Chipotle Payments System Hacked
If it is not one thing it is another. Chipotle Mexican Grill had just reported that its sales rebounded following a prolonged decline that came after an outbreak of food safety issues, when company executives told analysts that its system for payment processing had been hacked.
The CFO of Chipotle Jack Hartung announced that the company wanted all its investors and customers to be aware that it recently had detected an unauthorized activity on its network that supports the payment processing for purchases with credit and debit cards at its restaurants.
Hartung said Chipotle implemented more security measures, actions that it believes put an end to the unauthorized activity, which the burrito restaurant chain said it believes occurred from March 24 to April 18.
Chipotle said it hired an online security firm and was working with officials in law enforcement and the actual payment process to take care of the matter.
The CFO said the company would notify any of the affected customers when they have further information about dates the system had been hacked.
The news of the hacking dulled the investor’s day enthusiasm that had other big news such as the restaurant chain’s best quarterly results since the fall of 2015.
Shortly thereafter sales started to tank from the food safety issues. During 2016, the food safety crisis generated the most headlines for the business and customers started to question the promise of Chipotle to serve healthier and fresher foods than its rivals such as McDonald’s.
Sales therefore sputtered during all of last year, with sales of same-restaurants, which is a key metric and excludes those from new or recently closed establishments, falling five consecutive quarters.
However, Chipotle broke that negative trend with comparable sales surging 17.8% which was better than had been expected, while its overall revenue surged 28% to end the quarter at $1.07 billion.
CEO Steve Ells said that last December he returned to a role of the only CEO and is committed to restoring the simplicity that was able to make Chipotle such a success.
The company instituted a rewards program, has had a recent major ad campaign on television and is advancing tis clean food promise.
Prior to the announcement by Hartung about the hacking, stock at Chipotle was up 6% in trading after hours but fell back to an increase of 3% following the announcement.