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The burrito maker has been having a lot of jaw-dropping things lately. Here are 15 things you should know about this company.
How To Buy Chipotle Franchise
Go online or flip through the morning paper, and you’ll come across articles about Chipotle’s (CMG 2.25%) recent health scare. With new E. coli and norovirus infections continuing to emerge, it’s clear the company has a rough road ahead, but let’s talk about 15 things you might not know about Chipotle’s history so far.
The Chipotle Close To Montreal You Have To Roadtrip To Asap
1. Chipotle founder Steve Ells borrowed $75,000 from his father to start the company, which is worth $15 billion today. Els had the idea for what he thought was a “nice little business” while sitting outside a Mexican fast food restaurant in San Francisco.
2. Chipotle stock has soared 940% since its 2006 IPO, when McDonald’s (MCD -0.79%) began divesting its 51% stake in the company.
3. It probably won’t surprise you to hear that McDonald’s and Chipotle aren’t a natural fit. Maybe that’s one of the reasons McDonald’s spun off the company after its initial investment made $1.5 billion. Ayers is known as the burger maker trying to turn Chipotle into a Mexican version of McDonald’s, doing away with drive-thru restaurants, breakfast menus and everything else.
4. The years spent under the McDonald’s banner weren’t entirely wasted on the burrito maker. McDonald’s streamlined Chipotle’s real estate development and supply chain strategy, helping Chipotle nearly quadruple its restaurant count over the past decade.
Chipotle Launches Plant Based Chorizo And New Lifestyle Bowls
5. Chipotle’s decade-long same-store sales run is coming to an end. Executives recently predicted same-restaurant sales would drop 8-11% due to outbreaks of E. coli and norovirus.
6. Chipotle’s restaurant-level operating profit is the highest in the fast food industry. Its margins have been consistently higher than 25%, compared to rivals McDonald’s and Yum! Brands (YUM -0.62%) below 20%. Every new fast food startup wants to be called “[insert food category],” but many haven’t lived up to that title, which is a tall order.
7. Chipotle was one of the first fast food companies to demonstrate its pricing power at scale. Pricing power is critical in the era of the “value menu,” as it generates high operating margins and, in turn, strong cash flow that drives Chipotle’s aggressive (and very expensive, yet lucrative) restaurant growth. .
8. The cash returns for building Chipotle restaurants are virtually non-existent in the industry, so aggressively growing restaurants makes financial sense. The average restaurant profit is $250,000 per year, while restaurant development costs range from $600,000 to $1.3 million, depending on location. At least Chipotle can recoup its investment in less than three years. Not so with McDonald’s, which cost $2.3 million to start.
Cogs Driving Chipotle’s Total Expenses?
9. From a financial perspective, Chipotle has a near-perfect business model. The best way to put this in perspective is to examine return on assets. The company has a return on capital of 25.6% and a cost of capital of 8.45%. The 17.1% difference is the value Chipotle creates by investing in growth. In some cases, the banking industry earns more on loans (return on equity) than it pays on deposits (cost of capital), and banks have spreads in the low single digits.
10. Chipotle’s real estate strategy has changed dramatically over time. While the company primarily builds stand-alone units in high-traffic areas, Chipotle now operates a variety of lower-investment restaurants, such as retail centers and food courts in malls.
11. Chipotle is far from dotting the American landscape with restaurants. In fact, there are 6 Chipotle restaurants per million people in the United States, compared with 45 for McDonald’s. I can’t imagine Chipotle being packed with McDonald’s-like restaurants, but there’s a long runway before you hit every street corner, like Starbucks (SBUX -0.42%), which operates 24 restaurants per million people in the US.
12. Don’t mistake Chipotle’s slogan “Fairness in Food” for health. After a Chipotle meal, you’ll get your daily dose of sodium (and then some). One serving of burritos has 2,410 mg of sodium and 1,275 calories!
Chipotle To Mid Sized Cities: We’re Coming For You
13. Chipotle isn’t just honest about the ingredients in its food. Steve Ells acknowledged that the company doesn’t have a crystal ball for forecasting same-restaurant sales, a metric closely watched by investors who mistakenly think they can predict numbers from the outside. As Els said when asked to forecast same-store sales:
We’re not going to spend a lot of time predicting how we’re going to exceed that number. What we’re doing is we’re going to take the current sales trends and push them out over the next 14 months, the rest of the year, and then all of 2015. … For example, you really don’t have a magic trick or crystal ball to predict how you’re going to beat the 19%.
14. There’s a secret way to get a year of free Chipotle burritos. Unfortunately, you first have to be a famous athlete and tweet about your Chipotle love, like former professional athletes Russell Wilson, Bryce Harper, Tony Hawk, and many others.
15. Beyond the Chipotle tidbits, the company has serious health issues to address. Just a few weeks ago, Boston reported a separate and unrelated norovirus outbreak after 53 restaurants in Washington and Oregon closed due to an E. coli outbreak in October. The hits just kept coming. The CDC is now investigating another E. coli outbreak that may be linked to the Chipotle site in the Midwest. As expected, the stock hit multi-year lows as a result.
After Numerous Health Incidents, Chipotle Has A Big Perception Problem
Chipotle Mexican Grill CMG $1,512.47 (2.25%) $33.26 Delicious! Brand Yum $128.89 (-0.62%) $0.80 Starbucks SBUX $105.85 (-0.42%) $0.45
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How To Eat Vegan At Chipotle
Better invest in The Motley Fool. Get stock tips, portfolio guidance and more from The Motley Fool’s premium service. With over 2,819 locations, you can’t go wrong with Chipotle. The Mexican restaurant chain has locations across the United States as well as Canada, Germany, the United Kingdom and France. Many consider it a healthy snack because it’s made with vegetables and whole grains. The company offers food without artificial flavors, colors or preservatives. True to the motto “Food with Integrity,” Chipotle prides itself on fresh ingredients.
How much will it cost to open a Chipotle in 2022? Chipotle once allowed franchising of its restaurants, but the program ended in 2006. Starting today, Chipotle won’t allow anyone to franchise their restaurants because they don’t want to “break” the way they run their business. By working with a franchisee, you give up some control as an entity. You can find opportunities that fit your goals and budget by taking our 7-minute franchise quiz.
In this industry report, I evaluate Chipotle’s sales, profits, and other business figures. If the company decides to open up another franchise opportunity, you’ll be ready to take action. Let’s explore this growing Mexican business concept.
Chipotle does not offer franchise opportunities and therefore charges no fees. Meanwhile, here’s what similar concepts looked like when we evaluated similar concepts like Qdoba and Moe’s West Grill.
Chipotle Giving Vegan Plant Based Chorizo A Try On Its Menu
Chipotle averaged $2.2 million in sales per store. Average sales per store in 2019 matched that figure. On the other hand, their global revenue was close to $6 billion, the highest in Chipotle’s history, with sales up 7.13%.
That’s pretty average store performance from a sales numbers standpoint. For example, consider the concept of Steak ‘n Shake, grosses
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