They are moving to more centralized food preparation for certain ingredients. Ahhhh, fresh food from a central kitchen. So now they have to distribute pre-processed ingredients to their location so they can test and control the supply issues. As they get bigger they are finding that their underlying business story gets more difficult to scale up. This will increase their costs somewhat, eat into the margins a bit, and that could be something to watch out for.
Well, it was at this level last year, so long term holders lost their year or so of gain gain but may still be ahead. Those that bought recently, well they are crying. And those that bought during this e-coli issue during softness on CMG stock price - they got on the bucking bronco. Perhaps it will pay off, but they knew the risk.
For an investor, the issue is how long and the other opportunities in the mean time. I am sure that there are a number of people who bought in at 530-550 thinking this would go away quickly. Now these bottom feeding investors are getting burned. So who is going to prop the stock price up in the near term? How long is the return to growth? How many customers did they really lose over the long term? What other food companies will push to take advantage of the weakness with CMG?
Most likely not a complete scam. They serve way to much food to never have an issue. Much like a great doctor, every so often there will be an outcome that is not desired. My guess is that post January, it will start to come back in anticipation of earnings.
Real question is if they have a bad quarter coming, will they do anything take advantage of that. You know, if the news is bad, then lets use this as an opportunity to clean the books. Hard to do in the food business (unlike manufacturing where one can delay moving a crate out of the shipping area so it books the next quarter.
CMG is done for the near term. It will be volatile, but I would be very surprised if we see 600's in the couple of months. I think that share price of below 500 is more likely than over 600 in the near term, and if there is any more bad news this month than it will take quite a while for traders to flood back in (much like it will take a while for burrito eaters flooding back in.)
DB is only the first to slash their target. This is going to be death by a thousand cuts (well, at least a few cuts by analysts.)
Well, if this carves into revenue, and it will, then this is entirely rational. Costco and Starbucks revenues are not based on their prepared foods.
It seems like CMG is racing to get control over there supply issues. But the acts they have taken, while potentially valid as a way of improving the health issues, will proceed to limit the number of suppliers thus handing pricing of their commodities into a smaller group. This will put pressure on profits not to mention the loss of the "buy local" marketing benefit. In additional, it confirms that the health issues were real. I have met people who will not eat there now.
So while the market may drive the share price up because it is a "buy" as compared to the recent past, I cannot see how that will continue. I will continue to sit on the sidelines.