Chipotle's troubles might help Panera as both serve up reports

Mon Apr 25, 2016 6:41pm EDT
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By Noel Randewich

SAN FRANCISCO (Reuters) - Wall Street expects little from Chipotle Mexican Grill Inc's (CMG.N: Quote) first-quarter results late on Tuesday as the burrito chain struggles to recover from a string of food-borne illness outbreaks. But its loss might be rival Panera Bread Co's (PNRA.O: Quote) gain.

Shares of Chipotle have dropped 38 percent since August after norovirus and E.coli outbreaks at some of its outlets led to a plunge in sales for the company, which markets its food as healthier than rivals'.

It has been handing out free burritos to win back diners, but analysts still expect it to lose money in the quarter ended March 30 and the next two quarters.

At least some customers steering clear of Chipotle appear to have gone over to fast-casual competitor Panera Bread, which has also increased its focus on healthy ingredients.

In December, 13.4 percent of Chipotle customers also visited Panera, up from 11.6 percent in September, the month before E.coli outbreaks linked to its restaurants, according to Placed, a market analysis firm.

That might have added some extra fuel to Panera's sales in the March quarter, analysts said.

"They have a similar geography, a similar number of stores, and it's a coincidence that worked out in Panera's favor that they really started hammering the whole idea of clean food and no artificial ingredients," said Maxim Group stock analyst Stephen Anderson.

"'Clean food' at Panera stands in contrast to the ongoing troubles at Chipotle," he said.   Continued...

The logo of Chipotle Mexican Grill is seen at a restaurant in Paris, March 7, 2016.   REUTERS/Charles Platiau