Goldman passes on Chipotle's stock after diners call chain's new queso 'gritty' on social media

Key Points
  • Goldman Sachs analyst Karen Holthouse wrote that Chipotle's recent queso launch has been met with largely negative reactions on social media.
  • "Specific feedback provided during the test phase (e.g. "gritty", "bad", "disappointed") continue to show up during the rollout," wrote Holthouse.
  • The negative reaction bodes poorly for quarterly results, suggesting weaker same-store sales.
Chipotle Queso
Source: Chipotle Mexican Grill.

Customers are describing Chipotle Mexican Grill's new queso as "gritty" and "disappointing" across social media.

That kind of negative response could translate into weaker same-store sales for the quarter, according to research from Goldman Sachs.

Chipotle officially launched its queso nationwide last Tuesday after weeks of hype across social media. But following the nationwide release, customers were less than impressed and took to Twitter to vent.

"A very negative reaction to the queso launch suggests Chipotle Mexican Grill launched a product that is not meeting consumer expectations, and, as a result, missed a potentially significant opportunity to add queso as an incremental add-on," wrote Goldman Sachs analyst Karen Holthouse.

"The consumer reaction on Twitter suggests few customers will become repeat users, and it could also limit any initial traffic bump around trial," she added.

The analyst is keeping her neutral rating on Chipotle, which fell nearly 4 percent Monday after publication of the Goldman report.

Holthouse's 12-month price target for Chipotle is $360.

The research pinned its conclusions on the sharp drop in Twitter "buzz" following the launch. Twitter volumes declined 68 percent after the national rollout compared with levels immediately recorded after reports that the product was in test.

"Consumer reactions following actual trial of the product have been largely negative and mirrored sentiment expressed during the testing phase," wrote Holthouse. "Specific feedback provided during the test phase (e.g. "gritty", "bad", "disappointed") continue to show up during the rollout."

Shares of Chipotle are down 33 percent in the last three months after reports surfaced that customers were sickened by a norovirus at a location in Sterling, Virginia, earlier in the summer, rekindling worries about food quality that have long plagued the restaurant chain.

Chipotle has been experimenting with several new menu items to attract new and lapsed customers back into its stores. The company did not respond to CNBC's request for comment on the Goldman report.

WATCH: Chipotle hopes to win back customers with new items, like queso

Chipotle hopes that queso will win back customers scared away by norovirus and rodents