QUOTE AND NEWS
Motley Fool  8 hrs ago  Comment 
Chick-fil-A, Chipotle, and Starbucks top a list of restaurant companies whose employees expect better business in the next six months.
Motley Fool  Sep 12  Comment 
One prominent investor thinks it's obvious that Chipotle stock is overvalued. But there's a lot more to valuation than looking at an earnings multiple.
SeekingAlpha  Sep 12  Comment 
By Orange Peel Investments: Often touted as the best restaurant stock out there, Chipotle (NYSE:CMG) has put in a performance over the last five years that has made it one of the most lucrative names you could potentially be in. The ride doesn't...
BusinessWeek  Sep 12  Comment 
After Chipotle dipped a toe into Southeast Asian fare, Yum! Brands follows suit with a Texas test for its new Vietnamese sandwich concept
Motley Fool  Sep 11  Comment 
Is it too late to invest in Chipotle? Not for shareholders with a long term horizon.
Benzinga  Sep 11  Comment 
Chipotle Mexican Grill, Inc.'s (NYSE: CMG) long-term earnings potential could eventually make its current share price look cheap in hindsight, an analyst said Thursday. Janney Capital's Mark Kalinowski metaphorically pounded the table for the...
TheStreet.com  Sep 11  Comment 
NEW YORK (TheStreet) -- Chipotle Mexican Grill shares mayabe worth $1,300 each by 2020 according toaJanney's analyst MarkaKalinowski. "If - if - Chipotle can reasonably keep up its unit-growth rate by decade's end, then the range of P/E...
BusinessWeek  Sep 11  Comment 
A look at how employees tend to describe conditions at a burrito chain that touts its workplace culture
Motley Fool  Sep 11  Comment 
El Pollo Loco has received a lot of support from Wall Street, but will it live up to high expectations?
Motley Fool  Sep 10  Comment 
Fast-casual dining chain joins growing list of restaurants and retailers asking gun owners not to open carry their legal firearms into their stores.




 

Chipotle Mexican Grill (NYSE: CMG) is a quick-service Mexican-inspired restaurant chain based out of Denver, Colorado. The company is primarily known for its large burritos, which are served wrapped in aluminum foil. The company emphasizes its simplified menu in which a small set of quality ingredients are combined to create items such as tacos, fajitas, and "burrito bowls" in addition to its burritos. All food items are assembled in front of the customer using an assembly line process.

The company is known for its simple and humorous print ads, its primary method of advertising. Its self-professed emphasis on quality ingredients has led to initiatives such as increasing the use of naturally-raised meats. Chipotle's stores are typified by an industrial-styled interior with heavy use of dark red color and corrugated metal accents.

At the end of 2010, Chipotle opened 128 new restaurants, bringing its total to 1,084 in the United States, Washington D.C., and Ontario, Canada. Furthermore, the company plans to open 135-145 new restaurants in the year 2011.[1]

Company Overview

In 2010 Chipotle reported revenues of $1.84 billion, a 21% increase from 2009. Net income for the year was $179 million, representing a 41% growth.[2]

Up to 25% of Chipotle's new restaurant openings will be what are called “A Model” restaurants, which Chipotle plans to put in well established markets with high levels of brand awareness. A Model locations will be built primarily in secondary trade areas which have attractive demographics but are typically characterized by lower occupancy costs. The company expects that A Model locations will be constructed for substantially lower investment costs and have lower operating expenses than its recent traditional restaurant openings. The economic environment has put pressure on the commercial real estate market and developers, reducing the number of new real estate developments available to the company, which have historically accounted for a majority of the Chipotle's new restaurants.

Trends and Forces

Increasing Hispanic Culinary Influence

New Mexican fast food restaurants like Chipotle and Qdoba are catering to the Hispanic market to drive sales. According to the US Census Bureau, 25% of the US population is of Hispanic descent. Hispanics account for over $600 billion in purchasing power in the US alone and by 2050, it is projected that 1 out of every 4 Americans will hail from a Spanish-speaking country or region. It is no surprise, then, that the burrito has become an American culinary staple and that the industry is adding Southwestern cuisine to its menu offerings. Chipotle – with its flavorful Mexican cuisine – is positioned to extract value out of this powerful demographic over the next 10 years.

No Time, More Money

The baby boomer generation, time-pressed Gen Ys, and the rise of dual- income families means more people are dining out. There are 77 million Boomers in the US currently and they are getting older and wealthier. Americans can more readily afford to eat out, but they are also more time constrained than ever: according to the Department of Labor, more than 50% of American families were dual earner households and US disposable personal income should continue to grow in the forseeable future. With both parents holding full-time jobs, less time is left to prepare meals. Simply stated, eating out is the most convenient solution and the industry can quickly ramp capacity to meet demand. VIVA LA RAZA

More room for growth

Presently, the company operates all of its restaurants within the US and believes the potential for domestic stores is around 3,000 locations. Since current restaurants only comprise of roughly a third of that level, there is significant room for growth before the company hits saturation.

Whole Foods Effect

The company is well positioned to capitalize on the “Whole Foods effect” and secular drive towards high quality ingredients. According to the organic Trade Association (OTA), organic food sales are growing at a 20% clip annually in the US, although such food only accounts for 3% of all food and beverage sales. The company is ambitiously redefining the way America grows, serves, and eats its food. Most of the food is made fresh daily: its people chop fresh tomatoes, pull oregano leaves off stems, and toast cumin seeds. Among its suppliers, Chipotle avoids meat from livestock raised with hormones or antibiotics and looks for fresh ingredients naturally raised with respect to the land, animals, and farmers that produce the food.

Chipotle, seems to have created a sustainable branding strategy that leverages its good food, humorous ads, distinctive interior design, and in-store world music. It is a testament to Chipotle’s success that they have built a purpose bigger than its product and accomplished so without any finger-pointing.


References

  1. CMG 2011 10K
  2. CMG 2011 10K
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