NEW YORK (AP) – Concerns over a shortage of pork drove shares of Chipotle lower before the opening bell Wednesday.
The Mexican food chain has been facing a shortage since January when it suspended a major supplier over animal welfare concerns. The suspension may have signaled that the company is focusing more on food ingredients and standards, but it is has also resulted in a shortage of carnitas, which account for 6 to 7 percent of entree orders.
The drop in carnitas sales, coupled with bad weather, have weighed on Chipotle’s same-store sales growth, a key measure of retailer health. The Denver-based company reported 10.4 percent sales growth in the first three months of the year, falling short of Wall Street expectations for 11.7 percent growth.
Chipotle is working with suppliers to restore pork supplies to normal levels in its roughly 1,800 restaurants by the fourth quarter, which begins in October.
Janney Capital Markets analyst Mark Kalinowski remains optimistic about the company, citing its first-quarter profit results and ability to control costs. He said food and packaging costs were below expectations, along with general costs.
Shares of Chipotle Mexican Grill Inc. fell $36.52, or 5.3 percent, to $656 in premarket trading about two hours before the market open.