Posted
Oct 25 2007, 02:19 PM
by
Robert Walberg
Help me out here people. How is it that Chipotle Mexican Grill's stock can soar to new heights -- up by a gut-busting 126% over the past year -- while the rest of the casual restaurant industry is experiencing a bad case of indigestion? Now I like a one-pound burrito as much as the next guy, but there's nothing that really separates Chipotle from the rest of the not-so-fast food Mexican chains such as Qdoba Grill (owned by Jack in the Box) and Moe's Southwest Grill (operated by franchisor Focus Brands). They all use fresh ingredients at a comparable cost served in a pleasant yet unspectacular atmosphere.
Maybe it's just that American consumers are growing tired of soup and sandwiches and are merely looking for something, and some where, different to eat. That might help to explain why Chipotle is forecasting comparable same-store sales growth in the high single, low double-digit area, while Panera Bread recently lowered its guidance to under 1%. Talk about your flat bread!
Chipotle's sensational earnings growth is the principle reason for the stock's sizzling performance. Look for the stock to be red hot again tomorrow, as the company was added to the S&P MidCap 400 after Thursday's close, making a run to new high ground a good bet over the near-term.
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