Apparently, Chipotle Mexican Grill, Inc. (NYSE:CMG) has bad queso, and that is weighing on CMG stock.
CMG’s highly anticipated new queso offering has fallen through. As angry customers often do, Chipotle customers have taken to Twitter Inc (NSYE:TWTR) to voice their negative opinion on the new item. In a broad sweep, the sentiment on the new queso ranges from concerned to disgusted.
That has CMG stock down pretty big over the past several days. Last week, this was a $315 stock. Now, CMG trades under $300.
Is this an overreaction to a bunch of Twitter trolls? Or is it a justified sell-off in an overvalued company which took yet another misstep?
I’m almost certain it’s the latter.
Here’s why.
Chipotle’s Queso is THAT Bad
The scan of Twitter feeds is not pretty.
At all.
You would be hard pressed to find a single positive review of Chipotle’s new queso on Twitter. One user posted that the queso tastes like “gross powdered crap.” That tweet got 36 likes and 5 re-tweets. It’s worth noting that both of those figures are really high for that user.
Teen Vogue tweeted that the new queso “tastes like a mixture of pimento cheese and cardboard.” That tweet received more than 60 likes and more than 10 re-tweets.
Meanwhile, professional hockey player Zach Boychuk said the queso was worse than an exploding phone. The people liked that one. It received more than 1,100 likes and 100 re-tweets.
But even that popular tweet doesn’t fully explain how negative the Twitter sentiment is for Chipotle’s new queso.
One user claimed the new queso was a “bit bland.” That tweet received a whopping 428 likes. Another user called it “inedible.” That tweet received nearly 50 likes. On Twitter, Chiptole’s new queso has been called a “major disappointment” (~40 likes), “garbage” (~70 likes), “absolute trash” (~90 likes), the “disappointment of the year” (~120 likes), and “disgusting” (~550 likes).
Another user claims that anyone saying Chipotle’s queso is good is just straight up lying.
Beyond just calling Chipotle’s queso bad, many users went ahead and said that competitors have much better queso offerings. One user called Jack in the Box Inc. (NYSE:JACK) owned Qdoba’s queso “stronger.” That tweet got 136 likes and 13 re-tweets.
This was a common theme on Twitter. Both Qdoba and Moe’s Southwest Grill were called out as having much better queso than Chipotle.
Well, Chipotle has also taken to Twitter to defend its queso. From a verified account, Chipotle has said its queso uses “real cheese” and that it is made with “only real, unprocessed ingredients.”
Long story short, Chipotle went all healthy with its queso, and compromised big-time on taste.
Maybe the “healthy queso” play is the right one to make. After all, consumers are exceedingly concerned about eating healthy. But when it comes to a high-calorie, high-fat add-on like cheese dip, consumers don’t really care all that much about being healthy. If you’re getting queso, after all, you are probably okay with taking in the extra calories.
So Chipotle just messed up here. The big hit is that they took the much more popular chorizo off the menu to make room for the cardboard tasting queso. So not only did Chipotle misfire with a new offering, but their menu overall resides less well with customers now than it did a few weeks ago.
Bottom Line on CMG Stock
This will undoubtedly cause even more customer churn for this already beleaguered brand. Whether it’s E. coli outbreak hangover, concerns about food safety and lax employee sick policies, or just bad queso, customers have multiple reasons not to go to a Chipotle.
And that is what they are doing.
Roughly 3 years ago, everyone I knew was going to Chipotle. Now, everyone is going to get poke or super-food bowls.
CMG stock is not priced for this reality. At 27.5-times next year’s consensus earnings estimate, CMG stock still has a lot of room to fall.
As of this writing, Luke Lango did not hold a positive in any of the aforementioned securities.
