Chipotle struggles to win back customers

Chipotle is acting out of character in its desperation to win back customers — a struggle that its most recent sales results indicate could be a long one.

Chipotle Mexican Grill Inc. said Thursday that its sales were down 23.6% during the second quarter as it fights to recover from a series of food scares. That follows a 30% drop at established locations in the first three months of the year, when Chipotle posted its first quarterly loss as a public company.

Profit fell to $25.6 million, or 87 cents a share for the second quarter. Wall Street expected a profit of 91 cents a share, according to FactSet. A year earlier, the company earned $140.2 million, or $4.45 a share. Total revenue declined to $998.4 million. Analysts expected $1.05 billion.

Despite Chipotle’s assurances that it has taken steps to tighten food safety procedures after the E. coli outbreak and norovirus cases starting last fall that sickened people around the country, many customers are still staying away.

To woo them back, the company has turned to more traditional advertising, expanded its famously simple menu to add chorizo and even inaugurated a summertime loyalty program. That’s a change from better days, when Chipotle said it didn’t need such incentives to get people to buy its bowls and burritos.

Morgan Stanley said last week that it believes a full sales recovery back to Chipotle’s peak volumes could take years, based on a consumer survey it conducted. The survey showed about a quarter of Chipotle customers have either stopped going or reduced how often they eat at the chain, six months after the last reported food safety incident.

Chipotle shares have declined 13% since the beginning of the year, while the Standard & Poor’s 500 index has increased almost 6%. Its shares fell about 1.5% to $411.75 in after-hours trading.

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