Analysts think now is a good time to get into the burger business — except for Chipotle, which is about to get into the burger business.
The New York City investment firm Maxim Group expressed their disapproval of Chipotle Mexican Grill Inc.’s latest direction after the Denver-based restaurant chain operator unveiled plans to open a fast-casual burger joint in Ohio during the fall.
“… now is not the appropriate time for Chipotle to introduce its new concept,” Maxim Group wrote in a post for Barron’s magazine.
Chipotle is in recovery mode after a string of high-profile food safety issues caused hundreds to become sick during 2015. The company reported last week revenue for the first half of 2016 was down about $454,000 or 20 percent from the first six months of 2015.
Given the less than stellar financial news, Maxim Group thinks the fast-casual chain should focus on bringing back customers and restoring the reputation of its flagship brand before starting a new venture.
That’s not to say there isn’t room for more competitors in fast-casual burger space, Maxim Group wrote. Just not room for Chipotle.
The company shouldn’t go up against Denver-based Smashburger, Virginia-based Five Guys or other burger stops unless “management can return the core Chipotle concept back to health, which we argue is unlikely in at least the next one to two years,” Maxim Group wrote.
The financial market seemed to agree. Chiptole shares fell about 1.5 percent Friday to $423.99, after initially making modest gains following Thursday’s announcement.
Shares in Chipotle peaked Aug. 5, 2015 at $757.77, before the company’s name was paired with the unsavory words “norovirus,” “salmonella” and “E. Coli.”
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