Monthly Notes On Restaurant Industry: Chipotle Mexican Grill & McDonald’s
According to a report by Knapp Track, comparable store sales for fast casual restaurants rose 0.9% in the month of May 2015. However, the interesting thing to note is that the customer traffic for these restaurants declined 2%, leading to a 2.9% increase in the average spend per customer, indicating revenue growth due to higher menu prices. [1] On one hand, the same store sales for fast casual restaurants has been in the positive range for over 10 months now, whereas on the other hand, the decline in customer traffic might probably be due to price hikes. The May consumer price index was up 0.4%, primarily due to an increase in gas prices. [2]
Here’s a quick round-up of the restaurant companies covered by Trefis.
Chipotle Mexican Grill
- Up 11% Already This Year, Does Chipotle Stock Have More Room To Run After Q4 Results?
- Up 30% This Year, Will Chipotle Stock Rally Further Following Q3 Results?
- What To Expect From McDonald’s Stock Post Q2 Results?
- Chipotle’s Stock Up 50% Over Six Months. What’s Next?
- Chipotle Stock Looks Attractive at $1552
- This Restaurant Stock Is Holding Up Despite Rising Inflation. Is It Still A Buy?
Despite the strong financial results in the first quarter of the fiscal 2015, Chipotle Mexican Grill (NYSE:CMG) witnessed a steep decline in its stock price, primarily due to a below-expectation comparable sales number. Earlier this year, the company suspended one of its pork suppliers in the U.S. after a recent audit, on claims of below standard animal welfare protocols. This affected the supply of Carnitas to about one-third of the company’s outlets in the first quarter. Chipotle expects the comparable store sales in the second quarter to be in the low-to-mid single digits, with as much as 200 basis points negative impact due to the pork shortage. The second quarter earnings report is expected to be released on July 21, 2015. [3]
Chipotle’s stock declined gradually from $630 to $607 during the last month. Our price estimate for CMG’s tock is $669, which is roughly 10% above the current market price. Trefis estimates the company’s net revenues to reach $5.1 billion in 2015.
See Our Complete Analysis For Chipotle Mexican Grill
McDonald’s
After a poor first quarter earnings report, McDonald’s Corporation (NYSE:MCD) is taking rigorous steps to improve customer trust in its Asian markets. On May 4, the company announced a new turnaround plan, according to which McDonald’s will operate under a new organizational structure from July 1. [4] On June 8, 2015, the company reported 0.3% year-over-year decline in global comparable sales for May, with the U.S. and Asian markets reporting declines in comparable sales of 2.2% and 3.2%, respectively. [5]
McDonald’s stock traded between $95 and $97 during the month of June. Our price estimate for the company’s stock is $101 (market cap of $97 billion), which is roughly 5% above the current market price. Trefis estimates for the company’s net revenues is $27.11 billion in 2015.
See Our Complete Analysis For McDonald’s Corporation
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Notes:
- Casual restaurants sales rise, McDonald’s closing stores, tablets take off and more [↩]
- Consumer Price index, CSO statistical data [↩]
- Chipotle Mexican Grill to announce second quarter 2015 results on July 21, 2015 [↩]
- McDonald’s announces initial steps in turnaround plan including worldwide business restructuring and financial updates [↩]
- McDonald’s reports global comparable sales for May [↩]