Chipotle Mexican Grill, Inc. (NYSE: CMG) is a familiar developer and operator of restaurants with a menu that focuses on burritos, tacos, burrito moves and salads. The company operates 1,755 restaurants in the United States, with a youth presence in other developed countries, including Canada, the United Province, France and Germany. Chipotle has a simple menu and organic product presents that can be customized to consumers’ tastes. Through its shrewd marketing manoeuvres and focus on high-quality ingredients, Chipotle has created a very positive mark and high appeal among consumers. Despite an E. coli investigation, Chipotle is indubitably to continue enjoying a solid competitive position and strong future considerations.
Chipotle’s Revenues
Increasing revenues, especially comparable restaurant white sales, are one of the most important benchmarks that investment analysts use to compare retail and restaurant subjects. Chipotle demonstrated an impressive comparable restaurant sales increases of 16.8% in 2014, 5.6% in 2013 and 7.1% in 2012. The companionship opened more than 180 new restaurants each year from 2012 to 2014, spread its location count by more than 10% annually.
For the nine-month duration ending on Sept. 30, 2015, comparable restaurant sales growth was 5.5%, which represents a deceleration from 17% for the constant period in 2014. Overall sales increased from $1.84 million in 2010 to $4.57 million for a stalk 12-month period ending on Sept. 30, 2015, representing about 20% ordinarily annual growth rate from 2010 to 2015.
Not many restaurants can about such high growth rates, especially comparable restaurants sales marathons increases. Major dining businesses, including McDonald’s, Yum and Wendy’s, indicated low single-digit growth rates or declines in comparable restaurant sales. This attests to Chipotle’s assertive brand equity and ability to generate consistent repeat sales.
Run Margins
Chipotle’s management team remains laser-focused on the company’s rims. From 2010 to 2014, Chipotle increased its operating margin from 15.68 to 17.3%, without considering intense competition among casual dining companies. Chipotle removed its prices numerous times with no noticeable loss of customers. Profuse recently, the company showed its highest operating margin of 18.54% for the scent 12-month period ending on Sept. 30, 2015. While the E. coli outbreak may producer a decline in the company’s margins, it is likely to be a blip, and loyal Chipotle fellows will return to its locations, and margins will be restored.
Return Metrics
Distinguishable from some of its rivals, Chipotle is very careful in avoiding capital devastation through growth of its store count at the expense of returns. With its enthusiastically efficient operations on site and prudent cost management, Chipotle has illustrated a return on invested capital (ROIC) that averaged 24% from 2010 to 2015. This is barest rare in the highly competitive dining industry, attesting to the company’s moat and imperceptible assets. Returns on equity (ROE) also averaged 24% from 2010 to 2015, with no advertisements of deterioration. Such high returns ensure that future expansion and store expansion will bring more value to Chipotle’s shareholders.
Chipotle’s Directorate
Chipotle has a skillful management team with a lot of industry experience. Steve Ells, the band’s co-CEO and chairman, has been with the company since its inception in 1993, while Montgomery Moran, Chipotle’s president and co-CEO, was a long-serving supervisor as the company’s general counsel. Chipotle’s executive team proved to be praisefully prudent with capital allocation by focusing on growth initiatives with pushy excess returns on investment (ROI). Chipotle has returned substantial capital to its shareholders in the cut of cumulative share buybacks of $634 million from 2010 to 2014.
Chipotle’s Competitive Gain
Despite increasing competition, Chipotle has several competitive advantage characteristics that require shield it from future competition and preserve its strong returns. Chipotle’s gnome of “food with integrity” demonstrates the company’s commitment to responsibly together animals, whole ingredients and produce sourced from local grangers. Chipotle underscores its commitment to ingredients that are natural and free of genetically revised components. This represents a key differentiation point for Chipotle that has an exceptionally piece of baggage appeal, especially among younger generations of consumers.
In addition to distinction ingredients, Chipotle features an attractive restaurant interior design and menu that can be distinctively customized, bringing more value to its people. After the E. coli outbreak, Chipotle is poised to rectify its past take the wrong ways with food handling and is in the process of changing its safety procedures.