CHIPOTLE MEXICAN GRILL $703.89 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.0 million; Market cap: $21.8 billion; No dividends paid) halted sales of pork items at one-third of its nearly 1,800 U.S. restaurants in mid-January 2015. That’s because it learned that a key supplier had failed to meet Chipotle’s humane pig-housing standards.
The company uses pork in around 7% of the burritos, tacos, bowls and salads it sells.
Chipotle believes most customers will simply substitute pork with other meats on the menu, but some may go elsewhere.
As a result, the company has reduced its comparable-restaurant sales growth estimate for the quarter ended March 31, 2015, to between 10% and 10.3% from its prior forecast of 11%. It has also lowered its forecast earnings per share to $3.84 to $3.87 from its prior estimate of $3.93.
Still, the decision to not compromise its standards should serve Chipotle well in the longer term, as it reinforces its reputation for natural food—and gives it free publicity.
Chipotle is still a hold.
