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article imageChipotle's bad business leading to job cuts at other companies

By Business Insider     Jan 21, 2016 in Business
The impact of Chipotle's E. coli outbreaks has extended beyond the restaurant chain's plunging sales.
Chipotle's same-store sales fell by 30 percent in December in the wake of the outbreaks tied to its restaurants in nine states.
Now a paper mill that supplies burrito bowl take-out containers to Chipotle has cut jobs.
Maine paper manufacturer Huhtamaki laid off 25 to 30 employees after Christmas, the Bangor Daily News reports.
The paper bowls that Huhtamaki supplies to Chipotle were piling up as demand for Chipotle dropped, United Steelworkers union representative Duane Lugdon told the Bangor Daily News.
Lugdon said he's hopeful that the layoffs will be temporary, however, and that the workers will get their jobs back within two months, once demand picks up again for Chipotle.
But Chipotle says customer traffic and profit margins won't fully recover from recent food safety scares until 2017.
"It's going to be messy in terms of margins, it's going to be messy in terms of earnings," Chipotle Chief Financial Officer Jack Hartung said in an investor presentation Wednesday, referring to the rest of 2016. "We’re not going to be the efficient business model that everyone has come to know."
Hartung said the company is expecting to win back "most, if not all" customers at some point in 2017.
The company is launching a massive marketing effort in mid-February to encourage customers to come back to its restaurants.
"We are making an unprecedented effort to reach out to our most loyal customers with a detailed story about what happened," Chipotle Chief Marketing Officer Mark Crumpacker said.
While earnings and sales are suffering in the short term, Hartung said the recent outbreaks don't change the company's long-term outlook.
"In the long term, we don’t really feel any different about our economic potential," he said.
When asked whether February is too early to invite customers back to its restaurants, Chipotle co-CEO Steve Ells said he was confident that the restaurants are safe and contamination-free.
"I have confidence that we’re going to recover from this, that we're going to win our customers back," Ells said.
This article was originally published on Business Insider. Copyright 2016.
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