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Chipotle Mexican Grill Inc Class A CMG

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Chipotle's Well Positioned Post-Pandemic, but Current Valuation Assumes Unrealistic Long-Term Growth

R.J. Hottovy, CFA Sector Strategist

Analyst Note

| R.J. Hottovy, CFA |

Narrow-moat Chipotle's third-quarter update showcased the steps the firm has taken to navigate COVID-19-related disruptions and position itself for postpandemic market share gains. Comps increased 8.3%--well ahead of the low-single-digit growth from most nonpizza quick-service and fast casual chains--on the strength of digital/delivery sales, which increased 202% and represented 48.8% of total sales for the quarter (even more impressive when factoring in delivery price increases implemented during the quarter). While comps have retreated to mid-single-digit growth in September/October, part of the deceleration can be chalked up to lapping last year's successful carne asada launch. 

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Company Profile

Business Description

With $5.6 billion in systemwide sales during 2019, Chipotle Mexican Grill is the largest player in the $16 billion domestic fast-casual Mexican restaurant category. Its menu includes burritos, bowls, tacos, and salads, which are made from higher-quality ingredients than those typically found at quick-service restaurants. As of September, the firm operated more than 2,700 company-owned restaurants in the United States, Canada, the United Kingdom, France, and Germany.

610 Newport Center Drive, Suite 1300
Newport Beach, CA, 92660
T +1 303 595-4000
Sector Consumer Cyclical
Industry Restaurants
Most Recent Earnings Jun 30, 2020
Fiscal Year End Dec 31, 2020
Stock Type Cyclical
Employees 83,000