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David Einhorn is one of the great short sellers of our time. But he obviously eats at better restaurants than the rest of us. This week he said Chipotle (NYSE:CMG) now had a competitive threat from Taco Bell (NYSE:YUM). This is the equivalent of saying a fully loaded Escalade is being threatened by a used Yugo.

Einhorn’s comments knocked almost 5% off CMG stock and this creates a buying opportunity but first a look at why he said what he said and why he is wrong. Taco Bell recently introduced what looks like a higher-end burrito bowl and wrap with a pretty celebrity chef, Lorena Garcia, with an appealing accent and attitude doing the commercials. If you have never been to a Taco Bell, you might go in and check it out. Why not, right, Taco Bell is cheaper than Chipotle.

Then you realize the commercials are putting lipstick on a pig. After all, we are talking about Taco Bell – different price points, different facilities and different everyday clientele than Chipotle.

But the most important point is the food. These wraps and bowls cannot be personalized as all food is at Chipotle. And that is the key – personalization.

Personalized food is what Chipotle is all about – pick out what you want and they put it together for you. Fresh food. Extra this double that, none of that – my sons do double steak with almost everything else available. I am a vegetarian burrito bowl, black beans, no cheese or sour cream, extra peppers and onions, corn, rice, guacamole on the side. My wife does chicken.

Personalized food is why Panera (NASDAQ:PNRA) is pulling away from Cosi – both offer lots of choices but PNRA has extended and modified them for a growing dinner crowd. It also has the bakery. Whole Foods (NASDAQ:WFM) caters to those wanting food prepared their way – fresh, perhaps organic, higher quality than the prepared foods at most large grocers. Newer Whole Foods gave enormous food and salad bars (one near me offers close to 100 choices plus custom sandwiches and sushi) – again, it is providing what I call personalized food.

Taco Bell is offering up market fast food from a pretty chef who vaguely reminds me of Giaada Di Laurentiis. What does this mean? Taco Bell is not trying to take share from Chipotle – as the economy slowly mends, it is trying to keep customers from going to Chipotle. Einhorn has it backwards – the new offerings from Taco Bell are an indication Chipotle is hurting Taco Bell as customers find themselves willing to spend a bit more for a personalized meal.

Éinhorn is used to being the smartest guy in the room. And usually he is. He just needs to eat out more often- at least where the rest of us eat.

Source: Einhorn Is Wrong About Chipotle