A brand-new report from Market Force Information indicates that popular sentiment about the troubled burrito chain Chipotle Mexican Grill(CMG) - Get Report is improving. But does that mean it's time to load up on shares?
By now, everyone knows Chipotle's sob story. The company was the darling of the fast-casual restaurant space, blasting past competitors Panera Bread and Shake Shack with a winning combination of do-gooder ethics and tasty, fresh Mexican-inspired food. Its stock was perched near $750 per share at its zenith.
But then, in October 2015, a series of food-poisoning outbreaks involving a number of different Chipotle locations in a number of different states changed everything. Customers were frightened off, sales plunged by more than 20% in 2016, and Chipotle's stock lost more than half its value.
The company spent 2016 attempting to win back its once-rabid fan base. But big promotions and even a summertime loyalty scheme weren't enough to drive same-store sales high enough.
However, according to the new Market Force report, customers are beginning to change their mind about Chipotle. A consumer study that polled 11,000 people from across the U.S., ranked fast-food and fast-casual restaurants on value, quality of food, speed, friendliness, cleanliness, atmosphere, healthy options and curb appeal.
For the Mexican category, Chipotle took the top spot for the first time in two years. The company took first place in food quality, curb appeal, and cleanliness, which speaks volumes about how the company's food safety measures are now viewed. And it ranked in the top three of every category except value.
It's important to note that surveys such as this, which show more favorable consumer sentiment, does not mean that Chipotle will quickly ratchet up same-store sales and return to its glory days.
The entire restaurant industry has been plagued by a recession during the past year. And sales at even the most popular chains, including McDonald's , have slowed. But it is worth noting that Chipotle reported positive sales for December. There could indeed be an influx of returning customers.
We'll have to wait and see what Chipotle delivers in the first quarter of fiscal 2017 before prognosticating whether Chipotle's stock is headed back up. It would be highly surprising, however, if shares in the burrito brand were to reach their former highs.
Meanwhile, continue to pass on Chipotle's stock unless you're willing to stomach some risk and have plenty of antacid at hand.
As we've just explained, investors should avoid Chipotle. If you're looking for better growth opportunities, we've found a genius trader who turned $50,000 into $5 million by using his proprietary trading method. For a limited time, he's guaranteeing you $67,548 per year in profitable trades if you follow his simple step-by-step process.Click here now for details.
The author is an independent contributor who at the time of publication owned none of the stocks mentioned.