Seeking Alpha

Chipotle calls out the fast-food industry

  • Execs with Chipotle (CMG -1.1%) are full of swagger after blasting away restaurant peers with a 17% gain in comparable-store sales in Q2.
  • The general take from inside the Denver juggernaut is that no other company is accomplishing what Chipotle is doing at scale and in a sustainable fashion.
  • Co-CEO Monty Moran goes as far as to say the traditional QSR game of value meals and "cheapening" the food experience is going away. Though he didn't name names, his description brings burger giant McDonald's (MCD +0.5%) and Burger King (BKW -3%) to mind.
  • What to watch: Chipotle is planning to apply some of the same principles that worked with the burrito chain to the ShopHouse and Pizzeria Locale concepts.
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Comments (9)
  • J Mintzmyer
    , contributor
    Comments (3739) | Send Message
     
    imo QSR is filling a void for middle and upper income folks who used to stomach the MCD/BKW offerings, used to pack lunches, or used to visit local restaurants.

     

    I doubt there's much growth left long-term for QSR or much losses left for the MCD/YUM types- but we'll see.
    27 Aug 2014, 04:04 PM Reply Like
  • Buyandhold 2012
    , contributor
    Comments (2528) | Send Message
     
    I see absolutely nothing to like about Chipotle stock.

     

    The PE ratio is 63.52. That is a PE ratio in the stratosphere. Ben Graham advised against investing in stocks with PE ratios above 15.

     

    The stock pays no dividend. And there are far better stocks to consider for purchase at this time.
    27 Aug 2014, 04:37 PM Reply Like
  • King Rat
    , contributor
    Comments (773) | Send Message
     
    A math teacher shouldn't reject a textbook for a school because the textbook is for history. Instead the math teacher should refer the book to the history department.

     

    Nobody is going to dispute Ben Graham's methodology or the success of his methodology's followers. Nonetheless, just because CMG is not appealing to Graham's methodology does not mean that CMG is not appealing to any investor at all. AAPL has gone from a PE of over 100 15 years ago to under 60, under 35, and now under 17. Rejecting AAPL strictly from a PE standpoint or dividend standpoint would have been regrettable.

     

    Disclaimer: I am not long CMG but I get weary when otherwise intelligent people imposing their personal preference on others as though they were universal principles everybody should adhere to.
    27 Aug 2014, 06:34 PM Reply Like
  • Nahila1
    , contributor
    Comments (22) | Send Message
     
    Do not write off McDonalds as they can increase their advertising budgets and lower prices enough to snuff out competitors if they change direction and go back to the basics of fewer menu offerings and improve the core menu items and service. Food offerings are trendy and Mexican restaurants as well as other concepts have come and gone. The competition for customers is entering a period of changing of demand for less sugar and bread/buns menu items with a strong push toward freshness. McDonalds is the 1100 lb. Gorilla in the market and still on top of the restaurant food chains and under a strong leadership change of direction can still smoke the competition. I know from what I say after having been in every phase of the restaurant business for 48 years and been a direct and Indirect competitor of McDonalds for the last 38 years.
    27 Aug 2014, 04:51 PM Reply Like
  • 81george
    , contributor
    Comments (284) | Send Message
     
    It appears that King Rat is as far from investment world as math is from history. I would guess that he is a liberal arts person, probably history teacher rather than science, finance or business, let alone math, which require strong logic.
    And yes, CMG operates in the industry where even current high growth rates don't justify 63.5 p/e and can't be compared to AAPL, Googl, AMZN etc.
    27 Aug 2014, 09:01 PM Reply Like
  • chopchop0
    , contributor
    Comments (3650) | Send Message
     
    YUM has managed to do OK. MCD is struggling big time.
    27 Aug 2014, 10:04 PM Reply Like
  • 9895461
    , contributor
    Comments (63) | Send Message
     
    Does Monty really think that the value meals are going to go away? I think alot of people like the fact that at McDonalds you can get a meal that's fast, cheap and sends you on your way.
    28 Aug 2014, 06:47 AM Reply Like
  • rcm438
    , contributor
    Comments (21) | Send Message
     
    I'd be careful.................. burritos are not an everyday staple and will only grow to a point. Also at some point, the public will realize that this "good and healthy" product is neither. Chipoltle has done a terrific job in controling the messaging. Try to figure out how many calories, fat and sodium you are really eating. When you go to the website you have to go thru a lot of gyrations to figure it out. I was shocked to find out my burrito and dring were over 1700 calories with almost 3000 mg of sodium. More than 2 1/2 big macs. At some time the public will get wise
    28 Aug 2014, 07:28 AM Reply Like
  • chopchop0
    , contributor
    Comments (3650) | Send Message
     
    yup. they are highlighting local produce and humane meat, but ignoring the actual healthiness of the food itself.
    28 Aug 2014, 07:57 AM Reply Like
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