Chipotle's sales decline is just beginning
The burrito chain has warned that its same-store sales could fall for the first time in company history this quarter because of the outbreak. The company is expecting a decline of between 8% and 11%.
But JPMorgan says this is just the beginning of a long slide for Chipotle.
Analyst John Ivankoe predicts Chipotle's same-store sales will decline for at least the next five quarters through September 2016.
In a research note, Ivankoe estimates that sales at stores open at least a year will fall 13% in the fourth quarter of this year, then decline 12%, 7%, and 4% respectively, in the first, second, and third quarters of next year.
Ivankoe also dropped the company from "Overweight" to "Neutral," saying there will be a prolonged negative impact to the brand following reports of a second outbreak of E. coli tied to its restaurants.
"The new news flow shows the impact continuing and more importantly a management team that seems to be scrambling for answers," Ivankoe writes.
So far, 53 people have been sickened in nine states as a result of the dual E. coli outbreaks, and 47 of those people have confirmed eating at Chipotle before their illnesses started.
The first and larger outbreak was limited to people who had eaten at Chipotle before November 7.
To make matters worse for Chipotle, it was recently hit with a norovirus outbreak at a restaurant in Boston that sickened more than 150 customers.
Chipotle's stock price has lost a third of its value since mid-October, when reports of the illnesses first started coming out.
The company has committed to making major changes to its food preparation and testing to improve safety going forward.
Tomatoes, cilantro, and lettuce are among the ingredients that will now being prepared in the central kitchen and shipped to restaurants in plastic bags, the Wall Street Journal reported.
Cooks will also take extra measures to kill germs, such as dipping onions in boiling water before they are chopped and adding cilantro to hot rice to get rid of microbes, according to the Associated Press.
The company told Business Insider it may start scaling back on its use of local ingredients, as well, because smaller suppliers will likely have difficulty meeting its new standards for food safety and testing.