Chipotle slumps on slower sales growth, pork woes

Shares of Chipotle slumped Wednesday as the restaurant company forecast slower sales growth, in part due to an exodus of pork-eaters frustrated by the chain's sourcing problems with the meat.

The fast-growing burrito chain again notched impressive results in the first quarter, reporting a 48 percent rise in earnings to $122.6 million and opening 49 new restaurants. Chipotle Mexican Grill has more than 1,800 restaurants, including 19 outside the United States.

But shares tumbled 7.3 percent to $642.20 in afternoon trade after Chipotle projected comparable restaurant sales increases in the "low-to-mid single digits" in 2015.  

That is far below the 10.4 percent gain in the first quarter and the 16.8 percent jump in 2014.

Chipotle chief financial officer Jack Hartung said the chain, popular with millennials, has a history of "this kind of surge" followed by periods of "leveling off."

But Hartung also acknowledged that business had been hit by the absence of pork in some restaurants after it suspended a supplier earlier this year.

In January, Chipotle broke off orders with the unspecified supplier because it fell short of a requirement to raise pigs with access to the outdoors or in deeply bedded pens.

Raising pigs on hard-slatted floors without bedding is "inhumane," said co-chief executive Steve Ells.

"We knew that removing this pork from our supply was the right thing to do, but our decision left us without enough pork and the resulting outages affected more than one-third of our restaurants," Ells said.

The chain had hoped patrons who enjoy Chipotle's braised-pork "carnitas" dishes would switch to other meats.

Instead, these diners "appear to be visiting less often or not at all until they know we have carnitas in their market," Hartung said.

Chipotle experimented with "rolling blackouts" during which carnitas were removed from regions for finite periods, but discovered that the move left consumers confused.

Chipotle now plans to offer carnitas continuously in markets where the meat is especially popular, company officials said.

Chipotle has also located an undisclosed new pork supplier and expects pork supplies to return to normal levels in the fourth quarter.