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On the Watch: Chipotle Mexican Grill



By AP
22 July 2008 @ 01:16 pm ET

NEW YORK - Restaurant chain Chipotle Mexican Grill Inc. will report its second-quarter earnings on Wednesday and investors will be watching to see whether the slow economy and a salmonella scare have tampered with sales or profit.

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CMG 82.41 -0.31

The burrito maker has not offered any guidance for the quarter, but analysts polled by Thomson Financial expect the company to report profit of 75 cents per share on revenue of $343.9 million.

Chipotle--like many other fast-food and restaurant chains--stopped using tomatoes in June after the Food and Drug Administration said tomatoes may have been the cause of a national salmonella outbreak.

The chain began selling tomatoes again a few days later once it was able to confirm all shipments were coming from growing regions approved as safe by the FDA. The Centers for Disease Control now believe raw jalapenos may have been to blame. Chipotle said in a notice on its Web site that is has stopped selling raw jalapenos and will instead grill the peppers.

It's unclear whether the salmonella scare will have any effect on the company's profit or sales in the quarter.

Buckingham Research Group analyst Mitchell J. Speiser said in a note to investors last week that he expects profit to grow about 25 percent, with sales rising by about the same amount.

Speiser said he was mainly concerned about higher ingredient and labor costs as well as the slowdown in consumer spending that has affected virtually all companies which depend on consumers' discretionary income.

Shares dropped 27 percent during the quarter and are down 7 percent in the past 52 weeks.

Copyright 2009 The Associated Press. All rights reserved.
This material may not be published, broadcast, rewritten or redistributed.

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