Chipotle to Permanently Close Up to 65 Stores, Company’s Stock Shares Drop by 9%

The fast casual chain, Chipotle’s road to recovery is certainly has been a long one. 

Just when you think the chain is making the right moves, like hiring Taco Bell’s former marketing mastermind Brian Niccol as the CEO, the chain’s stock shares drop.

On Thursday, the fast casual shares dropped about 9 percent to $416.89 a share after investors didn’t seem confident in the company’s Wednesday announcement about how the chain plans to win back customers. 

At the beginning of 2015, the chain that used to boost the tagline “Food with Integrity,” was knocked off of its pedestal after a series of food safety problems at multiple Chipotle locations. 

Although the brand tried to contain the PR nightmare, a media frenzy ensued. 

Since then, Chipotle has desperately tried multiple recovery tactics like BOGO promos, free burritos, and wildly expensive ad campaigns. 

In the announcement on Wednesday, Chipotle said that it would be spending $135 million to fund a new ad campaign, loyalty program, and to enhance mobile and online ordering. 

Extending delivery at 2,000 stores via the Chipotle app is also on the agenda, along with potentially introducing a Happy Hour on off-peak hours with promotions like $2 tacos and on its alcoholic offerings. 

Niccol said that he could "easily see a future where Chipotle more than doubles revenue to over $10 billion,” but gave limited details on how the brand will do so. 

"We are watching sales and transactions every day and we look at it by region and by day part. And what we continue to see is good performance in all the dayparts," said Niccol. 

Although Niccol seems to have big plans and a positive outlook for Chipotle, the chain did also report some unsavory news. 

Chipotle will be closing anywhere from 55 to 65 underperforming stores permanently, which is about 3 percent of Chipotle stores. Five of the seven Pizzeria Locales, the fast casual pizza chain in Chipotle’s portfolio, will be closing as well. 

Chipotle storefront

Several analysts and investors made it clear that they were disappointed in the brand’s approach and with the lack of detail outlined in the call.

"The call was lighter on detail than we would have liked so we expect weakness in the stock today," said Peter Saleh, an analyst at BTIG, according to “CNBC.”

Another analyst David Tarantino of Baird expressed similar sentiments and said that the call “focused mainly on high-level strategies and did not contain many details related to near- or long-term financial targets.” 

Read more about Chipotle’s latest announcement at “Thrillist” now.