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Below is an excerpt from a piece written by Hedgeye Restaurants analysts Howard Penney and Shayne Laidlaw and published on Fortune.com explaining "Why Chipotle May Never Make a Big Comeback."

Chipotle's Woes Are Far From Over - chipotle s woes

The good news for Chipotle is that its food doesn’t appear to be making customers sick anymore. The bad news is that investors should be sick over the embattled company’s unrealistic growth expectations and financial mismanagement.


Many investors are still buying expensive Chipotle shares in hopes that the company returns to its prosperous days in 2014. That’s not going to happen.

Before 2015, Chipotle was the envy of restaurant operators across the country. Many industry participants were convinced Chipotle had cracked the code on an industry operating model that led to outsized margins.


But the outbreak of foodborne illnesses that broke out coast to coast for five months in 2015 has permanently impaired the profitability of its business model. Simply put, the company’s lack of investment in basic food safety procedures violated the first rule of running a restaurant: Don’t get the customer sick.


Click here to continue reading on Fortune.com...