How Has Negative PR Affected Chipotle’s Operating Efficiency?

-12.41%
Downside
2907
Market
2546
Trefis
CMG: Chipotle Mexican Grill logo
CMG
Chipotle Mexican Grill

  • In 2014, for every dollar spent in operating expenses (SG&A adjusted for D&A and share based compensation), Chipotle Mexican Grill (NYSE: CMG) generated $2.47 in revenues.
  • Affected by the E.coli controversy toward the end of 2015, Chipotle saw a slow down in its revenue growth rate. In addition, it had to increase its operating expenses to lure customers back to its restaurants.
  • Subsequently, revenue generated for every dollar spent on operating activities fell to $2.40 in 2015.
  • We expect this fall to continue in 2016, to below $2.30, as Chipotle spends heavily on marketing and promotional activities, along with higher remuneration for its employees.
  • Going forward, we expect revenue generated for every dollar spent on operating activities to recover as comparable store sales improve due to the boost in consumer perception, which can potentially bring customers back to its stores.  With frequent visits and higher spending by customers, Chipotle can increase its revenue relative to its expenses. Therefore, we estimate the metric to increase to $2.32 by 2018.

pot

Have more questions about Chipotle Mexican Grill (NYSE: CMG)? See the links below:

Relevant Articles
  1. Up 11% Already This Year, Does Chipotle Stock Have More Room To Run After Q4 Results?
  2. Up 30% This Year, Will Chipotle Stock Rally Further Following Q3 Results?
  3. What To Expect From McDonald’s Stock Post Q2 Results?
  4. Chipotle’s Stock Up 50% Over Six Months. What’s Next?
  5. Chipotle Stock Looks Attractive at $1552
  6. This Restaurant Stock Is Holding Up Despite Rising Inflation. Is It Still A Buy?

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Chipotle Mexican Grill

See More at Trefis | View Interactive Institutional Research (Powered by Trefis)

Get Trefis Technology