24/7 Wall St.

Foursquare CEO Jeff Glueck has given Chipotle Mexican Grill Inc. (NYSE: CMG) investors a preview of what are predicted to be horrible earnings for the restaurant chain come April 26. If they are any less horrible than Glueck is predicting, Chipotle shares could actually end up gaining, if not immediately post earnings, then in the weeks and months following.

Foursquare is an app with about 50 million monthly active users that recommends restaurants, among other things, based on a user’s location and interests. Extrapolating from the data compiled by the app over the past quarter, Glueck sees sales at Chipotle dropping close to 30% and foot traffic 23%. These dismal figures already take into account that Chipotle is currently one of the most hated companies in America, according to 24/7 Wall St. research. An embarrassing norovirus outbreak in March followed five E. coli incidents since July 2015 that sickened hundreds of people. To say sentiment is down would be putting it mildly.

The key number to watch for won’t be revenues though. Investors know that sales will be down because not only have the outbreaks scared people away, but the company has been handing out free food via coupons to its most loyal customers to get them back inside. It is foot traffic that will really matter come the earnings report. If Chipotle can show that people are still coming to its restaurants, regardless of whether they happen to be actually paying for their food, then it means the chain is being forgiven. If foot traffic is down less than 20% this quarter, it will be a huge plus for the Mexican fast-food chain.

24/7 Wall St.
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