Chipotle Serves Superb … Pizza?

Chipotle Mexican Grill (NYSE: CMG  ) has been a tremendous success story, and it has rewarded its investors with stock appreciation of 146.5% over the past three years. Many restaurants are facing challenging times. Chipotle is an exception to this rule.

For instance, Darden Restaurants (NYSE: DRI  ) , with its Red Lobster, Olive Garden, and LongHorn Steakhouse brands, was a perfect fit for a strong economy with a healthy consumer. This consumer wanted to take advantage of casual- dining opportunities, rewarding themselves after a hard day's work, or going out to celebrate a special occasion. Perhaps even just to get out of the house. Whatever the case may be, the consumer environment has changed considerably over the past five years, and consumers now look for value above all else. While Darden still has growth potential with other brands, including Yard House, Darden isn't situated quite as well as Chipotle.

Then there's Yum! Brands (NYSE: YUM  ) , which always offered value with its Kentucky Fried Chicken, Taco Bell, and Pizza Hut brands, but unlike Chipotle, these brands don't target the health-conscious consumer. With the Internet leading to a more educated consumer, more people are looking for healthy alternatives to traditional fast food. Chipotle offers fresh produce, value, and a more upscale fast-food dining experience.

For an example of the top-line growth differences for these three companies over the past five years, consider the chart below:

YUM Revenue (TTM) Chart

Yum! revenue (trailing-12 months) data by YCharts

Darden and Yum! Brands are still strong companies that should manage to figure out ways to cater to consumer demands. However, they're well behind Chipotle at the moment. Furthermore, Chipotle isn't sitting on its lead. Wisely, it's looking to stretch that lead.

It's more about the concept than the food
The high-quality ingredients, and Chipotle's promise of Food With Integrity (ingredients sustainably grown with respect for farmers, animals, land), are important. The subtitle above pertains to the fact that Chipotle can use this concept for more than just Mexican food.

For instance, it's looking to build out its ShopHouse brand. This concept originated from Thailand, where families live in three-story structures and serve food from the bottom floor. At Chipotle's ShopHouse restaurants, you can build your own dish, which might include curry and vegetables that have been seared in a wok.

And, of course, Chipotle wouldn't leave out the largest market in the United States: pizza.

High-quality dough leads to more dough
Imagine a special room that's kept at 72 degrees at all times. This room also maintains a humidity level that mimics a beautiful spring day in Naples, Italy. This room exists at Pizzeria Locale in Denver, Chipotle's newest venture. The concept was based on a pizzeria by the same name in Boulder, Colo. which opened in 2011 and has seen great success since.

The original Boulder version of the restaurant has a 4.3 of five rating on Google Reviews (90 reviews) and a four of five rating on Yelp (225 reviews). If the restaurant has been a huge success with these ratings, then it would make sense to see how Chipotle's Denver version has performed to date in regards to ratings.

Unfortunately, there are only six Google reviews so far, but the average is score is 4.4 of five. On Yelp, there are 70 reviews, and the average score is four, the same as the Boulder, Colo. location. Altogether, it looks as though Chipotle has a success on its hands. And it's already mentioned the possibility of opening two more locations throughout Denver. Who knows where this could go? As far as potential goes, there's plenty of it.

It should be noted that there is a tie between the Boulder, Colo. and Denver locations. Chipotle partnered with the Boulder, Colo. location's owners, and they're working together to build the concept. If you happen to be in the Denver (or Boulder, Colo.) area, then you might want to check it out. You order your own 11-inch personal pizza and toppings from the counter, which is then cooked in a high-temperature oven in less than two minutes.

Too expensive?
Chipotle is on-trend in every way possible, which is why the stock has performed so well. The one reason for caution is that expectations are high, with the stock trading at 53 times earnings. However, if you ignore valuation and only focus on the underlying business, then you should see that Chipotle has good odds for long-term success and could potentially grow to meet the high expectation the investing public has of the company. As always Foolish investors should do their own research before making any investment decisions.

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