Comments on: Chipotle Mexican Grill (CMG) – Setting up for Disappointment http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/ Dynamic Investments for Exceptional Traders Tue, 31 Jan 2012 01:21:02 -0700 http://wordpress.org/?v=2.8.6 hourly 1 By: cute kitten http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/comment-page-1/#comment-15534 cute kitten Thu, 28 Apr 2011 17:43:06 +0000 http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/#comment-15534 I dugg some of you post as I cogitated they were handy very beneficial. I dugg some of you post as I cogitated they were handy very beneficial.

]]> By: The Week Ahead: Apple, Netflix and more - Top Stocks http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/comment-page-1/#comment-4942 The Week Ahead: Apple, Netflix and more - Top Stocks Sat, 19 Jul 2008 04:34:34 +0000 http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/#comment-4942 [...] He looked at the increasing costs associated with the food that Chipotle served and provided great insight into a short position that paid off well. Now, shares are starting to bounce on the recent market uptick and estimates [...] [...] He looked at the increasing costs associated with the food that Chipotle served and provided great insight into a short position that paid off well. Now, shares are starting to bounce on the recent market uptick and estimates [...]

]]> By: ZachStocks » Blog Archive » Chipotle Mexican Grill, Inc. (CMG) - Results are in, Stock is Down http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/comment-page-1/#comment-4525 ZachStocks » Blog Archive » Chipotle Mexican Grill, Inc. (CMG) - Results are in, Stock is Down Fri, 25 Apr 2008 17:52:44 +0000 http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/#comment-4525 [...] articles by ticker MF LULU CROX ESEA FCSX SCOR CMG EJ TNDM DSX CMED BX GTLS CTCM CRM SVR GXDX CLR PWRD BKC FSLR PFWD N KBW SFLY MORN LVS NYX ICE OXPS [...] [...] articles by ticker MF LULU CROX ESEA FCSX SCOR CMG EJ TNDM DSX CMED BX GTLS CTCM CRM SVR GXDX CLR PWRD BKC FSLR PFWD N KBW SFLY MORN LVS NYX ICE OXPS [...]

]]> By: BorisB http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/comment-page-1/#comment-4504 BorisB Tue, 15 Apr 2008 17:03:19 +0000 http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/#comment-4504 Question. You posted that some premium is warrented. Jeffries just said Chipotle is best of breed. this might be a mini-mcdonalds growth story in the making. Also monthly sales at Mcdonalds, extra fuel sensitive Cracker Barrel and others are reporting monthly sales, keep watchers abreast of the situation, and there has been some stablization in the "consumer staple" restaurant monthly sales. and I just dont see what tired hamberger trick Burger King has that Chipotles doesnt other then a lower valuation. What does the fair value for CMG look like today and in 1 year? There has been a dip of $14 bringing it down to the 50 MA. also a final thought.. in Atlanta there are about a dozen sites. but this growth story implies there is room for 4 dozen sites. 50 sites? is that possible? there are 50 in Denver and 50 in Chicago. Question. You posted that some premium is warrented. Jeffries just said Chipotle is best of breed. this might be a mini-mcdonalds growth story in the making. Also monthly sales at Mcdonalds, extra fuel sensitive Cracker Barrel and others are reporting monthly sales, keep watchers abreast of the situation, and there has been some stablization in the “consumer staple” restaurant monthly sales. and I just dont see what tired hamberger trick Burger King has that Chipotles doesnt other then a lower valuation. What does the fair value for CMG look like today and in 1 year? There has been a dip of $14 bringing it down to the 50 MA. also a final thought.. in Atlanta there are about a dozen sites. but this growth story implies there is room for 4 dozen sites. 50 sites? is that possible? there are 50 in Denver and 50 in Chicago.

]]> By: BorisB http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/comment-page-1/#comment-4495 BorisB Fri, 11 Apr 2008 01:03:25 +0000 http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/#comment-4495 i will be happy if "well oiled machine" as you phrased it Chipotles *A* shares reach $140 by year end. A breakout to new highs and besting 1000 sites by the end of next year would be nice. if they can open >200 new sites in 2009 that would be fantastic. The consumer and commodity macro factors will probably influence the color of the price escalation. i will be happy if “well oiled machine” as you phrased it Chipotles *A* shares reach $140 by year end. A breakout to new highs and besting 1000 sites by the end of next year would be nice. if they can open >200 new sites in 2009 that would be fantastic. The consumer and commodity macro factors will probably influence the color of the price escalation.

]]> By: Zach http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/comment-page-1/#comment-4491 Zach Tue, 08 Apr 2008 22:37:34 +0000 http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/#comment-4491 Boris, Thanks for the comments! I'm not sure we're that far apart on fundamentals for the company, we just come to different conclusions as to the stock price. I don't think SSS have to decline in order for the stock to sell off. But a 10% hike in NYC is actually a bit concerning. This could have the effect of raising sales (inelastic demand) or could be disastrous if demand is actually elastic and people refuse to pay more. The fact that 3 houses upgraded the stock doesn't do much to give me confidence. Often these guys are actually very accurate at determining sales and earnings figures but can totally miss the boat as far as predictions on how the stock will react. If analysts (and by extension their clients) are bullish, that may be a sentiment metric that a good trader would fade. Only time will tell. But it will certainly be an interesting stock to watch over the next several quarters and I believe the fate of CMG will be highly correlated to many consumer dependent sectors of our market. Thanks for reading and for participating in the dialog! Zach Boris,

Thanks for the comments! I’m not sure we’re that far apart on fundamentals for the company, we just come to different conclusions as to the stock price. I don’t think SSS have to decline in order for the stock to sell off. But a 10% hike in NYC is actually a bit concerning. This could have the effect of raising sales (inelastic demand) or could be disastrous if demand is actually elastic and people refuse to pay more.

The fact that 3 houses upgraded the stock doesn’t do much to give me confidence. Often these guys are actually very accurate at determining sales and earnings figures but can totally miss the boat as far as predictions on how the stock will react. If analysts (and by extension their clients) are bullish, that may be a sentiment metric that a good trader would fade.

Only time will tell. But it will certainly be an interesting stock to watch over the next several quarters and I believe the fate of CMG will be highly correlated to many consumer dependent sectors of our market.

Thanks for reading and for participating in the dialog!

Zach

]]> By: borisb http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/comment-page-1/#comment-4490 borisb Tue, 08 Apr 2008 21:53:12 +0000 http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/#comment-4490 On Mar. 31, New York-area Chipotle restaurants hiked prices almost 10%. A spokesman for the chain, which offers Mexican fare, said the price rise, the first in more than three years in that region, was due to higher food costs. "Even with the new prices in New York, Chipotle remains a great value," he said in a statement. On Mar. 31, New York-area Chipotle restaurants hiked prices almost 10%. A spokesman for the chain, which offers Mexican fare, said the price rise, the first in more than three years in that region, was due to higher food costs. “Even with the new prices in New York, Chipotle remains a great value,” he said in a statement.

]]> By: Borisb http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/comment-page-1/#comment-4485 Borisb Mon, 07 Apr 2008 01:04:02 +0000 http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/#comment-4485 "Looking specifically at Chipotle, it appears that the valuation is high due in a large degree to confidence in the company’s management." this is probably not what sets the valuation. during the past 15 months the unit economic model has upticked from 39% ROI to about a 44% ROI. thats solid cause for optomism and chipotles says locations are easier to come by. they are in opportunitic position to take advange and move in on other players expansion turf as the industry cuts back new unit growth. If you have picked up some concrete inside information that SSS are going down the tubes then i wont argue with that but for now i believe the same store sales are still relatively robust. Thats why 3 houses have upgraded Chipotle in past 30 days. the new Jefferies report pratically glowed. “Looking specifically at Chipotle, it appears that the valuation is high due in a large degree to confidence in the company’s management.” this is probably not what sets the valuation. during the past 15 months the unit economic model has upticked from 39% ROI to about a 44% ROI. thats solid cause for optomism
and chipotles says locations are easier to come by. they are in opportunitic position to take advange and move in on other players expansion turf as the industry cuts back new unit growth. If you have picked up some concrete inside information that SSS are going down the tubes then i wont argue with that but for now i believe the same store sales are still relatively robust. Thats why 3 houses have upgraded Chipotle in past 30 days. the new Jefferies report pratically glowed.

]]> By: Borisb http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/comment-page-1/#comment-4483 Borisb Sun, 06 Apr 2008 17:51:23 +0000 http://zachstocks.com/2008/04/chipotle-mexican-grill-cmg-setting-up-for-disappointment/#comment-4483 Chipotle just for fun. AAA. favorite growth metric: chipotle unit volumes have grown for 12 quarters sequentially to an annual rate of $1,734,000 per unit up sharply from under $1,500,000 per unit in 2005. while the sequential growth is enviably over due to slow down sharply..(or is it?) the unit economics near $1,734,000 annual sales equate to >40% ROI. thus even if there is some demand softness it clearly pays for Chipotle to raise expansion plans from 130-140 in 2008 towards an eventual clean cut goal of 200 units annually. the uniformly priced upfront menu prices all entrees for $6-ish. Chipotle's market share gains with its stellar upfront $6-ish per entree menu( $6-ish per entree occurs atleast suburban real estate locations florida's orlando to miami. The quality perception by the loyal fan base, repeat customers 30 to 50 times a year..is the $6 entree may have a value of up to $12 per entree in casual dinning format. so the loyal repeat customers have a value perception of a $12 entree priced for $6 , half price. The core customer base is Colledge stuntents. BBB. MACRO ENVIRONMENT Regarding consumer slow down. i agree. this is dangerous threat. Lets look at what bellweather MCDONALD's has fully disclosed in DECEMBER, JANUARY, FEBUARY RESULTS. McDonalds same store sales bottomed out in December and upticked nicely in January and Ramped up bigtime in Febuary. see wachovia's MCD SSS FEB '08 report early march. the next mcdonalds monthly sales report is due in *1 to 2 days*. Whats more McDOnalds said consumer are stress ed but this is cutting into McDonalds sales by only 1% to 2% and that during the worst the "Dollar Value ITEMS" barley upticked from 13% of overall sales to 14% of overall sales. This suggest that these type of operators McDonalds, Burger King, a $6 per entree CHipotle have proven to be more *low priced* consumer staples then consumer discretionary. CCC. COMMODITY 1 & COMMODITY 2 Commodity 1 - input cost trend is horrible. Commodity 2 - realestate and construction market favorable soemwhat.. due to industry downcycle and spare capacity. ( perhaps somewhat a buyers market). Commodity 1. McDonalds has reported that some input cost have risen 10% in the past year. So this is a lingering problem for a few quarters. But commodity cycles come and go and Chipotle is still the smooth Pac-Man marketshare operator. Chipotle just for fun. AAA. favorite growth metric: chipotle unit volumes have grown for 12 quarters sequentially to an annual rate of $1,734,000 per unit up sharply from under $1,500,000 per unit in 2005. while the sequential growth is enviably over due to slow down sharply..(or is it?) the unit economics near $1,734,000 annual sales equate to >40% ROI. thus even if there is some demand softness it clearly pays for Chipotle to raise expansion plans from 130-140 in 2008 towards an eventual clean cut goal of 200 units annually. the uniformly priced upfront menu prices all entrees for $6-ish. Chipotle’s market share gains with its stellar upfront $6-ish per entree menu( $6-ish per entree occurs atleast suburban real estate locations florida’s orlando to miami. The quality perception by the loyal fan base, repeat customers 30 to 50 times a year..is the $6 entree may have a value of up to $12 per entree in casual dinning format. so the loyal repeat customers have a value perception of a $12 entree priced for $6 , half price. The core customer base is Colledge stuntents. BBB. MACRO ENVIRONMENT Regarding consumer slow down. i agree. this is dangerous threat. Lets look at what bellweather MCDONALD’s has fully disclosed in DECEMBER, JANUARY, FEBUARY RESULTS. McDonalds same store sales bottomed out in December and upticked nicely in January and Ramped up bigtime in Febuary. see wachovia’s MCD SSS FEB ‘08 report early march. the next mcdonalds monthly sales report is due in *1 to 2 days*. Whats more McDOnalds said consumer are stress ed but this is cutting into McDonalds sales by only 1% to 2% and that during the worst the “Dollar Value ITEMS” barley upticked from 13% of overall sales to 14% of overall sales. This suggest that these type of operators McDonalds, Burger King, a $6 per entree CHipotle have proven to be more *low priced* consumer staples then consumer discretionary. CCC. COMMODITY 1 & COMMODITY 2 Commodity 1 – input cost trend is horrible. Commodity 2 – realestate and construction market favorable soemwhat.. due to industry downcycle and spare capacity. ( perhaps somewhat a buyers market). Commodity 1. McDonalds has reported that some input cost have risen 10% in the past year. So this is a lingering problem for a few quarters. But commodity cycles come and go and Chipotle is still the smooth Pac-Man marketshare operator.

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