per shares (EPS) are still marginal and are unable to satisfy their shareholders.
It is also planning to increase the price for its beef dishes if the price of the meat doesn’t drop. This increase is partly because Chipotle (NYSE: CMG) doesn’t compromise when it comes to the ingredients and maintains its standards of “food with integrity”. The constant supply constraints indicate that the price of beef will further increase in year 2015 and 2016. This urges the restaurant to increase the price of its beef dishes. Though this increase in the prices did help Chipotle’s (NYSE: CMG) earning to rise by 8.5% in its third quarter, but then the restaurant was faced with a decreasing trend in its number of customers.
As Chipotle (NYSE: CMG) remains adamant when it comes to using high quality ethically sourced ingredients, its losing its position as a competitor in the market as customers are forced to pick cheaper dishes or switch to other restaurants. This trend has proved itself detrimental to the Chipotle (NYSE: CMG) as it is losing on its profits. Furthermore, the restaurant has also faced shortage in the pork supply as the suppliers fail to meet the welfare standards of the animal set up by the company.
Recent shortage of avocados came as another problem to Chipotle (NYSE: CMG), further dropping down its sales. The restaurants has also faced lower supply of carnitas due to shortage in supply of pork. This shortage can be supplemented if the restaurant agrees to use conventionally raised pigs, however, this will come at the cost of company’s ethical standards. Nonetheless, not all is lost, in fact by sticking to its ethical standards Chipotle (NYSE: CMG) has separated itself from the mainstream restaurants.
Many people still prefer to eat at Chipotles (NYSE: CMG). Furthermore, though company’s stocks dropped by 7% during the third quarter, the company reached its new high on Thursday as the shares reached a price of $680.