Chipotle Mexican Grill, Inc (NYSE:CMG) the New Prominent Name in the Industry

475

By Stefan Larson on October 24, 2014 Consumer Staples

Chipotle Mexican Grill, Inc (NYSE:CMG) has ousted McDonald’s as the leading fast food restaurant in the market. The burrito roller has attracted a major portion of the market as compared to the Big Mac. Chipotle (NYSE:CMG) reported an excellent third quarter earnings, posting 31.1 percent to 1.08 million dollar. The profit came after Chipotle (NYSE:CMG) leapt to 19.8 percent in sales; earnings per share surged to 4.15 dollars. In contrast to Chipotle (NYSE:CMG)’s great run, McDonald’s is on a constant decline. The company fell by 3.3 percent in the last quarter, reporting a loss of 14 percent in the operating income.

Even though Chipotle (NYSE:CMG) brought in good earnings in the third quarter, its shares traded low by 7 percent. Analysts claim that it was the result of its vague goals for the next year. The company claims that it’ll make revenue in the single digits but also claims it can accumulate up to the mid-teens. Giving contrasting statements hasn’t really helped the company. The investors are obviously wary of the confusion that is blurring Chipotle (NYSE:CMG)’s future goals; or perhaps the company isn’t quite sure itself. One of the main reasons Chipotle (NYSE:CMG) has been having a good run with the finances is because of its decision to raise prices in the second quarter.

The decision stayed till the third quarter resulting in large bills for the customers and large checks for the company. But that didn’t bother the customers who were more than happy to pay anything reasonable to get their hands on the bloated burrito. In fact, the major boost came from the influx of customers, resulting in 11.3 percent growth. During the previous quarter, food prices hiked all around by 34.3 percent. The decision to raise prices also helped in dealing with the food price hike all around. Analysts think that the price hike didn’t affect sales much, hence Chipotle (NYSE:CMG) shouldn’t ever bet on a price hike to change things.

Chipotle (NYSE:CMG) said that it would be making less in the fourth quarter as compared to the third quarter and this assumption was made due to the consistent trend of same store sales turning mellow as the quarter progresses. Chipotle (NYSE:CMG) clearly isn’t relying upon price hikes and other strategies for the future at all. Chipotle Mexican Grill, Inc (NYSE:CMG) plans to open around 200 new restaurants, bringing up its grand total to 2000.

Chipotle Mexican Grill, Inc (NYSE:CMG) is known for its customer experience and quality food as the company never compromises on anything. Chipotle Mexican Grill, Inc (NYSE:CMG) is rising fast and is certainly learning from the mistakes made by other fast food joints such as McDonald’s which has apparently traded its food quality for lower cost. Chipotle Mexican Grill, Inc (NYSE:CMG) has been ranked number 1 by several surveys and if things keep going smooth, Chipotle Mexican Grill (NYSE:CMG) might just become the new McDonald’s, or perhaps even bigger and better.