Chipotle Mexican Grill (NYSE: CMG ) is too expensive? A new value menu argues otherwise.
Called the "Low Roller Menu," Chipotle's new offerings include soup, salad, and tacos. A single taco sells for $2.25, more than you'll pay at Yum! Brands' (NYSE: NYSE: YUM ) Taco Bell -- but unlike your average Border Bomb, it's built with organic ingredients.
So far, Chipotle is only testing its "Low Roller" offerings here in its home city of Denver. The messaging is striking, and similar to what you'll find in former parent McDonald's (NYSE: MCD ) billing of its own value menu. "Our expanded menu will knock your socks off and leave you with enough cash to buy new ones," reads the card I received during our latest visit to a nearby Chipotle.
Other proposed changes include a kid's menu and featured items. Think of the latter as a customer-friendly way to standardize offerings a la McDonald's, Burger King (NYSE: BKC ) , CKE Restaurants' (NYSE: CKR ) Carl's Jr., or my personal favorite, In-N-Out Burger.
The lower price points and a clearer menu should allow Chipotle to boost traffic, something the burrito baron failed to do during an otherwise strong first quarter. Here, "strong" refers to same-store sales growth. Chipotle's comps improved 2.2%, thanks in part to price increases on certain items. Mixing in "Low Roller" options should add diversity without distorting its reputation as a premium quick-serve brand.
We've seen this strategy work with high-end retailers and consumer goods manufacturers. Apple (Nasdaq: AAPL ) has the sub-$100 iPod Shuffle and the very affordable Mac Mini. Nokia (NYSE: NOK ) has both the N90 smartphone and sub-$100 starter phones for emerging markets such as India. Now Chipotle has the "Low Roller" menu.
And it may be exactly the spicy topping this burrito baron needs.
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