Chipotle Mexican Grill Company Analysis James Gaffigan Zachary

Chipotle Mexican Grill Company Analysis James Gaffigan Zachary Hylton Jordan Schwartz Nicholas Pycha

Overview �Founded: 1993, �Industry: � 1, 300 Colorado fast casual food restaurants globally �Restaurant chains in: ◦ 35 states in U. S ◦ District of Columbia ◦ Ontario, Canada ◦ Europe (Zack's, 2012)

Overview �Serves: ◦ Burritos and burrito bowls ◦ Tacos ◦ Salads �Food with Integrity Policy ◦ Fresh Ingredients ◦ local produce ◦ Naturally raised animals (Zack's, 2012)

Investment Decision �Not a good long-term investment ◦ Fierce competition: Taco Bell and Qdoba ◦ Overvalued stock price/ lack of dividends ◦ Current legal issues (Mussi, 2012)

�SWOT Analysis ◦ Chipotle vs. Taco Bell �Sustainable resources ◦ Food with Integrity vs. Cantina Bell Jordan Schwartz

SWOT Analysis � Strengths ◦ Sustainable resources: Food with Integrity ◦ Marketing programs ◦ Minimal growth � Weaknesses ◦ Irregularities in work authorization documents ◦ Increased labor costs (EBSCO, 2012) & DATAMONITOR: Yum! Brands, Inc. (2010, September 2)

SWOT Analysis � Opportunities ◦ Focus on expansion � Threats ◦ Fierce competition ◦ Increasing costs (EBSCO, 2012)

�Competitive factors �Business in the news James Gaffigan

Competitive Factors �Current and potential earnings �Mergers and acquisitions �Any development of a new product �News (How the Market Works, 2012)

Business in the News �Rounding price of food �Legal issues �Financial prospects disclosed incorrectly �Substantial drop in stock price (Torrisi, 2012) (Olsen, 2012)

�Financial Analysis ◦ Significant factors �Gross Profit �Net Income �P/E Ratio �Earnings Per Share Zachary Hylton (Zack's, 2012)

Gross Profit Qdoba Gross Profit (in millions) Taco Bell Chipotle 0 1, 000 2, 000 3, 000 4, 000 5, 000 6, 000 7, 000 (Zack's, 2012)

Net Income Qdoba Net Income (in millions) Taco Bell Chipotle 0 2004006008001, 000 1, 200 1, 400 (Zack's, 2012)

P/E Ratio Qdoba FY Estimates Taco Bell Chipotle 0 5 10 15 20 25 30 35 (zacks. com)

Earnings per Share Qdoba Diluted EPS Taco Bell Chipotle 0 2 4 6 8 (Zack's, 2012)

Stock Prices 400 350 300 250 Chipotle 200 Taco Bell 150 Qdoba 100 50 0 Sept '08 Sept '09 Sept '10 Sept '11 Sept '12 (yahoo. finance. com)

Dividends Company Yield Annual Div. Payout Ratio Chipotle -0 - -0 - Yum Brands 1. 93% $1. 34 . 36 (zacks. com)

�Analyst's Evaluations ◦ Standard and Poor’s ◦ Zacks Investment �Conclusion: Our recommendation Nick Pycha

Standard & Poor’s �Current �Risk recommendation: Hold assessment: Medium risk �Values CMG stock price at $278. 20 per share ◦ Overvalued by $58. 20 or 17. 3% (Standard & Poor’s, 2012)

Zacks Investment Research �Zacks Rank: 3 - Hold �Recommendation: �Failed Neutral to meet estimations ◦ Earnings per share ◦ Revenue (Zack's, 2012)

Conclusions �Fierce competition �Overvalued �Current stock price/ lack of dividends legal issues �Recommendation: YUM Brands