Looks like Chipotle still has a way to go to win back customers — and Wall Street.
After posting disappointing third-quarter results, the Mexican restaurant chain trimmed its outlook for comparable sales, a metric closely monitored by the Street, and scaled back its plans for new store growth.
Chipotle shares fell 15 percent Wednesday afternoon, trending toward their worst decline in more than five years. On Oct. 19, 2012, the stock fell more than 12 percent in one day.
"Despite some sales lift from queso and pricing, we view this result and outlook as disappointing, particularly for those looking for a more meaningful recovery following multiple food safety events," Credit Suisse analyst Jason West wrote in a note to clients.
The recovery for the fast-casual chain, he added, "remains elusive."
Credit Suisse lowered its price target on Chipotle shares to $275, from $320. The stock was trading around $277 on Wednesday morning. West cited the fact that the current restaurant environment is "oversupplied," presenting obstacles should Chipotle want to grow faster in the future, as management has suggested.
To be sure, the Colorado-based restaurant chain has been testing initiatives to lure customers back ever since it faced a slew of foodborne illness outbreaks in 2015. A nationwide rollout of queso in September was anticipated to boost sales. But it wasn't enough to make a strong third quarter.