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Today's Food and Beverage Movers and Shakers: Chipotle, Krispy Kreme, and Starbucks

By Matt Thalman – Mar 4, 2014 at 9:30PM

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Keeping a close eye on what's happening within the food and beverage industry is one of the best ways to protect your investments.

The food and beverage industry is a lot more straightforward than many others, but it's also very fragmented and highly competitive. Along with a few large players, there are thousands of smaller companies battling for customers.

It's also a constantly changing industry, so investors have to keep a close eye on the latest developments. Let's look at some of today's food-and-beverage movers and shakers: Chipotle Mexican Grill (CMG 1.10%), Krispy Kreme (KKD) and Starbucks (SBUX 0.69%).

Chipotle rose 5.45% today on more than double the usual volume but little news pertaining to the company. It's likely that a large institutional investor was buying shares, but we won't know until the disclosure reports come out months from now. The stock is expensive, trading at 55 times past earnings and 36 times future expected results, but considering the 30% revenue increase it posted in its latest quarter, it's clear that Chiptole has a long road of growth ahead. It's not just relying on its burrito shops for future growth; it started the Asian-inspired ShopHouse a few years ago and recently invested in a pizza shop in Denver. So there's a good chance Chipotle's full growth potential may still not yet be priced into shares.

There wasn't any obvious news about Krispy Kreme today, either, but shares still jumped 3.02%. Maybe it was the free doughnuts. A few of its Philadelphia locations were giving away glazed doughnuts today in celebration of Mardi Gras. The company was also offering freebies on Valentine's Day, and in Mobile, Ala., customers will be given a dozen glazed doughnuts if they bring in a bagful of Mardi Gras beads, as part of a charitable donation program. It could be that all the giveaways are starting to have an effect on business. They're a cheap and easy way to get the company's name out, and the company can gain incremental revenue from people who buy other items while picking up their free food. With the war over breakfast heating up at McDonald's, Yum! Brands' Taco Bell, and Starbucks, anything the doughnut shop can do to stay relevant will help.

Speaking of Starbucks, the stock rose 1.69% today after the announcement of four new breakfast sandwiches: ham and Swiss on a croissant; sun-dried tomato and cheese on a ciabatta roll; egg and cheddar on toast; and a low-calorie egg white, bacon, and cheese on an English muffin. The great thing for Starbucks is that it doesn't really matter whether these items move the needle in the coming quarters. The company just needs to do enough to keep its customers coming in the door every morning in the face of heightened breakfast competition from McDonald's and Taco Bell. If it can keep customers from leaving, Starbucks shareholders should be content; if it can draw in new customers, all the better.  

Matt Thalman owns shares of Starbucks. The Motley Fool recommends and owns shares of Chipotle Mexican Grill and Starbucks. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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