QUOTE AND NEWS
Market Intelligence Center  Mar 25  Comment 
Chipotle Mexican Grill Inc (CMG) is an excellent choice for either a diagonal spread or a covered call expiring in May. '15 at the $680.00 level according to MarketIntelligenceCenter.com’s patented algorithms.A covered call on Chipotle Mexican...
Benzinga  Mar 23  Comment 
Chipotle Mexican Grill, Inc. (NYSE: CMG) shares are overvalued while Yum! Brands, Inc. (NYSE: YUM) will eventually recover from its food-scare fiasco in China, an analyst said Monday. Chipotle's transaction growth rate will slow to 7.7 percent...
Benzinga  Mar 20  Comment 
In a recent piece for The Street, Brian Sozzi looked at Chipotle Mexican Grill, Inc. (NYSE: CMG) and how the popular restaurant chain is approaching new trends in service, food and technology. While other restaurants seem to be constantly...
TheStreet.com  Mar 19  Comment 
NEW YORK (TheStreet) -- Starbucks can ask baristas to talk about race, Yum! Brands' KFC can experiment with edible packaging and Domino's Pizza can create an app that lets customers order via a smartwatch. Chipotle is happy just...
Forbes  Mar 18  Comment 
Looking at options trading activity among components of the S&P 500 index, there is noteworthy activity today in Adobe Systems, Inc. (NASD: ADBE), where a total volume of 36,960 contracts has been traded thus far today, a contract volume which is...
Motley Fool  Mar 16  Comment 
Here's how you know when a restaurant's business is headed for a downturn.
Clusterstock  Mar 16  Comment 
Chipotle's business is booming, a nd the burrito chain's co-CEOs are being paid handsomely for it.  Steve Ells and Monty Moran made $28.9 million and $28.2 million respectively last year, the company said in a filing on Friday. The amounts...
Forbes  Mar 14  Comment 
    McDonald’s will rise again. But it may no longer sell burger and fries, at least not the kind of burgers and fries it has been selling for years -- learning a lesson or two from Shake Shack and Chipotle.   Investors focusing too much on...




 

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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