Chipotle sacrifices short term sales for long-term principles

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The options for investors who have high standards when it comes to animals and food can be few and far between. While Chipotle’s (CMG) standards are not perfect, they are far beyond the industry average. Now they are showing that they will stand behind those beliefs even at the expense of some short term sales.

One third of Chipotle’s (CMG) stores have stopped selling pork after a routine audit found that one of it’s suppliers, who remains unidentified, was not meeting its standards. The standards stipulate that “pigs are raised outside or in deeply bedded pens, are never given antibiotics and are fed a vegetarian diet.”

“This is fundamentally an animal welfare decision, and is rooted in our unwillingness to compromise our standards where animal welfare is concerned,” said Chipotle’s PR Director Chris Arnold.“We would rather not serve pork at all, than serve pork from animals that are raised in this way,” he said.

They are protecting their beliefs – and their brand. From an ethical standpoint, and the long-term investment standpoint that spells good news.

At the same time they are not standing by as pork sales, which make up 7% of sales, takes a hit. As an alternative to meat, the company is marketing its vegan tofu topping Sofritas, introduced in July 2013, with a promotion. The new promotion earns a free entree when customers buy one of their tofu-based meals. Buy a Sofritas entree on Monday Jan. 26 and you can use the receipt to get a free entree of your choice between Jan. 27 and Feb. 28. The Sofritas promotion should help offset some of the short-term losses while promoting a vegan option.

The next Chipotle earnings call is coming up on February 3rd and may address investors more on the pork shortage. In the meantime, the stock closed at $711.11 on Friday, very near to the $711.66 on last Monday’s close before the pork announcement.