Many investors over look the money that can be made on a food related stock. Imagine that. “Eat What You Own.” Chipotle Mexican Grill is a great example. Each time you spend $7 bucks on their burrito, you’re adding to their revenue.
Chipotle targets a specific customer base, people who value eating healthy Mexican food in a cool looking place. The meats are all natural with no anti-biotics. Growing up in San Francisco, Chipotle contrast the mom ‘n pops burritos in the Mission district. With its industrial design, Chipotle looks more like a modern furniture showcase center. I tried their chicken burrito and I find it lacking flavor. Their strength, similar to In-N-Out Burger, is a small menu. The fillings are mostly the same:lettuce,tomatoes,beans,herbs, and meat. It’s just a matter of the form: taco/salad bowl/ or burrito.
Started by Steve Ellis, Chipotle went IPO in 2006. At the end closing the first day, the stock price was $44. As of Friday, the stock was at 110.44. If you had invested $10,000, you would have more than doubled your money. McDonald’s owned a part of Chipotle, which gave them some management and operation wisdom. The success of Subway parallels Chipotle which is the art of being replicated. The menu, interior design, and operations can be duplicated at any location. Having a limited menu, results in companies being able to secure long contracts with vendors and also negotiate low pricing with their high volume. Categorized as fast casual dining, the turnover is fast. Since they accept fax orders, offices are often their customers. Compared to Taco Bell (owned by Yum Brands), the target audience for Chipotle is for a more hip older customer base (age 20-38). At Taco Bell, the lowest priced item may be $2 for a taco while Chipotle’s average per customer sale price may be around $8 (burrito + drink). Their full potential is yet to be seen. China + India are large market that have yet to adopt Mexican fast food. Asian countries view Mexico as a third world country and probably see mashed avocado not too tempting.
* note: For writer’s integrity, I am disclosing that I do not own any Chipotle stocks, I wish I did.