Editors' pick: Originally published April 27.
The fast-casual brand said Tuesday that it will move forward with the introduction of a chorizo (a combination of spicy chicken and pork) to its offerings in an effort to win back customers driven away by health scares. The item has previously been tested in select markets.
"It was very popular, it quickly because customers' most favorite protein," said Chipotle Founder and co-CEO Steve Ells on a call with analysts following the company's first quarter earnings report. Chipotle also debuted a new craft beverage pilot program in its home market of Denver in late March.
According to Jim Cramer, TheStreet's founder and manager of the Action Alerts PLUS portfolio, a spicy sausage and other new products aren't the answer to Chipotle's prayers. The good news is, customers will probably return eventually on their own.
"When you have a restaurant that gets a 'C' in the window, when you have a restaurant that is tainted short-term, people are going to think twice," he said while at the New York Stock Exchange Tuesday. "They will not think twice a year from now."
Some of Cramer's hopefulness for the burrito-maker stems from its coupon program. Earlier this year, Chipotle sent out coupons offering customers free burritos. The results, he says, are telling.
"The couponing shows you the loyalty -- 67% of people redeemed their coupon. I mean, most people would hope for 6.7%. A lot of people would hope for 0.6%. So I think the store is very much intact," he said.
Chipotle saw sales plummet in the first quarter of the year. After market close Tuesday, it reported earnings of 88 cents per share for the period, falling short of the 94 cents per share anticipated by analysts and a far cry from the $3.88 per share reported for the same period a year prior.
Revenue came in at $834.5 million, also falling short of projections of $868.5 million and well below the $1.09 billion reported a year ago.
In a statement, Chipotle co-CEO Monty Moran acknowledged the results left investors unhappy.
"Our restaurants and leadership teams have worked hard to overcome the challenges of the first quarter," he said. "What is most important is that we continue to build teams of top performers in our restaurants, and among our field leadership, which will allow us to continue to improve on our already high standards and exceptional customer experience. We have some of the best employees in the industry, which continues to serve as a competitive advantage, and we will continue to invest in our people culture to help expedite the next stage of growth for Chipotle."
Chipotle shares were down 5.71% to $420.45 in mid-day trading Wednesday.