Chipotle warns of possible data breach affecting payment system

A Chipotle Mexican Grill restaurant is seen in Redlands, California February 9, 2011. Chipotle reports fourth-quarter earnings on Thursday and analysts said there may be questions about the impact of the ongoing probe by the U.S. Immigration and Customs Enforcement (ICE).

REUTERS/Lucy Nicholson

NEW YORK -- Chipotle saw a key sales figure rise more than expected as it works to regain customers’ trust after a series of food scares, but may have lost at least a little ground again in disclosing a possible data security issue.

The company said it recently detected unauthorized activity on the network that supports its payment system in restaurants, but believes it has stopped the activity. It said its investigation is focused on restaurant transactions between March 24 and April 18 of this year, and would not provide further details since the investigation is still going on.

A Chipotle representative said the company has notified card networks, which notifies issuing banks, which in turn notifies customers.

Since the E. coli and other food scares that started sickening people around country more than a year ago, Chipotle has pledged to ensure that its food is safe, offered coupons for free burritos, stepped up advertising and introduced a temporary loyalty program to get people back in its stores. The company also added chorizo as a topping to lure more customers.  

Chipotle said it will start testing a dessert next month. CEO Steve Ells described the dessert, bunuelos, as fried tortilla strips with honey and sugar with an apple and caramel dipping sauce. The company has felt confident enough to raise prices by about 5 percent in about 440 restaurants, but said it will evaluate how that goes over before expanding the price hikes elsewhere.  

For the quarter, Chipotle Mexican Grill Inc. earned $46.1 million, or $1.60 per share, following a loss in the year-ago period. Analysts had expected $1.29 per share, according to FactSet. Total revenue was $1.07 billion, topping the $1.05 billion analysts expected.  

The Denver-based chain said earlier that sales rose 17.8 percent at established locations for the three months ended March 31, following a 29.7 percent decline in the year-ago quarter. Sales at stores open at least 13 months had turned positive in December after dropping steeply starting in late 2015. The 13-month metric is a considered a key indicator because it strips out the volatility of newly opened and closed locations.

The company has continued building new locations, and ended the quarter with 2,291 stores.

Chipotle shares rose 3 percent in after-hours trading.