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Can These New Ads Save Chipotle?

Thursday, September 22, 2016 3:49
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(Before It's News)

From Zacks Research: On Wednesday, burrito restaurant chain Chipotle Mexican Grill, Inc. (NYSE:CMG) debuted a new ad campaign targeting those customers who are still weary over the company’s tacos, burritos, and other once-popular food options.

Chipotle founder and Co-CEO Steve Ells filmed a video ad, and admitted that the company “failed to live up to our own food safety standards, and in so doing, we let our customers down.”

Chipotle also outlined eight key food safety advancements: supplier interventions, advanced technology, farmer support and training, enhanced restaurant procedures, food safety certification, restaurant inspections, ingredient traceability, and advisory council.

Related: See what ETFs own the most CMG

Additionally, Ells signed a full-page ad in the New York Times, as well as digital ads and other print ads where he outlined many advancements that the company has made, including increased restaurant inspections, the employment of additional safety checks, and an electronic tracking system for better ingredient monitoring.

This is the latest move by Chipotle to try and woo its customers back into its restaurants, and to win back the trust it lost after the mishandled and prolonged E. Coli crisis it recently faced. Even though many customers still ate at Chipotle during the breakout, just as many diners, if not more, decided to eat at other fast-casual chains. Restaurant locations primarily in the Northeastern and Western states were affected by the bacteria.

Lately, the company has rolled out many promotions, including its Chiptopia Summer Rewards program, a free kids’ meals deal, a promotion aimed at nurses and teachers, and lots of free burritos. But these promotions have yet to take effect. According to Forbes, “Wall Street analysts expect Chipotle to report a 9% drop in revenue for the third quarter, though encouragingly, a rebound is expected in the final three months of the year.”

CMG stock is sharply down from its high of $750 per share in August 2015; it’s currently trading for around $400 per share. Sales also took a hit, and are down 20% in the first six months of 2016.

Currently, CMG is a #4 (Sell) on the Zacks Rank and is down 16.55% year-to-date.

This article is brought to you courtesy of Zacks Research.

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