Chipotle Mexican Grill, Inc. (CMG) stock really, really doesn’t need this right now. Down 31% in the last year and over 2% year-to-date, investors received further bad news today. It seems that even teens are ditching Chipotle, according to a recent survey done by Piper Jaffray.
Why is that a big deal? Aren’t millennials just spoiled, broke, digitally obsessed fools? Maybe, but those fools are valuable!
If a brand can win a customer over as a teen, it can create a lifelong customer. And it looks like today’s long-term cash machines are drying up … not great for the future prospects for CMG stock.
Chipotle’s Loss Is Starbuck’s Gain
In a survey of 6,500 teens, CMG lost “mindshare” across both geographies and genders. That’s not to say Chipotle isn’t at least still popular with the under-20 crowd — it is.
While Chipotle remains the second-most popular destination for high-income teens, it’s only a top-five dining destination for those with average budgets.
Interestingly enough, the company with the most mindshare among both high-income and average-income teens was Starbucks Corporation (SBUX).
That makes for the second time in the past week that newly collected data have shown CMG floundering and SBUX reaping the reward. Data last week from Foursquare — an app that lets users “check in” at this place or that on social media by accessing their GPS — showed Chipotle customers leaving the store en masse and going to the likes of McDonald’s Corporation (MCD), SBUX and even Whole Foods Market, Inc. (WFM).
There was more bad news in that survey. Foursquare data showed foot traffic at Chipotle down 23% year-over-year, translating into a 30% drop same-store sales.
Bottom Line on CMG Stock
I would hate to hold CMG going into Chipotle’s first-quarter earnings report on April 26. I’m not just saying that, I really would.
I’ve heard some analysts say Chipotle’s whole health debacle will cost it two to three years of earnings, which is certainly plausible. The way SSS numbers are slumping now is staggering: Q4 SSS were down 14.6%, January SSS were down 36.4% and February SSS were down 26.1%.
I think it’ll be a while before we see those numbers turn positive, although such awful quarters will provide some easy-to-beat comps in Q4 of this year and Q1 of 2017.
At least, the comps should be easy to beat; as Donald Trump might say, Chipotle is “losing at everything.” That doesn’t inspire much confidence in CMG pulling itself together for a rally anytime soon.
Don’t expect much movement from Chipotle stock before Q1 earnings next Tuesday, and don’t expect much positive movement after earnings.
As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.
