Facebook's IPO Debacle, Day 3: Un-Friended and Dis-Liked on Wall…
Former Olympic Rower Turned to Minimalism to Pay Down $82,000 in Debt
This post is part of my series featuring established companies and the smaller, more aggressive or innovative rivals that may eventually succeed them.
The most impressive game-changer story in the fast food industry over the past 50 years is indisputably McDonald's (NYSE: MCD). Founder Ray Kroc was a visionary and pioneer in serving customers hot fast food at a reasonable price. Thirty thousand units later, McDonald's is still a growth story. But the better growth story is Chipotle Mexican Grill (NYSE: CMG), so much so, in fact, that McDonald's was an early investor in Chipotle! (McDonald's no longer owns shares of Chipotle.)
McDonald's went through some execution issues in the mid-1990s through 2003. The fast food industry was taking some hits from nutritionists, and the quality of food was suspect. McDonald's re-tooled its entire operation from store front to menu offerings. The standard hamburgers and those delicious french fries are still on the menu, but McDonald's has added a variety of salads, wraps and other healthier options. In the past five years the stock has nearly tripled in value, validating McDonald's make-over.
Chipotle, founded in 1993, has not had to re-tool or redefine itself. The freshest of ingredients, naturally raised poultry and beef are highlights of the limited, but superb menu. Chipotle is a favorite of almost every demographic group, from teenagers to the elderly. Chipotle has succeeded in offering the finest fresh Mexican food, but not at the cheapest price. The average ticket at Chipotle comes in near $9. The company recently raised prices at different levels depending on geography. Sales have not slowed a bit in spite of the price increases.
McDonald's has saturated its key markets and must make "the box" yield greater sales leverage. The company will add units strategically, but for the most part, the key real estate corners are already "Golden Arches" occupied. Whereas Chipotle, with only 730 units, has room to easily 10-fold that base over the next decade. This does not include any international expansion in the equation. The Chipotle concept is portable to selected nations that fancy Mexican food.
Only in existence for 15 years, Chipotle has defined the casual, fast-food Mexican industry. The company offered its initial public offering (IPO) on January 26, 2006, at $22 per share. The stock saw a high of $150 and now rests at $90, still a four-bagger since the IPO. The strength of the story lies in its flawless daily execution and fierce customer loyalty. Chipotle is a GameChanger company and Ray Kroc would be proud of Chipotle!
Georges Yared is the editor of YaredsGameChangers.com and author of the new report "How to Spot the Next Google."
Goldman Earnings Sink After Buffett Dividend
Johnson & Johnson's Income Falls 23%
Burberry Shares Leap on Sales Update
Reader Comments (Page 2 of 2)
7-28-2008 @ 7:09AM
Wetnwild66NC said...
These optimistic, over-the-top articles are usually written by people who have a vested, monetary interest in the companies covered in the story. I'm sure "Georges Yared" has probably put alot of money into Chipolte stock, hoping this article will help Chipoltes return to it's former high of $150/share . Right now, as of July 27, Chipolte stock is trading at a 52 week low of $66.31...so many people gush how wonderful Chipoltes is... but there's got to be something wrong at Chipoltes for their stock to take such a nosedive... and don't blame the economy.. it sounds like they've either priced themselves out of the market with expensive entrees or people are disappointed with the menu selection and don't return after their initial visit.
9-01-2008 @ 1:28AM
Ryan said...
Does anyone reading this article actually know anything about the fast food service industry? This is a completely BOGUS comparison!!! Look into the facts, the company that OWNS Chipolte is none other that McDONALD'S!!! What a wonderful comparison?!?!?! A branch of the company being replaced is owned by a branch of the same company! This is a HORRIBLE comparison, and before they compare Boston Market to Chipolte or McDonald's, Boston Market is also owned by the Golden Arches. If it wasn't for the fact they needed the money for stockholder equity, they also owned Donato's Pizza. So who cares if you like the Mexican or the Big Mac, if AOL is going to compare one company to another, it helps to actually compare 2 DIFFERENT companies.
9-10-2008 @ 9:24PM
Gabriel said...
What a bunch of BS! You all that tasted the food and didn't like it it's probably because you requested some hot salsa on your food! It is really interesting all the comments about my loved Chipotle, and really bothering to read people like ROBERTA yes you lady with the hispanic name! Talking sh...t about people that eats at chipotle, those who can afford 9dls a meal. Please get some more info, I work at a Chipotle restaurant and 95% of the people that eats at every single Chipotle is other than Mexicans or Hispanics in general, you IDIOT. If you really want a healthy meal go to chipotle, do some research about our food, I agree it's not like mexican food IN MEXICO, but its just like going to any Full service Mexican Restauant, the food it's not like in Mexico. Go eat tacos to a LUNCH TRUCK parked on the street and that my friends, tastes like REAL MEXIAN FOOD(tacos only), Whatever you just made me mad. Ahhhh one more thing, Chipotle is not own by no body, Chipotle is and independent Company, 100% a Corporation. Pardon my english. Amigos si no sabes nada callate por favor!!!