Chipotle Mexican Grill Inc. ACMG

Morningstar Rating

Stock Research and Analysis

by Morningstar Analysts

With several favorable long-term trends, Chipotle has a very bright future, in our view. We like the company's strategy of doing just a few things but doing them very well, and we believe there's plenty of growth ahead for this fast-casual, Mexican Read more

Bulls Say

Chipotle is a leader in fast-casual dining, the fastest-growing segment of the restaurant industry.

The brand has been embraced by Mexican food aficionados in Colorado, Texas, and California and has also proved very popular in Ohio, Minnesota, and Illinois.

In a difficult consumer environment, Chipotle's comparable sales rose by a double-digit percentage in 2007 and by 5.8% in 2008.

The company has developed a strong culture by promoting from within, which has led to better-run restaurants and reduced turnover.

Chipotle has expanded into Canada with a restaurant in Toronto and plans to enter the European market with its first store in London by late 2009. Read more

Bears Say

Chipotle is facing rising competition on many fronts. Some fast food chains are upgrading their menus and the decor of their restaurants, while many casual dining firms have become more focused on Chipotle's value proposition.

In an economic downturn, some of Chipotle's customers might scale back spending at its restaurants. Comparable restaurant sales growth has slowed over the last few quarters.

The business is also facing minimum wage hikes and volatile commodity costs.

Management may be too preoccupied with rapid expansion, which could detract focus from restaurant operations. Read more

Strategy

Chipotle will continue its expansion, with plans for 120-130 new restaurant openings in 2010. Management aims to increase sales at existing restaurants by speeding up its service and by expanding use Read more

Management

Chipotle's management team has a great deal of experience with the company and in the restaurant industry. Chairman and co-CEO Steve Ells, who holds a degree from the Culinary Institute of America, founded Chipotle in 1993. President and COO Montgomery Read more

Profile

The company operates fast-casual, fresh Mexican food restaurants in 34 states, the District of Columbia, and Toronto, Canada. Its menu includes burritos, burrito bols, tacos, Read more

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