gfp Posted May 25, 2016 Share Posted May 25, 2016 Their store traffic increases seasonally, so busier stores should be expected from that alone. So anecdotal observations are interesting, but aren't going to help figure out year-over-year comps. The store traffic will come back with time, but the pace at which it occurs is unknowable. I agree with the bull in that debate... because he is me. The guy you're replying to periodically posts in this thread to pump up the stock, so I wouldn't take anything he says too seriously. No need for me to pump up the stock. Besides I'm up $57 per share so far on CMG. If you prefer, we can talk about the Toronto Raptors instead! ;D So you started this thread a year ago and your cost basis on this stock is 400, coincidentally the low tick of the last three years? Amazing Link to comment Share on other sites More sharing options...
Palantir Posted May 25, 2016 Share Posted May 25, 2016 Hey, if you're working for Chipotle, at least give us a few free coupons! 8) Link to comment Share on other sites More sharing options...
fareastwarriors Posted May 25, 2016 Share Posted May 25, 2016 Go Raptors! Link to comment Share on other sites More sharing options...
JayGatsby Posted May 25, 2016 Share Posted May 25, 2016 I visited a food court for lunch today and didn't see many people at CMG. Lots at the sushi place and Wich Wich and at McD but not too many at CMG. Half the customers were under 18 so how many of them had even heard of the food problems? And it occurred to me that the concept is a little tired. People are interested in new stuff and 1000 calorie burritos is not new. It was five or ten years ago but not now. Maybe CMG could launch bibimbap bowls. I would definitely try that. If this were true wouldn't SSS have been declining pre-ecoli? I think it's the Deutsche Bank analyst that keeps repeating this... I'm just not sure what it's based on other than personal taste. A sample set of people eating sandwiches and burgers rather than burritos doesn't seem all that conclusive. I think the evidence speaks for itself. But don't these chains usually come out with new menu items to create new interest? I haven't visited Chipotle in years but nothing had changed. Exact same menu. That's fine as long as it's working but Chipotle is no longer a new chain. There are now lots of places that provide better and healthier food compared with five or ten years ago (Zoes and Noodles etc, for example) when Chipotle was relatively fresh. Prior to ecoli SSS were positive. Then as soon as ecoli hit SSS went sharply negative and hasn't recovered. If there was menu fatigue I would have expected SSS to be negative one year ago, similar to how Subway and McD (prior to the brinner launch) have had gradual SSS declines. Something new may help get people back into the store so they can get comfortable with the product again. Link to comment Share on other sites More sharing options...
Oreo Posted June 9, 2016 Share Posted June 9, 2016 I am short CMG on and off. I get that CMG put up a good SSS performance prior to the food hygiene scandal, but even in an imaginary parallel universe where that scandal never happened, I imagine SSS growth would be trending lower. CMG's stores are grungy, dark, dirty and uninviting. Barriers to entry are falling (check out Sweetgreen). In the areas where CMG has its stores, I can find several competitors serving food at similar value/price ratios. Finally, I think that good, healthy food is becoming a commodity. You can get decent organic food by walking over to a Whole Foods. The proliferation of food delivery apps / logistics platforms (UberEats and Amazon will be the next ones) will take away the share of wallet and attention that CMG currently is enjoying. And all the competitors who previously paid no mind to the organic / health / wellness trends are moving in that direction. It's the obvious move. Shorting first-movers in segments with low (or falling) barriers to entry and intensifying competition tends to pay off. Link to comment Share on other sites More sharing options...
JayGatsby Posted June 9, 2016 Share Posted June 9, 2016 What's changed about the barriers to entry? Link to comment Share on other sites More sharing options...
Andrew6892 Posted June 13, 2016 Share Posted June 13, 2016 There is a lot of conjecture about CMG's valuation. I don't think you can conclude anything intelligent about CMG's valuation without understanding the unit economics, the market opportunity, DCFing it all out, and changing your recovery scenarios to see how that impacts the valuation. I've seen so many people being quick to slap some multiple on current earnings and call that value, but they aren't even aware what long-term assumptions are baked into those valuations. I'd ask those people a question like, "How many total units does your multiple assume at maturity?" They don't know or care or even understand why that matters. Link to comment Share on other sites More sharing options...
awindenberger Posted June 13, 2016 Share Posted June 13, 2016 Great point Andrew. Do you think that the issues they've been having this year will result in them opening new units at a slower pace long term? Link to comment Share on other sites More sharing options...
NBL0303 Posted June 13, 2016 Share Posted June 13, 2016 There is a lot of conjecture about CMG's valuation. I don't think you can conclude anything intelligent about CMG's valuation without understanding the unit economics, the market opportunity, DCFing it all out, and changing your recovery scenarios to see how that impacts the valuation. I've seen so many people being quick to slap some multiple on current earnings and call that value, but they aren't even aware what long-term assumptions are baked into those valuations. I'd ask those people a question like, "How many total units does your multiple assume at maturity?" They don't know or care or even understand why that matters. I second Aurelian's comment -- excellent thoughts Andrew and well-stated. These questions apply to many peoples investment theses and investment discussions in general. It concerns me to encounter investors or investment writers who present an idea, so presumably they've thought a bit about what they are writing about, who do not seem to understand how fundamental these types of questions and sometimes do not even seem to understand that it all boils down to value - what are you paying for what are you getting - rather than general thoughts about the future of a business or vague thoughts about a stock being undervalued or overvalued without fully considering through what their own value for the business is at the given time. Link to comment Share on other sites More sharing options...
ratiman Posted June 13, 2016 Share Posted June 13, 2016 There is a lot of conjecture about CMG's valuation. I don't think you can conclude anything intelligent about CMG's valuation without understanding the unit economics, the market opportunity, DCFing it all out, and changing your recovery scenarios to see how that impacts the valuation. I've seen so many people being quick to slap some multiple on current earnings and call that value, but they aren't even aware what long-term assumptions are baked into those valuations. I'd ask those people a question like, "How many total units does your multiple assume at maturity?" They don't know or care or even understand why that matters. Aren't you just slapping a number on future "total units at maturity"? How did you arrive at that? What is the competitive landscape in burritos going to be in 10 years? How are consumer tastes going to change? Did you figure in future food-borne illnesses into your analysis? Ultimately you're just slapping a number on it like everybody else. Link to comment Share on other sites More sharing options...
Andrew6892 Posted June 21, 2016 Share Posted June 21, 2016 There is a lot of conjecture about CMG's valuation. I don't think you can conclude anything intelligent about CMG's valuation without understanding the unit economics, the market opportunity, DCFing it all out, and changing your recovery scenarios to see how that impacts the valuation. I've seen so many people being quick to slap some multiple on current earnings and call that value, but they aren't even aware what long-term assumptions are baked into those valuations. I'd ask those people a question like, "How many total units does your multiple assume at maturity?" They don't know or care or even understand why that matters. Aren't you just slapping a number on future "total units at maturity"? How did you arrive at that? What is the competitive landscape in burritos going to be in 10 years? How are consumer tastes going to change? Did you figure in future food-borne illnesses into your analysis? Ultimately you're just slapping a number on it like everybody else. There is a big difference between i) doing an analysis that lets you know what you're assuming about the future and ii) doing an analysis that keeps you in the dark about the future. With the former, you can see what assumptions you're willing to underwrite, even on a conservative basis, and see what that says about the valuation. Certainly, no one can predict the future, but you can say, "I don't think the future will be worse than this scenario," and hey - the stock is still worth 50% more in this scenario. Or reverse engineer the assumptions until the valuation is equal to the current stock price - that gives you an estimate of what's priced in. If you just slap a 35x multiple on 2016 earnings, you don't know anything about anything. What if Chipotle only makes $1 of EPS this year? What's the right multiple of that? You just don't know. Link to comment Share on other sites More sharing options...
Oreo Posted June 22, 2016 Share Posted June 22, 2016 I find the numerical debate interesting but I would frame the issue differently, i.e. let's look at the underlying business economics from the perspective of the customer. Up until about 2012, at least in the urban/suburban areas that I lived in or visited, finding 'healthy'/'organic' food was harder than it is today. Since then, the breadth of choice just exploded. A multitude of packaged brands appeared out of nowhere, peddling everything from protein to oats to gluten-free cookies or almond milk, etc. It's like a massive lollapalooza effect where everything is acting in the same direction. Today, if you want to eat healthy, you have just so many choices, it's like an information overload: - go to Whole Foods salad bar or Trader Joes, etc - go to Sweetgreen - go to Target or any other large food retailer and get their organic private label line (where choice / breadth is increasing) - go to Chipotle - go to Panera Bread, etc - get a salad bowl from Subway - order a 'healthy' food kit from one of the many start-ups, usually working on a subscription model - order a home delivery of food or groceries from a start-up such as Instacart - order food delivery from an upscale restaurant, e.g. via Caviar - order food delivery from a cheap-but-healthy restaurant option, e.g. via Grubhub Supply of healthy food is growing faster than demand. It used to be the case that 'the product' (i.e. fast, high-quality, convenient and reasonably-priced food) was in short supply, and Chipotle took advantage of that. But this is changing, as 'the product' is getting ever more accessible, ever more commoditized. The store-level economics that we saw Chipotle post in 2014 (over $2.4 million average unit volume) are unlikely to be sustainable, in my view. And if the operating ROIC will continue drifting down, then how is Chipotle not a short at these levels? Link to comment Share on other sites More sharing options...
glorysk87 Posted June 22, 2016 Share Posted June 22, 2016 One argument that I think you're not contemplating that leaves the healthy food debate aside - their food is fucking delicious. I have yet to find a quick mexican food place that comes anywhere even close to the deliciousness of Chipotle. After the whole e-coli thing I actually went around town to a different mexican place every day for lunch, and after a few weeks found myself going back to Chipotle because no where else is even close to as good. Just food (hur hur) for thought. Link to comment Share on other sites More sharing options...
Oreo Posted June 22, 2016 Share Posted June 22, 2016 What do you think about Sweetgreen? If you have not tried it yet, interested to hear your thoughts. Another issue is that Chipotle locations look kinda dark, dirty and grungy once you're inside (the decor / ambiance are not very inviting), it's like a high-school canteen / cafeteria. Link to comment Share on other sites More sharing options...
atbed Posted June 22, 2016 Share Posted June 22, 2016 http://www.theharrispoll.com/business/Restaurant-Brands-of-the-Year.html IMO, Moe's is a fine replacement for Chipotle. Both serve great food. But Moe's was the first fast casual Mexican chain that I ate at growing up. We used to drive out weekly to get it in HS. It is nice to see it get more recognition, that it deserves. I think Andrew is right on this one... You have to look out far, and determine whether or not you feel comfortable with what (1) you think is priced in (2) assumptions you need to make in order to feel comfortable getting involved here. This stock was in the low 600s when the ecoli scandal came out. I never understand why people were so gung ho about this one in the 500s. Now that it is cracking below the 400s... -Ed Link to comment Share on other sites More sharing options...
glorysk87 Posted June 22, 2016 Share Posted June 22, 2016 I have a Moe's a few minutes from my house that I've been to a few times. Not a huge fan, but it's ok. Sweetgreen I haven't tried - A) I thought it was just froyo but I guess that was wrong and B) It always just seemed way to hippie/green for my liking. I will try it though. Link to comment Share on other sites More sharing options...
DCG Posted June 23, 2016 Share Posted June 23, 2016 I like Moe's quite a bit more than Chipotle. They seem to have more variety in things like salsa, and seem to use better meat. Every time I get a chicken burrito ffrom Chipotle there are tendons and crap in the meat. Link to comment Share on other sites More sharing options...
TorontoRaptorsFan Posted June 29, 2016 Author Share Posted June 29, 2016 Chipotle introduces their new loyalty program. http://chipotle.com/chiptopia Link to comment Share on other sites More sharing options...
DCG Posted July 1, 2016 Share Posted July 1, 2016 Chipotle's Chief Marketing Office, and the main executive leading their effort to try to rebound from the food safety issues was indicted for drug possession and being linked to a big New York drug ring: http://www.cnbc.com/2016/07/01/indictment-links-chipotle-executive-to-new-york-drug-ring.html Link to comment Share on other sites More sharing options...
Jurgis Posted July 1, 2016 Share Posted July 1, 2016 He was adding coke to burritos to get repeat customers. ;D Link to comment Share on other sites More sharing options...
CorpRaider Posted July 1, 2016 Share Posted July 1, 2016 Better than lethal bacteria? Link to comment Share on other sites More sharing options...
Jurgis Posted July 1, 2016 Share Posted July 1, 2016 Happier customers? ;D Link to comment Share on other sites More sharing options...
TwoCitiesCapital Posted July 1, 2016 Share Posted July 1, 2016 Chipotle's Chief Marketing Office, and the main executive leading their effort to try to rebound from the food safety issues was indicted for drug possession and being linked to a big New York drug ring: http://www.cnbc.com/2016/07/01/indictment-links-chipotle-executive-to-new-york-drug-ring.html This seems like a non-issue. 1) Hard to quantify it as a "drug ring" when he's just a customer of one of the many drug delivery services in NYC 2) 75,000 in 12 months selling cocaine hardly qualifies as big timers in a drug ring... Unfortunately, the way this typically works for rich, white folk is a slap on the wrist. We'll see if it happens this time, but I wouldn't expect much bad to come from this and the article seems to be exaggerating quite a bit. Link to comment Share on other sites More sharing options...
rkbabang Posted July 5, 2016 Share Posted July 5, 2016 He was adding coke to burritos to get repeat customers. ;D I heard that it costs a little extra to add the coke to your burrito, but not as much as the guac. Link to comment Share on other sites More sharing options...
TorontoRaptorsFan Posted August 1, 2016 Author Share Posted August 1, 2016 Chipotle opening their new burger concept this fall in Ohio!!!! ;D http://www.bizjournals.com/columbus/news/2016/07/29/central-ohios-mix-of-mainstream-consumers-and.html?ana=yahoo Link to comment Share on other sites More sharing options...
Recommended Posts
Create an account or sign in to comment
You need to be a member in order to leave a comment
Create an account
Sign up for a new account in our community. It's easy!
Register a new accountSign in
Already have an account? Sign in here.
Sign In Now