QUOTE AND NEWS
Motley Fool  5 hrs ago  Comment 
Here's a point-by-point analysis of Chipotle as it stands today.
SeekingAlpha  Sep 30  Comment 
By The Specialist: If you listen to the commentators, talking heads on CNBC, and even many financial writers (including myself until recently) you would think McDonald's (NYSE:MCD) is dying a slow death as millennials turns to higher quality and...
SeekingAlpha  Sep 29  Comment 
By The Specialist: I'm sure you've read and heard enough authors and commentators take shots at Noodles & Company's (NASDAQ:NDLS) last quarter and valuation. To sum it up quickly, here is a small fast-casual concept with a cool idea that garnered...
SeekingAlpha  Sep 28  Comment 
By John-Erik Koslosky: On Sept. 10, some managers at Chipotle Mexican Grill's (NYSE:CMG) State College, Pa. store made national news by closing the restaurant in protest of their work conditions. A note left on the door that cited "borderline...
SeekingAlpha  Sep 26  Comment 
By The Specialist: McDonald's (NYSE:MCD) has been struggling with trying to show domestic growth as shown by same-store sales. As a company and within the individual restaurants, nobody even comes close to McDonald's massive restaurant success,...
SeekingAlpha  Sep 26  Comment 
By InvestAlike: If Mexican food is very popular, should every restaurant chain start serving it in order to grow its business? The macro environment of the food industry has not given fair treatment to every firm which operates within. There are...
Forbes  Sep 26  Comment 
Looking today at week-over-week shares outstanding changes among the universe of ETFs covered at ETF Channel, one standout is the Vanguard Mid-Cap ETF (AMEX: VO) where we have detected an approximate $867.8 million dollar outflow -- that's a 9.2%...
SeekingAlpha  Sep 24  Comment 
By Abba's Aces: I recently closed my position in Chipotle Mexican Grill, Inc. (NYSE:CMG) from my growth portfolio because I felt that I had a pretty good profit at the time and wanted to lock up some gains. I ended up buying shares of Michael Kors...
SeekingAlpha  Sep 24  Comment 
By Jonathan Weber: Chipotle Mexican Grill (NYSE:CMG) has been a great performer over the past few years, fueled by steadily improving operational results, shares are up 58% over the past 12 months and 23% year to date. The Denver, Colorado based...
SeekingAlpha  Sep 23  Comment 
By Main Street Wins: Shares of Noodles & Company (NASDAQ:NDLS) went public in 2013 with much fanfare, as several media outlets hyped the company as one that could mirror Chipotle Mexican Grill's (NYSE:CMG) stunning success. Since then shares have...




 

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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