Chipotle has two years of bad sales growth

For over two years, Chipotle has the worst quarterly sales growth of 12%.  Chipotle used to have an outstanding speed when comes to sales growth, but now for four consecutive quarters, its sales growth has been plunging.

Even though the restaurant earnings are envied by most companies, investors were not satisfied at all.  Chipotle stocks went down 6% in after-hours trading once earnings were announced, according to CNN Money.

Chipotle CEO and co-founder, Steve Ells, tried to be cheerful about the fast-casual chain's progress.

"I am confident that we have the right food culture and people culture in place for us to continue our momentum," Ells said in a statement. 

The restaurant's slow progress is an indication of its already big range of operation.  At the start of 2012, Chipotle had over 1,200 restaurants.  By the end of this year, analysts project Chipotle will have nearly 2,000 restaurants.

 The fundamental metric for the restaurant industry pertaining to same store sales growth is now very low for Chipotle.  It declined to 2.6% in Q3.  The previous year, its same-store growth was 19.8%, according to the report of CNN Money.

At present, the stock seems expensive.  A common measure of how expensive a stock is - the price-to-earnings ratio - is towering for Chipotle at 43.  The valuations for McDonalds, Panera and Yum Brands are all well below.  The S&P 500's current P/E is about 25.

To tact Chipotle's slow sales growth, they hired Curt Garner, Starbucks former chief information officer, to be the first CIO of Chipotle starting in November.  Garner helped guide some of Starbucks' tech infrastructure initiatives.

His aim is to make improvements on the $1.2 billion in sales the company reported between July and September.  So far it had opened 150 restaurants this year.

Chipotle, which has achieved a dedicated followership by concentrating on a limited menu such as burritos, tacos, salads and bowls, had reported some supply chain problems earlier this year that made it stop serving pork at some restaurants.  The issues on the supply were the result of the company determining some contractors fell short of their standards, as reported by USA Today.

Food costs accounted for 33% of revenue in the quarter, down from 34.3% a year ago.  But Chipotle also reported that restaurant operating margin fell by 0.5 percentage points to 28.3%, weighed by higher labor costs and higher marketing and promotion expenses.

Chipotle officials informed analysts on Tuesday that they've put little emphasis on mobile ordering capability to perfect the experience of the large majority of customers who visit and order their food at local Chipotle restaurants.

However, the company said that it is throwing more and more effort into sharpening its takeout business despite the diminished sales.  Chipotle lately went on a 5,000-person hiring spree and noted that has directed more of its employees to perform secondary food preparation lines that prepare takeout orders.