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UPDATE 2-Chipotle's sales disappoint, shares dive 10 percent

(Updates share price, adds details)

Oct 24 (Reuters) - Chipotle Mexican Grill Inc reported a smaller-than-expected rise in sales at established restaurants, hurt by mixed reviews of its new queso side dish, and the founder said his company was slowing down store openings to get "fundamentals right."

Shares of Chipotle fell 10 percent in after-hours trade.

A management shakeup and millions of dollars in free food giveaways failed to revive business following a bruising string of food safety lapses in 2015. A Norovirus outbreak forced the brief closure of a Virginia restaurant in July, and the company has been trying to improve its menu.

In the face of those issues, Chipotle said it would open fewer stores than usual next year.

"We're going to slow down just a little bit, but this is a temporary slowdown for 12 to 18 months," founder and Chief Executive Steve Ells said in an interview. "You have to get the fundamentals right first. Looking inward and understanding where you made mistakes in the past helps you set up for change."

Sales at Chipotle restaurants open at least 13 months rose 1 percent for the third quarter ended Sept. 30. Analysts, on average, expected a rise of 1.2 percent, according to Consensus Metrix.

Chipotle's stock is down 53 percent from the start of 2015, versus the 74 percent jump for McDonald's Corp and the S&P 500's 25 percent gain.

More than 18 percent of Chipotle's float, or shares available for trade, have been sold short. With more than $1.68 billion at risk betting against the shares, it remains the No. 1 short in the restaurant sector, said Matthew Unterman, director at financial analytics firm S3 Partners.

Chipotle debuted queso nationwide in September in a bid to combat the "boredom" cited by former frequent visitors to the burrito chain.

Chipotle has a small menu compared with other chains and it cut spicy chorizo to make room for queso. The chain's simple, limited menu underpins the fast service that initially attracted customers and Wall Street, but it also carries the risk of diner burnout as the novelty wears off.

The recent Virginia Norovirus incident, along with a widely shared video showing rodents in a Dallas restaurant, sent shares down more than 10 percent.

Those were just the latest events to shake the trust of Chipotle investors and customers, who remain wary after E. coli, salmonella and Norovirus outbreaks were linked to the chain in 2015.

Chipotle said it would open slightly fewer restaurants this year than the previous forecast of 195 to 210, and that in 2018 it would open 130 to 150 stores.

Net profit rose to $19.6 million, or 69 cents per diluted share, from $7.8 million, or 27 cents per share, a year earlier while revenue rose 8.8 percent to $1.13 billion.

(Reporting by Lisa Baertlein in Los Angeles, Peter Henderson in San Francisco and Uday Sampath in Bengaluru; Editing by Arun Koyyur and Lisa Shumaker)