Our Restaurants team – lead by Howard Penney – has maintained its short call on Chipotle (CMG) for 2 years now. At the 730-day mark last week, he hosted an institutional call updating subscribers about our latest thinking. We’re sticking with our call for a $250 stock, implying at least an additional 10% downside.

It’s becoming more likely with each passing day. Shares of the burrito chain were down as much as -15% after reporting lackluster third quarter earnings that failed to meet Wall Street’s buoyant expectations. No surprise there.

“Chipotle is growing too fast for the problems they have,” says Restaurants analyst Shayne Laidlaw in the video above shot after that institutional call.

“The company needs a significant reduction in new unit capital spending so they can focus on the core issues they are facing so they can turn the existing business around.” Laidlaw says Chipotle needs to cut new unit capital spending by 50-75%.

The E. coli outbreaks, that began in late 2015 and hammered Chipotle’s stock, are merely a symptom of the company’s overextended growth strategy. The problems wrought by multiple foodborne illness outbreaks tainted public perception about the brand.

“Chipotle has since recovered some,” Laidlaw says, “but throughout the company’s E. coli crisis, consumers have had the opportunity to go out and find other restaurants and the consumer perception of Chipotle has deteriorated.” The company’s restaurant level margins have deteriorated in kind from a peak of 28% to around 16% in the third quarter of 2017.

The road to $250 a share is paved.

Chipotle: The Road to $250 - investing ideas