Despite strong fourth-quarter earnings, Chipotle Mexican Grill recently announced a weak-sales growth forecast for the upcoming year. This news has disappointed investors, who are beginning to see an end to the company’s historic growth over the past few years.
Chipotle focuses on purchasing ingredients from organic and local producers that avoid the use of antibiotics, added hormones, or chemical pesticides. This business strategy has appealed to the young consumer of today’s age, but can come with increased costs. The company fears that they will be unable to maintain the same growth this year due to price increases that were instituted over this past year.
Chipotle also recently suspended pork sales at a third of its restaurants after finding out that one of its suppliers wasn't complying with its animal-welfare standards. Although this move has increased positive public perception of the company, Chipotle has announced that it will absorb the $2 million dollar cost of removing the pork from menus.
Chipotle CFO John Hartung has mentioned the idea of raising prices on beef products to recover some cost increases, but he wants to avoid across-the-board price increases. This is good news for regular Chipotle customers, but a little tough for investors to swallow.
Chipotle is continuing to expand, opening up 192 restaurants during 2014 and expecting another 190-204 openings in 2015. Despite the concern over cooled growth, analysts are still predicting strong revenue and profit numbers for 2015.