However, a series of food safety issues caused Chipotle to fall out-of-favor with customers. In this deep-dive overview, we’ll look at Chipotle Mexican Grill’s revenues and same-store sales. Chipotle Mexican Grill operates only under the company-operated model, which means the company doesn’t franchise its restaurants like McDonald’s does. Meanwhile, 17 analysts have a “hold” rating while three analysts have a “sell” rating. On the company’s third-quarter earnings calls of 2014, then-CEO Steve Ells had stated that Chipotle’s customers are Millennials who would “skip fast food in favor of restaurants like Chipotle.” Chipotle credits Millennials, who prefer quality over price, for the company’s high same-store sales growth over fast-food restaurants such as McDonald’s, KFC (under the umbrella of Yum! She believes the U.S. has become such a melting pot of age, race, and other demographics spread out across disparate regions that fast-food operators have no way of singling out any one typical, everyday customer. The best clue came in 2016, when Chipotle had a Reputational Quotient (RQ) score of 71, far higher than McDonald’s 65.78. Recently the company launched a “Mom’s Valet” service “which allows young mothers to order food at a drive-thru, and then eat inside at a reserved table.” Families. Chipotle Mexican Grill is still growing without taking on any debt. The vertical bars indicate the expenses in millions over the last five years, and the horizontal line indicates these costs as a percentage of sales. Chipotle Mexican Grill states that a portion of its beans is organically grown. Target Market Chipotle’s primary target is adults ages 18-24 who are high school educated, and many times, college educated as well. But how is Chipotle’s advertising different than other restaurants’? The company reported strong SSSG for the first three quarters of 2019, with the latest quarter coming at 11.0%. Chipotle believes that using this technique produces better tasting, healthier meat. In comparison, McDonald’s operated 38,298 restaurants across the world. To learn more about how traffic and ticket impact same-store sales, see What Drives Restaurant Same-Store Sales? In October 2018, the company launched “Chipotle Rewards,” a loyalty program. Its occupancy cost has a higher percentage of fixed cost. Several restaurants are increasingly trying to use their existing locations to improve operating leverage. In 2018, Chipotle’s occupancy costs as a percentage of sales were 7.1% of the company’s revenue, or $347.1 million. Both marketing segmentation and targeting go hand in … That year’s survey was done in the midst of the uproar over food safety. We’ll discuss this more in detail later in this in-depth article. Chick-fil-A understands that moms are often decision-makers when it comes to family meals. But bear in mind that these companies actively franchise their restaurants, and Chipotle Mexican Grill does not. McDonald’s (MCD), Yum! Brands—collects the royalties and fees. This will also help reduce your transaction costs. Now let’s look at Chipotle Mexican Grill’s stock performance over the last few years and see what Wall Street analysts’ estimates are for the company’s key metrics. But it closed these restaurants in March 2017. Let’s explore that question now. This figure is also an improvement from 4.0% in the corresponding quarters of the previous year. But Pizzeria Locale differentiates itself from these successful chains by having the “pizza made in front of you in minutes.” By the end of the third quarter of 2019, CMG operated two Pizzeria Locale restaurants. This initiative aims to improve animal welfare standards by 2026. An In-Depth Overview of the US Restaurant Industry, series of food safety issues that the company had to face since December 2015. Also, analysts are expecting the company’s adjusted EPS to rise 56% to $2.68. From last year, the company’s labor cost has increased from 26.9% to 27.3% of total sales. Chipotle Mexican Grill was founded by the current CEO, Steve Ells, in 1993. Many of these – people consider cooking a hobby, and will make a majority of their meals from their own kitchen, specifically using fresh foods and healthy meals. Chipotle claims to use naturally grown chickens that aren’t given antibiotics. Revenue can be defined as the amount of money a company receives from its customers in exchange for the sales of goods or services. Also, the company is also committed to enhancing the animal welfare standards in the US and Canada by 2024. Revenue is the top line item on an income statement from which all costs and expenses are subtracted to arrive at net income. WE APPRECIATE YOUR PATIENCE AND APOLOGIZE IN ADVANCE FOR ANY DELAYS IN RESPONDING TO YOUR MESSAGE. Chipotle’s other operating costs include advertising and marketing expenses, bank and credit card charges, restaurant maintenance costs, and utilities. Chipotle has recently found a primary customer segment in millennials. But Niccol, with his focus on five key strategies, has managed to turn things around. For the comparable quarter, Shake Shack, which operates both company-owned and franchised locations, had reported labor expenses of 26.6% of total revenue in 2018. But first, I’ll explain why Chipotle Mexican Grill’s same-store sales have been increasing. www.chipotle.com. According to the company, Chipotle sources its ingredients from organic and local products. Brands), and Burger King (of Restaurant Brands). High growth in the restaurant industry is more likely to come from the fast-casual restaurant concept. However, as a percentage of sales, the company’s food cost has declined from 34.3% to 32.9%. Chipotle Mexican Grill claims that it sources 100% of its pork and beef from producers who raise the pigs and cattle outside. WE'RE EXPERIENCING LONGER-THAN-USUAL RESPONSE TIMES DUE TO COVID-19 . Chipotle Mexican Grill has suffered due to its E Coli crisis—but now the company is back on top, according to a consumer survey. Brands and Domino’s Pizza as well as the S&P 500 Index have returned 14.5%, 56.1%, 22.7%, and 18.5%, respectively. They have a variety of toppings available, not unlike the format of Domino’s Pizza (DPZ), Papa John’s (PZZA), and Yum! Also, the company launched similar marketing campaigns in the past. To learn more, check out An Overview of the US Restaurant Industry. The producers say their pigs are fed a vegetarian diet, and their cattle are grass-fed and never given antibiotics. To read more about Chipotle’s third-quarter SSSG of 2019, check out Chipotle Crushed Q3 Earnings: Stock a ‘Buy’ on Dips? And his enhancements like food safety programs and quarterly food safety training appear to have won investors back over as well. These costs accounted for 14% of the company’s revenues in 2018—a fall from 14.6% in 2017. Originally published in December 2014 by Adam Jones, this post was extensively updated in December 2019 by Rajiv Nanjapla. Meanwhile, peers McDonald’s, Yum! Of the 35 analysts who follow CMG stock, 15 analysts have a “buy” rating as of December 13. But you should note that Chipotle doesn’t have any interest expense. By the end of the third quarter of fiscal 2019, the company operated 2,546 restaurants. Chipotle Mexican Grill is a fast casual Mexican restaurant chain founded by Steve Ells in 1993. Analysts’ consensus price target stands at $851.36, which implies a 12-month return potential of 4.4%. Let’s look now at how Chipotle is funding its unit growth without incurring any debt. In October 2019, Chipotle signed the European Chicken Commitment. Demographics. Brian Niccol joined Chipotle in February 2018, when the company was going through a rough period after the series of food-safety issues. Mothers are clearly a large demographic of Chipotle’s followers. The investor community closely watches same-store sales numbers to check in on the health of their investments in restaurant and retail stocks. Over the past ten years, Chipotle Mexican Grill’s revenues grew at a 13.5% compound annual growth rate (or CAGR). ... hopes both to target a demographic that … To learn more about fast-casual and other restaurant concepts, check out An In-Depth Overview of the US Restaurant Industry. However, McDonald’s revenue has fallen at a CAGR of 4% due to its refranchising strategy. Chipotle Mexican Grill, Inc. (/ tʃ ɪ ˈ p oʊ t l eɪ /, chih-POHT-lay), often known simply as Chipotle, is an American chain of fast casual restaurants in the United States, United Kingdom, Canada, Germany, and France, specializing in tacos and Mission burritos that are made to order in front of the customer. And it also believes in a strong connection between “how food is raised and prepared to how it tastes.”, Also, Chipotle emphasizes animal welfare and locally grown food. However, the sales leverage from positive SSSG offset some of the increases in labor costs. So what’s Chipotle Mexican Grill doing differently to attract more customers? Chipotle Mexican Grill annual/quarterly revenue history and growth rate from 2006 to 2020. The company offers catering services in addition to on-premise selling at its restaurants. This strategy, in turn, will grow same-store sales at Chipotle’s restaurants. However, leverage can drive your return on equity. Find out how Numerator can help elevate your top line. So what’s driving the high growth for restaurant companies like those mentioned above? In 2018, Chipotle’s G&A expenses increased from 6.6% of its total revenue in 2017 to 7.7%. And since the beginning of 2018, the company has returned 182.1%. Investors can also find some of these restaurants in the SPDR S&P 500 ETF (SPY). This approach means Chipotle sources its meats from producers with animals that aren’t given antibiotics or growth hormones. Due to the disruption from food safety concerns, CMG’s correlation between unit growth and revenue has fallen to 17%. Also, we’ll see how they impact CMG’s operating income and margins. Expenses relating to corporate restructuring, annual bonus programs, and biennial all-managers’ conference expenses took the blame for the increase in G&A expenses in 2018. However, Chipotle’s revenue grew at a lower CAGR of 5.7% in the last five years due to a series of food safety issues that the company had to face since December 2015. This metric, the average customer spend, is a key driver of Chipotle’s valuation. Brands’ debt stood at $10.1 billion. Many Millennials consider cooking a hobby. Investors Relations Contact E-mail: IR@chipotle.com. The company sources its cheese and sour cream from cows that don’t receive the recombinant bovine growth hormone (or rBGH). But let’s turn now to how Chipotle sources its meat ingredients. Then, in 2016, it increased its units count by 240 units. A company uses target marketing or targeting, when it knows a group of people to market to. For the first nine months of 2019, Chipotle’s effective income tax stood at 22.3%, versus 35.8% in the corresponding quarters of 2018. Let’s focus now on Chipotle’s occupancy costs and general and administrative or G&A costs. Unit growth is equally important for a company to grow revenues. We’ll discuss unit growth in more detail later on. The casual dining restaurant concept includes restaurants such as Olive Garden, under the umbrella of Darden Restaurants (DRI), and Chili’s, under the umbrella of Brinker International (EAT). So Chipotle Mexican Grill’s advertising has been able to drive customers into its doors. Having a lackadaisical approach towards discrimination or harassment, racial or other, would not make much business sense with this demographic. Hello!! Chipotle considers their company to be in the “business of good food” they like to keep their menu limited so that it can be perfected and simplistic for their demographics. And through the franchise model, a restaurant can grow faster. Chipotle has a plan to help young farmers — and to keep its restaurants stocked with its customers' favorite menu items. Chipotle Mexican Grill Inc customers and markets results, customers demand and results compare to CMG, by company and industry - CSIMarket Brands (YUM), and Panera Bread (PNRA) have also taken initiatives to educate their customers by listing nutrition count and nutrition calculators on their websites. To find out more about the chicken production process, check out Market Realist’s Pilgrim’s Pride (PPC) overview, An In-Depth Company Overview of Pilgrim’s Pride Corporation. An In-Depth Company Overview of Pilgrim’s Pride Corporation, An Overview of the US Restaurant Industry, its fourth-quarter earnings of 2019 on February 4. Learn how to apply real-time purchase data and shopper behavior surveys from Numerator Insights to boost your sales efforts.
2020 chipotle customer demographic