The Motley Fool Previous Page


Chipotle Makes Money While Making a Difference

http://www.fool.com/investing/general/2012/11/13/chipotle-makes-money-while-making-a-difference.aspx

John Grgurich
November 14, 2012

Consumers are becoming more and more socially conscious, and want the goods and services they use to measure up. It doesn't take much. A simple action that costs a company very little --  or nothing at all -- can make a real difference in the mind of the consumer, and the company's bottom line.

There are some companies, however, that go well beyond that call of duty in that sense, companies that have incorporated social responsibility into the very heart of their business model. Chipotle Mexican Grill (NYSE: CMG  ) is one of those companies. Without further ado, then, let's have a look at the boutique burrito concern, and analyze it in terms of its performance as a socially-conscious enterprise, as a business, and as an investment.

Food with integrity
So goes Chipotle's first commandment and guiding principle for its wildly successful Mexican food business. According to the Chipotle website, food with integrity means, "Serving the very best sustainably raised food possible with an eye to great taste, great nutrition and great value." To that end, the company focuses on three key aspects of socially-responsible conduct:

  • Supporting and sustaining family farmers who respect the land and the animals in their care.
  • Using meat from animals raised without the use of antibiotics or added hormones whenever possible.
  • Sourcing organic and local produce when practical, including the use of dairy from cows raised without synthetic hormones.

Beyond these basic-but-beautiful core focus points, Chipotle has also signed onto California's 2010 Transparency in Supply Chains Act, which the burrito concern is taking very seriously, with efforts that include:

  • Verification: Periodically assessing its supply chain with respect to multiple factors, including risks of human trafficking and slavery.
  • Auditing: Subjecting Chipotle suppliers to inspections, announced and unannounced, by Chipotle, as well as third parties, to ensure compliance with company standards.
  • Certification: Requiring supplier compliance with laws that prohibit forced labor, child labor, and applicable standards for working hours and conditions.

A great company at a fair price
CSR cred now firmly established, let's look at a few basic metrics, and see how Chipotle measures up against its peers as a business and as an investment.

Revenue growth:

  • In its most recent quarter, Chipotle grew its quarterly revenue by a whopping 18.4% year over year.
  • Yum! Brands (NYSE: YUM  ) grew its quarterly revenue by a solid 9% YOY.
  • Perennial powerhouse McDonald's (NYSE: MCD  ) quarterly revenue actual