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Chipotle (CMG) is on the Hedgeye Restaurants Best Ideas list as a LONG
We hosted a Black Book presentation yesterday to discuss our LONG case for Chipotle (CMG). We hit on the singles and doubles CMG plans to hit, before they turn on the marketing machine, which is CEO Brian Niccol’s specialty.
We believe consensus is far too bearish on the outward looking margin profile of the business! In the Black Book we take you through line by line how we see the next three and a half years unfolding for CMG, getting to 2021 where we have EPS roughly 50% higher than consensus.
CMG’s enabling of technology and mobile ordering is different than when MCD or SBUX tried to do it because they are actually adding capacity! CMG will have the second make-line installed in approximately 1,000 restaurants by the end of 2018 – if CMG was capable of doing $2.5M AUV with one make-line we think it is conceivable they can do $3M+ with two!
This recovery won’t happen in a straight line, but with a vastly improved management team in place, with a plan to succeed in this new operating environment, we believe CMG represents one of the best LONG opportunities in the restaurant space.