Will Chipotle’s Growth Last?

Across sectors, we’re seeing many leading retailers cut back on their store openings due to the weakened economy. But Chipotle Mexican Grill is still growing as if gas prices are $2 a gallon and milk isn’t a middle-class luxury.

It still has great numbers. The chain, which has plans to open 130 to 140 new restaurants this year on top of its current 775, posted a 7.1% same-store sales increase during its second quarter – a lot of retailers would kill for right now – along with a 23% profit hike.

But apparently Wall Street was not impressed. It’s stock closed at $67.30 per share yesterday from a high this week of over $88.

We know the chain is highly popular but were surprised to see that it hasn’t tempered back its store openings a bit. At the same time, we were impressed that Chipotle’s numbers have held up so well. Is Wall Street overreacting, or are we bound to see the concept get hit hard like others of late?


6 Responses to “Will Chipotle’s Growth Last?”

  1. 1 Dealmaker July 25, 2008 at 9:16 am

    If…..the public is still buying down on dining out in this recession, Chipotle is a great tasting yet percieved to be a cheaper alternative to full service restaurants.

    No one else is opening new units… so Kudos to them for being brassy about it and sweeping up the great sites in a vacuum of competition!

    Way too many “streeters” are shell shocked and have forgotten the basics about taking calculated risks.

  2. 2 Caffeinated Charlie July 28, 2008 at 9:58 am

    If I have my choice between going to a “restaurant”, eating at Chipotle, or eating at home, I’d choose Chipotle. Good food, fast service (usually), less expensive for one meal than buying all the ingredients to make it myself.

  3. 3 TeenyTiny July 28, 2008 at 1:36 pm

    It’s like car racing, once you get out front in the fast lane, if you start downshifting, you lose. Chipotle is not going to give Wall Street a reason to downgrade their stock by cutting their plan, they’ll let the stock give them the indication, and take it from there.

  4. 4 TeenyTiny July 28, 2008 at 1:38 pm

    To answer your question, “Will It Last?”, the answer is, “No.” But will it last longer than most everyone else in their sector, the answer is, “Yes.”

  5. 5 BostonCommercial August 1, 2008 at 8:32 am

    I think any group the continues with growth in this economic climate is going to have many, many positive opportunites for superior locations, lease terms, etc. Two thumbs up to Chipotle for their aggressiveness! When the dust settles and the economy is back on track,Chipolte will be way ahead of the game.

  6. 6 James August 1, 2008 at 12:09 pm

    Wall Street is looking six months down the road and they are right to be concerned, this whole sector is hurting, very few of these stocks are attractive to the Street unless they are expanding rapidly. Same store sales figures are a real candle in the wind. Americans are cutting back on all the extras and traffic is dropping off everywhere. Chipotle may hit it just right and be able to negoitate some sweet deals in this environment, then again, six months from now they could be strapped for cash and have to curtail their plan. Opening stores, taking on employees, and managing distribution logistics is expensive. Good luck, also take a look at Noodles and Co.

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