While we often hear about businesses whose employees are paid under livable wages, this story is an odd duck because it focuses on the opposite. In this case, Bank of America has “downgraded” Chipotle because it feels that the company pays its employees too MUCH money.
Yes, think that over for a bit.
“We are downgrading Chipotle to Underperform from Neutral as we believe, assuming no significant tax reform, that 2018 and 2019 consensus EPS needs to drop at least 10 percent,” analyst Gregory Francfort write in a note Wednesday. “We believe further gains from trimming hours will prove difficult which limits the opportunity to get labor below 27 percent of sales even if traffic recovers.”
In layman’s terms that essentially means Bank of America intend to have the company cut Chipotle employee hours which they hope will reduce the financial loss of the company in the 2018 and 2019 fiscal year. It’s a shame, too, because among many, Chipotle is the one place that seems to pay its workers and actual livable wage, as opposed to most fast food places which pay about five dollars less an hour on average.
We are sure it is only a matter of time before the employees who will be affected by this to add their own input, so stay tuned.