Why Chipotle Mexican Grill’s aggressive on unit growth



Unit growth—new restaurants

Chipotle Mexican Grill (CMG) is on a high growth trajectory, which can be seen in its same-store sales numbers.

Chipotle Mexican Grill opened a total of 45 new restaurants in the second quarter, compared to 44 new restaurants in the same quarter a year ago. In comparison, Panera Bread (PNRA) opened a total of 19 restaurants, ten of which were company operated. Potbelly (PBPB) also opened 19 new restaurants, 16 of which were company operated.

Full year 2014 guidance

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In the second quarter earnings, management stated that Chipotle Mexican Grill plans to open a total of 180 to 190 new restaurants by the end of 2014. As we can see in the above chart, the company has opened a total of 89 restaurants in the first six months, compared to 92 over the same period in 2013. Restaurant chains that are included in ETFs like the Consumer Discretionary Select Sector SPDR Fund (XLY) and the PowerShares Dynamic Food & Beverage ETF (PBJ) usually give a forward guidance on unit penetration for the upcoming quarters.

Market location

Choosing locations for the restaurants is important for the restaurants’ success. Usually restaurants that open in the high street or a location of high interest do well. Chipotle Mexican Grill identifies such markets as “proven markets.” The company guided that it’ll open 70% of the restaurants in the proven markets. The rest of the 30% will be broken down into two parts—15% in “developing or established markets” and another 15% in “new markets.” For example, Chipotle Mexican Grill will be opening restaurants in Texarkana, Charleston, Duluth, West Virginia, and Mobile.


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