Two Catalysts For Chipotles Going Forward

[vanzandt]

1) Stock split (as of yet, unannounced)
My guess, of all the recent splits, when and if CMG does it, will manifest itself as the one that outperforms all the others from the psychological effects that splits tend to exhibit on a stock's price.

2) And yeah, I knoooow... I've been saying this for the last 3 years, but one of these days.... > CHINA.

Chipotles' CEO, Brian Niccol, was CEO of Taco Bell (part of YUM) before YUM spun off Yum China. He was also the Chief Marketing Officer of Pizza Hut prior to that, and having followed the YUM story for years, I have to imagine he has extensive experience in China from Pizza Hut alone, because Pizza Hut China was always an under-performing dog for YUM. (KFC and Taco Bell did (do) well there)

I think he's just biding his time, making sure they do it right when they do it, there's a lot of pieces that need to be in place, and it still may not happen for awhile, but assuming U.S./China relations stay relatively stable, CMG will go to China.

It's pricey by almost every metric so it may drop further in a recession, so it would be hard to say buy it right now, but still....

CMG----> $1317

Near term... a 10:1 split would do wonders I think. It would go from from $137 to $150 in a blink. And up from there when the markets calm down some.

One thing I will say, and I've said it before, even in this market... I would never hold CMG short overnight. You could wake up to a real bad morning.
~vz

 

[newwurldmn]

Do the Chinese eat Mexican food? I thought yum was all about kfc and Pizza Hut there.

 

[The_Krakenite]

Damn that stock looks expensive. But to be honest, with the US equities headed for lower and lower fire-sale prices, is there really going to be a need for stock splits by next month anymore? Haha.

I'm not really sure about CMG, when it comes to these types of securities, the closest thing I've bought up was the A&W income fund. I'll probably hold onto this one for life.

 

[ET180]

"assuming U.S./China relations stay relatively stable, CMG will go to China."

That's no where close to a given. We're already in a proxy war over Ukraine and active cyberwar for many years.

 

[xandman]

CMG won't fly in China. American fast food only gets traction with young people in Asia. It sells because of its American cache. But, American fast food is garbage: sugars, oils and cardboard. There is better food that you could buy off the street and much cheaper.

India would be a younger country for them to go into. See Pizza Hut/Dominos. Can't remember which one.

 

[MacBookProHo]

India would be a younger country for them to go into. See Pizza Hut/Dominos. Can't remember which one.

Indians love Pizza Hut/pizza, and the Chinese love KFC/fried chicken. It's weird, but understandable I suppose.

Pizza Hut is, rather, very similar to Indian food and their culture. With pita bread and sauces.
And the Chinese love the lucky red image of KFC, and fried chicken in general, and happy smiling faces of the Colonel. Alot of Chinese food products are packaged in red, and have this smiling, happy, face on it to symbolize good fortune, and luck and happiness and health.

 

[nitrene]

Pizza Hut is, rather, very similar to Indian food and their culture. With pita bread and sauces.

I was born in India. Indians do love pizza but it is really because of the tomato sauce and hot taste from the crushed pepper. Most Indian food has onions, tomato & ghee (clarified butter) along with a lot of spices (cumin, turmeric, cardamom, etc.). There is really no cheese in Indian cuisine except the popular Punjabi dish known as Mattar Paneer (peas & chese).

In actualtiy the most popular foreign food in India is really Chinese food since it has a lot sugar, oil & spices. In fact if you go the cities there is a type of restaurant called Chinese Indian food -- Chinese food made in Indian style.

 

[vanzandt]

Do the Chinese eat Mexican food? I thought yum was all about kfc and Pizza Hut there.

They pretty much are. But Taco Bell was the only brand that did better than expected last Q. I think same store sales were estimated at 2% and they came in north of 5%. For some reason they don't have the rights to them in Hong Kong and Macau. KFC is is the big dog though. They opened over 600 new locations last Q. They only opened a handful of Taco Bells.
Either way, it's about taste. If KFC can do well, one responder to this thread mentioned the junk-food aspect... yeah, but KFC isn't exactly the healthiest of choices. I think CMG would do well there.

And with all that said, the near term play would be the stock split anyway.

US/China relations are in fact heating up. I saw on Bloomberg earlier someone leaked that China has been threatening our military with "the Straits of Taiwan belong to China, they are not international waters"... as we posture they are. This is not new news really, but the fact that they are actually now saying this on a classified level is certainly worth noting. I personally don't think anything will come of it, the U.S. stance on Taiwan has remained crystal clear for quite awhile now, thru several Administrations. They can blow smoke, but that's all it is. They need us. Russia on the other hand.... from what we've seen the last 3 months, hell, China might be eyeing a land grab there.

 

[newwurldmn]

I don’t think it’s about health but rather it’s about americana. I ate at a Pizza Hut in cheng du. It’s more upscale than they are here.

Mexican food has not taken off internationally (which I’m surprised by).

 

[vanzandt]

I don’t think it’s about health but rather it’s about americana. I ate at a Pizza Hut in cheng du. It’s more upscale than they are here.

Mexican food has not taken off internationally (which I’m surprised by).

Xandman pointed out the success in America is cache. I would say that about a lot of things, but not CMG. We go there, order ahead, at least once a week. You see all ages in there.
So yeah there is a degree of Americana that would bolster its success in Asia, but I firmly believe its the quality and taste that will make it successful.
I've followed CMG even before MCD bought them. And that was way before the ipo. It's the culture there. They have no problem getting employees. All their ingredients are the absolute best. The only other fast casual that comes close is Panera.

Ah. It is a pricey stock. Its always been. And we've seen whats happened to former Titans like Meta and NFLX so... CMG is certainly not immune to a market thrashing. They'll get one too if they ever miss, but for now, I do like the idea of a 10:1 split.
Good idea, bad market.