Chipotle Mexican Grill Is a Long-Term Buy
Chipotle Mexican Grill (CMG) has been on a strong run in the past three months as its shares have appreciated to the tune of almost 20%. The company’s strong run is being driven by its improving financial performance.
Making strong progress
For example, Chipotle’s revenue for the second quarter increased to $1.2 billion from $1 billion in the same quarter last year, driven by an increase in comparable sales growth and new restaurants opened in the quarter. The quarter also included an increase in total operating expenses to $970.4 million from $870.2 million last year, driven by an increase in food, beverage and packaging expenses. However, Chipotle’s revenue growth outpaced the growth in its expenses.
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This was a result of an increase in cash generated by operating activities that increased 11.2% from last year’s same period.
Moves to drive growth
Armed with a strong fundamental and cash position, Chipotle is making moves to improve its financial performance going forward. In order to sustain its competitive edge, Chipotle has taken various measures. For instance, Chipotle’s has expanded its delivery partnership with Tapingo, which will allow it to deliver to 40 college campuses by this year and more than 100 colleges by the end of 2016.
Additionally, the company also added 48 new restaurants in the quarter, bringing its total count to 1,878. Additionally, the company is promoting healthy food by excluding GMO items. According to a press release from Chipotle:
“The strength of our business is the product of our unique food culture and unique people culture, and we constantly find ways to improve, and overcome challenges we encounter-whether that means non-GMO ingredients, adding new pork suppliers to ensure food with integrity, or reinventing the way tortillas are made at