We have reverted to a Neutral recommendation on Chipotle's from
Outperform reflecting the company's muted 2015 outlook. Although
the company's third-quarter adjusted earnings as well as revenues
beat the Zacks Consensus Estimate and also increased year over
year, the muted comps outlook for 2015 raised concerns. We believe
elevated costs of beef, avocados and dairy might force the company
to hike prices for a second consecutive time in two years, which
could hurt traffic trends at its outlets. Nevertheless, the company
is expected to maintain its strong market position through
innovative menu launches, serving antibiotic-free meats as well as
organic menu items and increased media exposure.
Founded in 1993 and based in Denver, CO, Chipotle Mexican Grill
Inc. (CMG) operates quick-casual and fresh Mexican food restaurant
chains in 35 states throughout the United States, the District of
Columbia and Ontario, Canada and the U.K. Chipotle offers a focused
menu of burritos, tacos, burrito bowls (a burrito without the
tortilla) and salads. Chipotle restaurants feature free-range,
hormone-free pork, natural chicken and other meat products cooked
through traditional methods and served in a unique atmosphere.
Chipotle classifies its restaurants as end-caps (at the end of a
line of retail chains), in-lines (in a line of retail chains),
free-standing units and others.
As of Sep 30, 2014, the company operated 1,724 restaurants
throughout the United States. The company also has seven
restaurants in Canada, six in England, three in France and one in
Germany. Further, the company operates eight ShopHouse Southeast
Asian Kitchen restaurants, serving fast-casual, Asian inspired
cuisine. Chipotle also holds an equity stake in a consolidated
entity that owns and operates a Pizzeria Locale unit, a fast casual
Chipotle Mexican Grill, Inc. (CMG): Read the Full
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