For as long as I can remember, Chipotle Mexican Grill (NYSE:CMG) has been criticized for its lack of diversity. The company's revolutionary approach to fast-casual dining was often overshadowed by the fact that Chipotle had only one restaurant brand.
However, investors who have followed the company in recent months have no doubt witnessed a change in this regard. Not only has the company started two new restaurant brands centered around entirely different cuisines, management has finally begun to diversify Chipotle Mexican Grill's menu and continues to embark on clever, industry-leading advertising campaigns.
New restaurant brands
Chipotle's two new restaurant concepts should work well. Both have been built from the ground up to operate in the same simple yet effective manner that the Chipotle Mexican Grill brand has for years. Management is maintaining the company's signature combination of high-quality ingredients and fast and convenient service and applying it to both Southeast Asian cuisine and pizza.
The two new restaurant brands, ShopHouse and Pizzeria Locale, are still very much in their infancy. The former brand has only six operational locations, while the latter has only one. However, the growth potential for both appears massive, especially considering Chipotle Mexican Grill's impressive store count of nearly 1,600.
In the company's recent earnings release, Chipotle Chairman and co-CEO Steve Ells explained, "We also know that to really change food culture and to reach even more people is going to require that we serve more than burritos and tacos. That's why we developed ShopHouse, which follows the same model as Chipotle by using delicious quality ingredients, classic cooking techniques, and emphasizes a culture of top performers being groomed to be the future leaders we will need to support our growth."
New green menu item
While not as exciting as new restaurant themes, Chipotle's signature Mexican brand menu has also recently been expanded. The new Sofritas is a form of shredded, organic tofu that can be ordered in any of Chipotle's classic burrito, taco, or bowl varieties.
The move is substantial because it represents Chipotle Mexican Grill's first completely new menu addition in 20 years. Also, the new offering should bring a whole new type of consumer into Chipotle's stores and further expand the company's consumer base.
Green marketing initiative
For a restaurant company that was once considered a one-trick pony by some, Chipotle is really starting to diversify; so much so, in fact, that it is even producing its own comedy series. "Farmed and Dangerous" is a satirical exploration of domestic industrial agriculture.
Director Tim Piper explained, "Chipotle's genuine mission to change the world of fast food is a great foundation for storytelling. The characters and plot reflect Chipotle's position on sustainable agriculture and enable Chipotle to communicate with more engagement than traditional advertising."
"Farmed and Dangerous" follows on the heels of Chipotle's successful short video/video game entitled Scarecrow, which carried a warning of the dangers posed by big industrial agriculture. With such clever advertising, Chipotle continues to tout the benefits of its menu items to consumers. It is an approach that should continue to reap rewards for the company and shareholders in the long term, as people continue to trend toward healthy living.
Not surprisingly, as a result of its aggressive strategies and initiatives, Chipotle is leading the industry in terms of growth. The following is a breakdown of the company's projected growth in 2014 compared to competitors Panera Bread and Yum! Brands:
|Company||Revenue Growth 2014||EPS Growth 2014|
The management team at Chipotle appears to be making all the right moves lately. Not only will the company's new menu item increase same-store sales traffic in the Chipotle Mexican Grill brand, the addition of new restaurant brands will lessen the company's overall dependence on its signature Mexican chain.
All of the company's expansion opportunities are being backed by an equally impressive advertising campaign, which should help to win over new consumers and instill further confidence in the company's healthy approach to fast-casual dining.
Accordingly, Chipotle remains a stock I plan on holding for years to come, one that could even be a true '"forever stock." But do Motley Fool analysts agree?