CHIPOTLE MEXICAN GRILL $356.82 (New York symbol CMG; TSINetwork Rating: Speculative) (303-595-4000; www.chipotle.com; Shares outstanding: 31.8 million; Market cap: $11.3 billion; No dividends paid) is a Denver-based Mexican-restaurant chain. The company charges slightly higher prices than fast-food chains, but it offers higher-quality food, including naturally raised meat, and better decor and service.
In the three months ended September 30, 2011, sales rose 24.1%, to $591.9 million from $476.9 million a year earlier. The company’s restaurants attracted more customers during the quarter, and it raised its prices. That pushed up same-restaurant sales by 11.3%. As well, Chipotle opened 32 new outlets. Earnings per share rose 24.5%, to $1.93 from $1.55.
New concept looks promising
Chipotle now has 1,163 locations, including the ShopHouse Southeast Asian Kitchen test restaurant it opened in Washington, D.C., in September 2011. ShopHouse sells meat made from naturally raised animals and buys vegetables and other ingredients—including garlic, lemongrass, ginger, turmeric and galangal (blue ginger)—locally.
The company says the ShopHouse restaurant has been successful, with “a line out the door every day.” It is already planning to open a second location.
Chipotle operates in the fickle and extremely competitive U.S. restaurant market. It trades at nearly 44 times its forecast earnings for this year. That’s a high ratio that leaves the stock vulnerable if it runs into any short-term problems. Still, it’s a well-established chain with a growing following, especially among health-conscious, environmentally aware baby boomers.
Chipotle is still a hold.
