Chipotle operates over 1,350 fast casual Mexican restaurants across the United States and internationally. While the company has experienced strong growth in revenues and earnings, some analysts argue Chipotle may be nearing maturity with margins and revenue growth stabilizing. Using a discounted cash flow model, the fair value of Chipotle's shares depends on future growth assumptions, but some feel the current stock price of $298 reflects a high premium compared to the company's fundamentals and growth outlook.
For my Managerial Accounting course, our team was charged with creating a strategy map and providing an analysis of a publicly-traded company's mission statement, business model, financials, competitive and business factors, consumer analysis, and key value drivers. We selected Chipotle.
Create an develop advertising plan for successful restaurant as part of team to include situational analysis, objectives, strengths & weaknesses, budgeting, strategy, execution, and evaluation. Direct responsibility for media plan covering strategy, media assessment, targeted execution, and budget allocation for best engagement with sought after market. (2006)
For my Managerial Accounting course, our team was charged with creating a strategy map and providing an analysis of a publicly-traded company's mission statement, business model, financials, competitive and business factors, consumer analysis, and key value drivers. We selected Chipotle.
Create an develop advertising plan for successful restaurant as part of team to include situational analysis, objectives, strengths & weaknesses, budgeting, strategy, execution, and evaluation. Direct responsibility for media plan covering strategy, media assessment, targeted execution, and budget allocation for best engagement with sought after market. (2006)
This presentation is part of a report created by a group for Veronica Marshall's Intro to Public Relations class in April 2016. For this presentation, I graphically designed the slide thematics as well as collaborated on the creative ideas and strategies that were presented in the presentation.
Marketing Promotions - Chipotle Case: The red foil burrito Cole Ericson
In an Integrated Marketing Communications class, my teammates and I put together a response to a hypothetical Request for Proposal from Chipotle. Our idea is meant to draw attention to Chipotle's own charity fund in an engaging way.
This presentation is part of a report created by a group for Veronica Marshall's Intro to Public Relations class in April 2016. For this presentation, I graphically designed the slide thematics as well as collaborated on the creative ideas and strategies that were presented in the presentation.
Marketing Promotions - Chipotle Case: The red foil burrito Cole Ericson
In an Integrated Marketing Communications class, my teammates and I put together a response to a hypothetical Request for Proposal from Chipotle. Our idea is meant to draw attention to Chipotle's own charity fund in an engaging way.
Chipotle Market Potential Analysis Part 1Mollye Peters
One of the projects in my International Marketing class was to take a domestic company and turn it into an international corporation. My group decided on Chipotle as our company. Everyone in the group worked on this project together but I was specifically focused on the criteria charts on slides 6-12.
This PowerPoint was used to demonstrate a SWOT analysis of Chipotle.; however, it starts out with the history of the company and branches off into strengths, weaknesses, opportunities, and threats of the firm.
This slideshow is an in-depth analysis about Chipotle and their social media usage. Through viewing this slideshow, you will gain a basic idea as to what Chipotle does online and where they see growth for the future.
Recommendations for Chipotle Mexican Grill Inc.Regina Ip
Provide recommendations for Chipotle Mexican Grill Inc. (Chipotle) to resolve current issues of fierce competition and decrease in market share and revenue
On October 18, 2012, Steven Ells, the founder, chairman of t.docxcherishwinsland
On October 18, 2012, Steven Ells, the founder, chairman
of the board, and co-chief executive officer (CEO) of
the Denver, Colorado-based restaurant chain, Chipotle
Mexican Grill (CMG), completed the conference call fol-
lowing the release of the company’s third quarter 2012
results. While the reported results were positive, analysts
picked on the slowing down of same-stores sales (a key
metric for restaurant chains), the competition from Yum
Brands’ Taco Bell and their recent launch of the Cantina
Bell menu and CMG’s announcement that food costs
were expected to increase in the near future. Following
the announcement of third quarter results, CMG’s stock
went down by nearly 12 percent in intra-day trading to
finally stabilize at a 4 percent drop over the previous
day’s price. At the end of trading on October 18, CMG’s
stock price was at $285.93, a significant decline from a
52-week high of $442.40.1 CMG had been the darling
of both Wall Street and its customer base ever since the
company’s founding in 1993 and its 2006 initial public
offering (IPO). Investors were attracted to CMG for its
fast growth and sizeable profit margins, while customers
responded favorably to its “Food with Integrity” mission
of serving good quality food with inputs sourced using
sustainable farming practices. Both Ells and his co-CEO,
Montgomery F. Moran, had to respond to the challenges
confronting the company.
The U.S. Restaurant Industry2
Profile
For the year 2012, the National Restaurant Association
projected total U.S. restaurant sales of $631.8 billion
(compared to $379 billion in 2000 and $239.3 in 1990),
which represented nearly 4 percent of the gross domestic
product. There were 970,000 restaurant locations, and
the industry employed 12.9 million people (10 percent
of the total workforce). The restaurant industry’s share
of the food dollar was 48 percent in 2012 compared to 25
percent in 1955.3
The restaurant industry consisted of a number of seg-
ments such as eating places, bars and taverns and lodging
place restaurants. The three largest segments were full ser-
vice, quick service and fast casual. Full service restaurants
offered table ordering, and the average check (revenue per
customer) was the highest of the three segments. While
national chains such as Darden Restaurants (operator of
Red Lobster, Olive Garden and Longhorn Steakhouse)
and Dine Equity (IHOP and Applebee’s) existed in this
segment, the majority of operators were individuals,
families or limited partnerships. This segment accounted
for 31.7 percent of industry revenues in 2011.
The quick service segment (previously referred to
as “fast food”) consisted of restaurants that offered fast
CASE 8
Chipotle: Mexican Grill, Inc.:
Food with Integrityi
i. This case has been written on the basis of published sources only. Consequently, the interpretation and perspectives presented in this case are not necessarily those of
Chipotle Mexican Grill.
Burger Restaurant Business Plan Powerpoint Presentation SlidesSlideTeam
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P13-3AWHITLOCK COMPANY Income Statement For the Year Ended N.docxalfred4lewis58146
P13-3A
WHITLOCK COMPANY
Income Statement
For the Year Ended November 30, 2015
Sales revenue
$7,700,000
Cost of goods sold
Beginning inventory
$1,900,000
Purchases
4,400,000
Goods available for sale
6,300,000
Ending inventory
1,400,000
Total cost of goods sold
4,900,000
Gross profit
2,800,000
Operating expenses
1,150,000
Net income
$1,650,000
P13-7A
WHITLOCK COMPANY
Income Statement
For the Year Ended November 30, 2015
Sales revenue
$7,700,000
Cost of goods sold
Beginning inventory
$1,900,000
Purchases
4,400,000
Goods available for sale
6,300,000
Ending inventory
1,400,000
Total cost of goods sold
4,900,000
Gross profit
2,800,000
Operating expenses
1,150,000
Net income
$1,650,000
Running head: CHIPOTLE 1
CHIPOTLE 2
Chipotle
Students Name
Student ID
Professor’s name
Date of Submission
IV. Cost of Production
There are many forms of costs incurred by Chipotle although the major ones are three. The operating costs includes of food costs, labor costs, and operating costs that include the payments to the management and machinery. The restaurant company has efficiently and effectively used to ensure that the company has remained at the peak in terms of profitability. Most of the company’s cost has been on the foods that are being used. In fact, the cost of food in the year 2013 accounted 33.40% that was equivalent to $ 1.1 billion of the revenues that were collected. The key ingredients that are being used have been increasing in cost rapidly. Another form of cost that the company has been incurring is the labor cost. Over twenty-three percent of the company’s revenues are incurred in catering for labor cost. This amount was estimated to be seven hundred and thirty million dollars in 2013. Advertising costs and marketing expenses by the firm have accounted for ten percent of the total revenues generated. Effective use of these costs has led to a tremendous growth in the profitability of the firm. The profitability has been increasing over the recent years, and the growth in 2013 was twenty-six percent.
The financial records of the Chipotle reveal that the company has no debt despite the costs that have been increasing. The fixed costs that the company was initially incurring in the rented stores have reduced as a result of the company’s indulgence in the construction of their shops. Labor costs have contributed to the success of the firm since the firm has been hiring qualified and skilled personnel. The firm has been engaging in Research & Development to improve the profitability of the firm. However, this has been impacting the firm positively and in a way has contributed to the success of the firm operating in the America and Europe continent (Wy.
Initial Valuation Report
Chipotle Mexican Grill, Inc.
12/14/2015
Final Report
CONTENT
Executive Summary ......................................................................................................................................................................... 1
Company and Industry Overview ............................................................................................................................................. 2
Chipotle Mexican Grill - The Business .................................................................................................................................... 2
Strategic Highlights ........................................................................................................................................................................ 2
Restaurant Industry - The Playing Field ............................................................................................................................... 2
Financial Ratio Analysis ................................................................................................................................................................ 4
Key Ratios across Industry .......................................................................................................................................................... 4
DuPont Analysis ............................................................................................................................................................................... 5
Profitability across Industry ....................................................................................................................................................... 6
Detailed Revenue Analysis .......................................................................................................................................................... 7
Other Key Ratios .............................................................................................................................................................................. 8
Forecast of Financial Statements ............................................................................................................................................. 9
Financial Statements – 2015-2020 .......................................................................................................................................... 9
Sustainable long term growth rate analysis ..................................................................................................................... 10
Underlying assumptions ........................................................................................................................................................... 10
Risk and Return Analysis ...................................................................................................................... ...
Implementation, Strategy Controls and ContingencyRunni.docxbradburgess22840
Implementation, Strategy Controls and Contingency
Running head: IMPLEMENTATION, STRATEGY CONTROLS AND CONTINGENCY
1
IMPLEMENTATION, STRATEGY CONTROLS AND CONTINGENCY
2
Implementation, Strategy Controls and Contingency
Company Overview
Chipotle Mexican Grill first opened in 1993 in Colorado by a man name Steve Ells. He started with 16 restaurants in Colorado. By 1998, McDonalds became a large investor. By 2006, Chipotle Mexican Grill had grown to over 500 locations nationwide. Revenues for 2014 increased by 26.7 percent to $1.07 billion, net income increased by 52.3 percent in 2014 and Chipotle opened 60 new stores. (Chipotle, 2015)
When Ells initially decided to open the restaurant he also decided he would do so by respecting farmers, encouraging sustainable agriculture and respecting the environment. This mission has stood strong and only continued to grow from within.
At the end of 2014, Chipotle Mexican Grill had 1,783 restaurants worldwide. This number grew from 704 restaurants in 2007. (Chipotle, 2015) Chipotle’s initial mission was to show that food served fast did not have to fall under the typical fast food stigma of fake and overly processed ingredients. Instead, Chipotle Mexican Grill focused on raw ingredients, classic techniques and quick-service. This is Chipotle’s best value discipline—the ability to serve socially responsible, quick-service food their consumers can feel good about eating.
Objective
The objective of Chipotle Mexican Grill is to break into the fast-food industry, the restaurant industry and the health-food industry. Another objective is for the company to continue to grow into internal markets. The company can achieve all three objectives with their goal of sustainable food and non-GMO ingredients.
Functional tactics
Functional tactics are activities that are built into the routine or the day-to-day of the company. This starts with the wellness of each employee. A well taken care of employee is a happy employee and happy employees equal more willingness to see the company succeed. Each employee will be offered health benefits and paid time off. This plan will be for employees who work more than 32 hours per week. Another functional tactic that is important is making sure the right people are hired for marketing, finance and restaurant management. Employees hired for these positions will require at least a Bachelor’s Degree in Business or at least five years of very relevant work experience. Each restaurant will be given set goals for sales based on a SWOT analysis of the region and once a quarter each restaurant will be compared to each other. If one restaurant does something differently that is making a big impact on their revenue it will be rolled out to the remaining stores. This allows each employee to feel like their contributions matter.
Action items
We must first assign one person for each region to be in charge of locating the most sustainable, non-GMO locally sourced ingredients and to get the .
Similar to Chipotle Equity Analysis_An Expensive Burrito? (20)
how can i use my minded pi coins I need some funds.DOT TECH
If you are interested in selling your pi coins, i have a verified pi merchant, who buys pi coins and resell them to exchanges looking forward to hold till mainnet launch.
Because the core team has announced that pi network will not be doing any pre-sale. The only way exchanges like huobi, bitmart and hotbit can get pi is by buying from miners.
Now a merchant stands in between these exchanges and the miners. As a link to make transactions smooth. Because right now in the enclosed mainnet you can't sell pi coins your self. You need the help of a merchant,
i will leave the telegram contact of my personal pi merchant below. 👇 I and my friends has traded more than 3000pi coins with him successfully.
@Pi_vendor_247
Latino Buying Power - May 2024 Presentation for Latino CaucusDanay Escanaverino
Unlock the potential of Latino Buying Power with this in-depth SlideShare presentation. Explore how the Latino consumer market is transforming the American economy, driven by their significant buying power, entrepreneurial contributions, and growing influence across various sectors.
**Key Sections Covered:**
1. **Economic Impact:** Understand the profound economic impact of Latino consumers on the U.S. economy. Discover how their increasing purchasing power is fueling growth in key industries and contributing to national economic prosperity.
2. **Buying Power:** Dive into detailed analyses of Latino buying power, including its growth trends, key drivers, and projections for the future. Learn how this influential group’s spending habits are shaping market dynamics and creating opportunities for businesses.
3. **Entrepreneurial Contributions:** Explore the entrepreneurial spirit within the Latino community. Examine how Latino-owned businesses are thriving and contributing to job creation, innovation, and economic diversification.
4. **Workforce Statistics:** Gain insights into the role of Latino workers in the American labor market. Review statistics on employment rates, occupational distribution, and the economic contributions of Latino professionals across various industries.
5. **Media Consumption:** Understand the media consumption habits of Latino audiences. Discover their preferences for digital platforms, television, radio, and social media. Learn how these consumption patterns are influencing advertising strategies and media content.
6. **Education:** Examine the educational achievements and challenges within the Latino community. Review statistics on enrollment, graduation rates, and fields of study. Understand the implications of education on economic mobility and workforce readiness.
7. **Home Ownership:** Explore trends in Latino home ownership. Understand the factors driving home buying decisions, the challenges faced by Latino homeowners, and the impact of home ownership on community stability and economic growth.
This SlideShare provides valuable insights for marketers, business owners, policymakers, and anyone interested in the economic influence of the Latino community. By understanding the various facets of Latino buying power, you can effectively engage with this dynamic and growing market segment.
Equip yourself with the knowledge to leverage Latino buying power, tap into their entrepreneurial spirit, and connect with their unique cultural and consumer preferences. Drive your business success by embracing the economic potential of Latino consumers.
**Keywords:** Latino buying power, economic impact, entrepreneurial contributions, workforce statistics, media consumption, education, home ownership, Latino market, Hispanic buying power, Latino purchasing power.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
how to sell pi coins at high rate quickly.DOT TECH
Where can I sell my pi coins at a high rate.
Pi is not launched yet on any exchange. But one can easily sell his or her pi coins to investors who want to hold pi till mainnet launch.
This means crypto whales want to hold pi. And you can get a good rate for selling pi to them. I will leave the telegram contact of my personal pi vendor below.
A vendor is someone who buys from a miner and resell it to a holder or crypto whale.
Here is the telegram contact of my vendor:
@Pi_vendor_247
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
NO1 Uk Black Magic Specialist Expert In Sahiwal, Okara, Hafizabad, Mandi Bah...Amil Baba Dawood bangali
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what is the best method to sell pi coins in 2024DOT TECH
The best way to sell your pi coins safely is trading with an exchange..but since pi is not launched in any exchange, and second option is through a VERIFIED pi merchant.
Who is a pi merchant?
A pi merchant is someone who buys pi coins from miners and pioneers and resell them to Investors looking forward to hold massive amounts before mainnet launch in 2026.
I will leave the telegram contact of my personal pi merchant to trade pi coins with.
@Pi_vendor_247
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
USDA Loans in California: A Comprehensive Overview.pptxmarketing367770
USDA Loans in California: A Comprehensive Overview
If you're dreaming of owning a home in California's rural or suburban areas, a USDA loan might be the perfect solution. The U.S. Department of Agriculture (USDA) offers these loans to help low-to-moderate-income individuals and families achieve homeownership.
Key Features of USDA Loans:
Zero Down Payment: USDA loans require no down payment, making homeownership more accessible.
Competitive Interest Rates: These loans often come with lower interest rates compared to conventional loans.
Flexible Credit Requirements: USDA loans have more lenient credit score requirements, helping those with less-than-perfect credit.
Guaranteed Loan Program: The USDA guarantees a portion of the loan, reducing risk for lenders and expanding borrowing options.
Eligibility Criteria:
Location: The property must be located in a USDA-designated rural or suburban area. Many areas in California qualify.
Income Limits: Applicants must meet income guidelines, which vary by region and household size.
Primary Residence: The home must be used as the borrower's primary residence.
Application Process:
Find a USDA-Approved Lender: Not all lenders offer USDA loans, so it's essential to choose one approved by the USDA.
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USDA loans are an excellent option for those looking to buy a home in California's rural and suburban areas. With no down payment and flexible requirements, these loans make homeownership more attainable for many families. Explore your eligibility today and take the first step toward owning your dream home.
Resume
• Real GDP growth slowed down due to problems with access to electricity caused by the destruction of manoeuvrable electricity generation by Russian drones and missiles.
• Exports and imports continued growing due to better logistics through the Ukrainian sea corridor and road. Polish farmers and drivers stopped blocking borders at the end of April.
• In April, both the Tax and Customs Services over-executed the revenue plan. Moreover, the NBU transferred twice the planned profit to the budget.
• The European side approved the Ukraine Plan, which the government adopted to determine indicators for the Ukraine Facility. That approval will allow Ukraine to receive a EUR 1.9 bn loan from the EU in May. At the same time, the EU provided Ukraine with a EUR 1.5 bn loan in April, as the government fulfilled five indicators under the Ukraine Plan.
• The USA has finally approved an aid package for Ukraine, which includes USD 7.8 bn of budget support; however, the conditions and timing of the assistance are still unknown.
• As in March, annual consumer inflation amounted to 3.2% yoy in April.
• At the April monetary policy meeting, the NBU again reduced the key policy rate from 14.5% to 13.5% per annum.
• Over the past four weeks, the hryvnia exchange rate has stabilized in the UAH 39-40 per USD range.
Currently pi network is not tradable on binance or any other exchange because we are still in the enclosed mainnet.
Right now the only way to sell pi coins is by trading with a verified merchant.
What is a pi merchant?
A pi merchant is someone verified by pi network team and allowed to barter pi coins for goods and services.
Since pi network is not doing any pre-sale The only way exchanges like binance/huobi or crypto whales can get pi is by buying from miners. And a merchant stands in between the exchanges and the miners.
I will leave the telegram contact of my personal pi merchant. I and my friends has traded more than 6000pi coins successfully
Tele-gram
@Pi_vendor_247
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
2. Chipotle – The Business
Ticker CMG
Market Cap ~9.4 Billion
Market Price $298.73
Trailing P/E ~34.7x
Forward P/E ~ 28.67x
Shares
Outstanding
31.5 Million
Stock Beta 0.48
Chipotle (CMG) currently develops and operates Fast-casual, Mexican Taqueria
inspired restaurants. The menu is focused on burritos, tacos, burrito bowls, and
salads. As of September 30, 2012 CMG operated 1350 restaurants including
international locations in London (5), Toronto (4), and Paris (1).
Chipotle was founded in 1993 by Steve Ellis who unknowingly became a pioneer
in the Fast-casual segment of the restaurant industry by reimagining and
repackaging traditional Mexican inspired cuisine.
“Food with Integrity”
Chipotle focuses on fresh, sustainable ingredients meeting specific quality
standards. The firm specifically sources and develops relationships with farmers
and distributors who meet or exceed these standards. These standards include
“naturally raised” pork, beef, and chicken defined as animals whose lifecycle
includes a proper vegetarian diet and does not include the use of antibiotics,
growth hormones, or feed additives. Their dairy cattle are pasture-raised with
daily access to outdoor pastures, they are also “naturally raised” without the use
of recombinant bovine growth hormone (rBGH).
Quickfact data sourcedfrom YahooFinanceintradayon
1/07/2013. Businessinformationsourceddirectlyfrom
Chipotle.com
Quick Facts:
3. Chipotle – The Business Strategy
Ticker CMG
Market Cap ~9.4 Billion
Market Price $298.73
Trailing P/E ~34.7x
Forward P/E ~ 28.67x
Shares
Outstanding
31.5 Million
Stock Beta 0.48
When Chipotle began operations in 1993, Steve Ellis sought to address the pain points
he experienced at the traditional taqueria’s in San Francisco that inspired his vision. The
primary issues were tight, small spaces with only 1 or 2 people working the kitchen to
meet demand. By applying the Ford assembly line model to this niche Steve Ellis
believed he could serve a much larger volume of customers while still adhering to his
principles of high quality, good tasting food that he developed in culinary school.
Chipotle seeks to minimize pre-opening costs. Each restaurant has a minimalist,
industrial design focus that can also be called stylish. This serves two purposes that
CMG has leveraged in their business model. (1) Restaurant development costs are
inexpensive – the rebranding and interior design process does not require specialized
parts or materials and can be sourced locally anywhere. (2) Minimalist, industrial
designs are famously adaptable to fit specific needs, spaces, and limitations. This allows
CMG flexibility in choosing restaurant locations and design customizations helping keep
the brand itself “fresh”. Approximately 99% of their restaurant spaces are leased instead
of purchased and built; again focusing on minimizing pre-opening costs.
The “Food with Integrity” mantra has helped strategically position CMG to exploit
current trends. Over the last two decades there has been a cultural shift in the U.S. as
people concerned with the growing obesity, diabetes, and heart disease rates sought
alternative higher quality food options that still provided some “fast food” elements.
Chipotle provides this with the focus of serving each customer in 90 seconds or less,
using quality fresh ingredients and perhaps more importantly, providing this service at
the price point between $6-$10. This is precisely in the mid point above traditional fast
food of $5 or less, and lower than sit-down casual-dining restaurants of $10 or more.
This provides an additional advantage because fast food is associated with poor quality
ingredients and more expensive casual dining restaurants are often comparable or
worse than CMG in ingredient quality. This provides high value to customers.
Quickfact data sourcedfrom YahooFinanceintradayon 1/07/2013. Businessinformationsourceddirectlyfrom
Chipotle.com
Quick Facts:
4. Chipotle – Balance Sheet Analysis
Ticker CMG
Total Cash
(mrq):
573.89M
Total Cash Per
Share (mrq):
18.22x
Total Debt
(mrq):
3.56M
Total
Debt/Equity
(mrq):
0.27x
Current Ratio
(mrq):
4.12x
Book Value Per
Share (mrq):
41.43x
Chipotle operates primarily as a cash based business with significant liquid assets and
little to no leverage and minimal debt. A quick look at some key ratios and
comparisons to the industry and sector lend support to this analysis.
FINANCIAL STRENGTH
Company Industry Sector
Quick Ratio (MRQ) 4.06 1.05 1.27
Current Ratio (MRQ) 4.12 1.18 1.64
LT Debt to Equity
(MRQ)
0.26 48.93 32.72
Total Debt to Equity
(MRQ)
0.27 72.46 55.28
Interest Coverage
(TTM)
344.46 33.27 67.62
CMG’s financial health dominates restaurant industry and services sector comparisons
in terms of liquidity, debt and leverage. With it’s current ratio almost 4x the industry
average and Total Debt to Equity only 0.37% of industry average, CMG is in a league of
it’s own.
Quickfact data sourcedfrom YahooFinanceintradayon 1/07/2013. TableData sourcedfrom Reuters.com
Quick Facts:
5. Chipotle – Cash Flow Analysis
According to SEC filings CMG has grown
it’s Net Operating Cash at a 34%
Compound Annual Growth Rate (CAGR)
with cash flows increasing from $39.7
million in 2004 to $411.1 million in 2011.
Since Chipotle’s public offering in 2006
the firm has steadily increased it’s Total
Free Cash Flow to Equity from $23.2
million in 2007 to $235.7 million in 2011
representing a 59% CAGR.
As discussed earlier, Chipotle’s business
model leverages their design philosophy
into relatively inexpensive development
and maintenance costs with a 5 period
average of $134.8 million in CapEx per
year.
-$200,000
-$100,000
$0
$100,000
$200,000
$300,000
$400,000
$500,000
Sum of
2011
Sum of
2010
Sum of
2009
Sum of
2008
Sum of
2007
Sum of
2006
Sum of
2005
Sum of
2004
Cash Flow Chart (in thousands)
Net cash provided by operating activities
Net cash used in financing activities
Purchases of leasehold improvements, property and equipment, net
Total FCFE
Datasourcedfrom combinedSEC 10K filings.
6. Chipotle Restaurant Location Breakdown
• As of September 30, 2012 CMG operated 1,350 restaurants of which 1,340 are U.S. based. Using July 2011 U.S. census
data of a domestic population of 311,591,917 that equates to 1 Chipotle for every 232,358 Americans. For
comparisons sake in 2009 there were 13,000 domestic McDonald’s(1) or 1 location for every 23,000 Americans.
• With location growth averaging 16.7% per year since 2005 and the Fast-casual dining segment tripling it’s market
share to 6%(2) of the restaurant industry in 2011 there is much room for domestic expansion.
2005 2006 2007 2008 2009 2010 2011
Total Store Growth YoY 18.81% 21.17% 18.89% 14.22% 13.39% 13.47%
0%
5%
10%
15%
20%
25%
%RestaurantGrowth
Total Restaurant Percentage Growth YoY
(1) http://www.geekologie.com/2009/09/mcdomination-map-of-mcdonalds.php (2) http://articles.latimes.com/2011/dec/22/business/la-fi-Fast-casual-
20111222
7. Chipotle Restaurant Location Breakdown (as of Dec 31, 2011)
0
200
400
600
800
1000
1200
1400
2005 2006 2007 2008 2009 2010 2011
Canada
United Kingdom
Wyoming
Wisconsin
Washington
Virginia
Utah
Texas
Tennessee
South Carolina
Rhode Island
Pennsylvania
Oregon
Oklahoma
Ohio
North Carolina
New York
New Mexico
New Jersey
New Hampshire
Nevada
8. Wow! A great niche, strong cash flows,
excellent balance sheet and room for
growth?!
This stock seems great! I need to call my
broker and Buy!
9. "It's far better to buy a wonderful company at a fair
price than a fair company at a wonderful price.“
- Warren Buffet
What is the fair price for
Chipotle?
10. Valuation Ratios
Company Industry Sector
P/E Ratio (TTM) 34.89 51.08 15.84
P/E High - Last 5 Yrs. 69.08 74.94 32.20
P/E Low - Last 5 Yrs. 22.31 24.04 9.50
Beta 0.85 0.30 0.93
Price to Sales (TTM) 3.60 3.45 1.47
Price to Book (MRQ) 7.24 11.75 1.56
Price to Tangible Book (MRQ) 7.35 13.01 2.63
Price to Cash Flow (TTM) 26.61 27.64 9.42
Price to Free Cash Flow (TTM) 43.29 14.66 29.59
Chipotle Valuation Analysis
To answer the question about what is the fair price, we have
to consider what is the intrinsic value of the stock relative to
the price paid.
Using some common ratios as a basis for answering this
question we can see that CMG’s P/E Ratio of 34.89x is
approximately 1.5x less than the restaurant industry’s
average P/E Ratio of 51.08x representing a relative 46%
discount for the investor.
*Note: Yahoo Finance Restaurant Industry P/E is 20.09x,
representing a 71% premium the investor must pay to own
CMG shares!!
CMG’s Price to Sales is comparable to the industry average,
while the Price to Book and Price to Tangible Book are 38%
less and 44% less than industry averages respectively.
Price to Cash Flow is also comparable to industry averages,
however CMG’s Price to Free Cash Flow of 43.29x is nearly 3x
higher than the industry average of 14.66x -- Why pay such
a high multiple for those cash flows? I think the answer may
lie in the growth numbers.
Tabledatasourcedfrom Reuters.com1/07/13
11. Chipotle Valuation Analysis
Examining the growth table there are two key takeaways with
respect to the premium price paid for Chipotle’s cash flows relative
to industry averages.
The most obvious observation is that Sales and EPS are growth
positive for CMG and the restaurant industry as a whole both on a
current basis and 5 Yr average.
Not only are these key variables growth positive but Sales and EPS
are growing at a blended 18.6% and 30.5% 5 Yr average respectively.
Looking at CMG’s 5 Yr Growth Rate of Sales compared to the
industry average we see that CMG’s 22.49% is 1.5x greater than
industry average while CMG’s EPS 5 Yr Growth Rate is 1.8x industry
average.
This growth picture certainly presents a compelling case for placing a
premium on CMG’s cash flows ... but is the premium too high?
Growth Ratios
Company Industry Sector
Sales (MRQ) vs.. Qtr. 1 Yr.
Ago
18.36 14.80 16.85
Sales (TTM) vs.. TTM 1 Yr.
Ago
21.97 16.81 15.24
Sales - 5 Yr. Growth Rate 22.49 14.78 8.78
EPS (MRQ) vs. Qtr. 1 Yr. Ago 19.58 19.10 68.20
EPS (TTM) vs. TTM 1 Yr. Ago 33.98 -- --
EPS - 5 Yr. Growth Rate 39.60 21.41 16.24
Capital Spending - 5 Yr.
Growth Rate
9.21 9.53 4.45
Tabledatasourcedfrom Reuters.com1/07/13
12. Chipotle Valuation Analysis
20112010200920082007200620052004200320022001
EBIT Margin 15.45%15.68%13.42%9.31%9.96%7.53%4.94%1.30%-2.51%-8.62%-18.79%
NI Margin 9.47%9.75%8.35%5.87%6.50%5.03%6.01%1.30%-2.44%-8.45%-18.24%
-25.00%
-20.00%
-15.00%
-10.00%
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
Margins
Income Margins
There are particular challenges to the current growth picture for
CMG. To command a premium for the price paid, a growth stock
should still be in a “high” growth stage. It can be argued that CMG
is still in high growth, however I see trends emerging to suggest
burgeoning maturation and stable growth.
In the chart below, EBIT and Net Income Margin showed strong
growth from 2001 until 2009. From 2009 until 2011 we see margins
beginning to stabilize, with EBIT averaging 14.9% and NI averaging
9.2% for the period.
In the chart below we see that revenue growth is strong
averaging 33.65% since 2002. However, there is a definitive
downtrend to observe.
This is to be expected as CMG continues to grow in size and
more competitors enter the Fast-casual dining segment of the
restaurant industry.
2011201020092008200720062005200420032002
Revenue Growth 23.62%20.91%14.00%22.67%31.94%31.10%33.35%49.19%54.18%55.51%
0.00%
10.00%
20.00%
30.00%
40.00%
50.00%
60.00%
Growth
Revenue Growth YoY
13. Chipotle Valuation Analysis
R² = 0.2971
-20%
0%
20%
40%
60%
80%
100%
120%
140%
Q4
2012
Q3
2012
Q2
2012
Q1
2012
Q4
2011
Q3
2011
Q2
2011
Q1
2011
Q4
2010
Q3
2010
Q2
2010
Q1
2010
Q4
2009
Q3
2009
Q2
2009
Q1
2009
Q4
2008
Q3
2008
Q2
2008
Q1
2008
Q4
2007
Q3
2007
Q2
2007
Q1
2007
Q4
2006
Q3
2006
Q2
2006
Q1
2006
Earnings Surprise Percentage by Quarter
Earnings Surprise Linear (Earnings Surprise)
Below I have charted the earnings surprise percentage since 2006 by quarter. Although the R2 is low for the
linear regression, we can see there has been a definitive downtrend in terms of the magnitude of positive
earnings surprises. The graph shows that analysts are better forecasting earnings, therefore managing
investor expectations which I interpret as negative for upside stock momentum. For investors paying high
premiums to own the equity, simply meeting expectations may only cause the stock to tread water while an
earnings miss could prove disastrous.
EarningsDatasourcedfrom ThomsonReuters
15. Chipotle Valuation Analysis – Thoughts and Conclusions
Looking at the DCF model provides guideline estimates for the intrinsic
value of CMG equity. Looking at the estimates using the 3% terminal
growth rate column, which coincides with Fed estimates of 2013 GDP
growth, we see over a range of discount rates that CMG equity at a
current price of $297.67 per share is undervalued.
Another angle to observe is earnings yield compared to 10 year Treasury
rates. Year to date earnings are $6.86 per share compared to the current
price of $297.67 which equates to a yield of 2.3%. This is only a 0.38%
excess return compared to the 10 yr yield of 1.92%
However, if FY12 annual earnings come in near consensus estimates at
$8.90 per share with today’s share price, then the earnings yield is 2.98%
which equates to a 1.06% excess return. Over 10 years that equates to
roughly 10.6% excess return over Treasury yields all else equal.
Depending on your risk aversion characteristics, CMG stock could be a
great buy. However, I am not convinced. I will detail my reasoning in the
next slide.
Total Price Per Share
Terminal Perpetuity Growth Rate
2.0% 2.5% 3.0%
Discount 6.0% $398.94 $451.53 $521.65
Rate 7.0% 313.67 345.19 384.58
(WACC) 8.0% 257.00 277.70 302.55
16. Chipotle Valuation Analysis – Thoughts and Conclusions
An Expensive Burrito
Chipotle equity does not currently present good value to the investor for
the following reasons:
1. As a “growth stock”, CMG is beginning to show signs of a maturing
business. Revenue growth is trending downwards, and margins are
stabilizing which acts as a P/E compressor.
2. As a “growth stock”, earnings momentum has trended downwards for
years and stalled over the last 18 months, setting up investors who are
“late to the party” for disappointment, even if earnings targets are in-
line.
3. Earnings yield compared to 10 year Treasury yield is too low to justify
the price premium. With no dividend expected, 10% excess return to
Treasuries over a decade is not good value especially if CMG is marketed
as a “growth stock”. This is assuming the consensus earnings target for
FY12 of $8.90 is met.
4. Chipotle’s use of cash is of concern from an investor perspective. Since
October of 2012 the company has authorized $200 million in share
repurchase programs. Is there any wonder why? Per Yahoo finance, from
February 2011 to December 2012 management has sold approximately
820,000 shares for a gross notional value of ~$2.3 billion. It would seem
that executives would like to limit the effects of dilution on the
company’s share price and float.
5. Finally we come to the competition. The Fast-casual segment of the
restaurant industry is growing and Chipotle may have the largest share,
but competitors are everywhere. Qdoba, Taco Bell (offering healthier
options), Bolocco, local Taqueria’s et al are all competing for market
share. The niche Chipotle occupies is becoming crowded. The product,
while good, is not so differentiated. This always leads to margin
compression.
The factors outlined above lead me to conclude that the price premium
necessary to acquire CMG’s earnings and cash flows does not present
good value or a proper risk-reward ratio to the investor.
17. Presented By Brian Christopher
Any questions comments or concerns contact:
Brian Christopher
kngllc@gmail.com
617.642.9211