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When you think about fast food, what comes to mind? For many, it's mystery meat, expanding waistlines, and a taste that's not exactly something to write home about. Still, people want the convenience of grabbing food on the go. Enter Chipotle Mexican Grill (NYSE: CMG ) .
So is Chipotle a good investment?
Happy cows and chickens = happy shareholders
Chipotle sets itself apart from other fast-food restaurants in one very important way. Healthy, sustainable food is vitally important to Chipotle, which the company calls Food With Integrity. In 2010, Chipotle used more than 75 million pounds of naturally raised meat -- raised humanely on a purely vegetarian diet, with no antibiotics, etc. -- continued to serve cheese, sour cream, and milk from cows not treated with the synthetic hormone rBGH, and continued to make progress toward increasing its reliance on organic and sustainable food. So why does this matter for investors?
Across the U.S. there is a strong push for increasing health awareness as obesity rates and health-related issues have remained in the forefront of the media. That said, this is a fast-paced nation, and people want (and need) quick lunch and dinner options. So what's the solution? Healthy fast food, and Chipotle is leading the charge. Let's look at the numbers.
|
Chipotle Mexican Grill |
2010 |
2009 |
2008 |
|---|---|---|---|
| Sales (billions) | $1.84 | $1.52 | $1.33 |
| Same-store Sales | 9.4% | 2.2% | 5.8% |
| Total Number of Restaurants | 1,084 | 956 | 837 |
Source: Company financial statements.
Yes, Chipotle saw same-store sales growth slow from 2008 to 2009 -- it attributes this to increased menu pricing, as well as a decrease in customer visits because of the economic conditions in 2009. But in 2010, comps jumped 9.4%. That increase had a huge impact on Chipotle's bottom line, which increased 41.1%, to $179 million.
Healthy company, healthy customers, healthy investment
Chipotle isn't the only fast-food restaurant focusing on healthier choices. McDonald's (NYSE: MCD ) , Yum! Brands (NYSE: YUM ) , and Wendy's/Arby's Group (NYSE: WEN ) , have added items like salads and grilled chicken in an attempt to at least give the appearance of healthier choices on their menus. The reason for this is simple: People want it, and that means profits.
But the difference with Chipotle is its commitment to organic, sustainable food. Chipotle isn't cutting corners when it comes to the quality of food it serves, and people appreciate that, as can be seen by its rapid growth. Plus, those burritos are delicious!
Bring on the world!
Wouldn't you have liked to have bought stock in McDonald's before it went global? Just think of the returns! Well, Chipotle is expanding into international waters. With locations open in Canada and England, and plans to open a store in Paris in 2011, Chipotle may just be the next big global restaurant chain. And even if it doesn't go completely global, Chipotle still has great staying power, rapid growth, and delicious food, making it a possibly strong addition to any Fool's portfolio.
What do you think? Is Chipotle the next big restaurant chain? Click on its link to rate it in CAPS, or sound off in the comments below!
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Report this Comment On June 03, 2011, at 10:05 PM, WayneGorsek wrote:
This stock is way overvalued and I intend to short it ASAP! Buy at your own risk and pay these insane prices pumped up by the FED and Wall St analysts! CMG stock reminds me of silver at $50, we all know what happened when silver ran out of buyers and smart money headed for the exits!
Wayne Gorsek
Report this Comment On June 04, 2011, at 1:51 AM, EquityBull wrote:
They would be much healthier if they did not exclusively use dark meat chicken. I prefer healthy white meat to the fatty dark meat chicken they use
Report this Comment On June 04, 2011, at 12:41 PM, stever1245 wrote:
The basic burrito is 43g of fat and 2400mg of Sodium. Heart attack wrapped in foil. Not exactly heath food.
Report this Comment On June 06, 2011, at 12:26 PM, MFI1 wrote:
My 4 year old's favorite restaurant. I always see other children there eating away. This company will be around forever.
Report this Comment On June 08, 2011, at 10:22 AM, jamess355 wrote:
Actually, a basic burrito (ckn w/ beans, rice, salsa and cheese) is about 27g of fat and 2000mg of sodium, which drops to 1400mg if you opt for the no tortilla option - that's pretty healthy for fast food, especially considering that a single burrito is all you need to really stuff your face.
http://www.chipotle.com/en-US/menu/nutritional_information/n...
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