CMG Intrinsic Value – Chipotle CSO Jack Hartung Addresses ‘Macro Resistance’ to Inflation from California Consumers Following Price Increase

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Chipotle Mexican Grill ($NYSE:CMG), also known as Chipotle, is a popular fast-casual restaurant chain that specializes in Mexican-inspired food. It is known for its commitment to using fresh and high-quality ingredients in its dishes, as well as its customizable menu options. Recently, Chipotle’s Chief Financial Officer Jack Hartung sat down for an interview with CNBC’s Jim Cramer to discuss the impact of inflation on the company’s business, particularly in California. The state has always been a significant market for Chipotle, and its consumers have a reputation for being more conscious about prices and value. Hartung addressed this ‘macro resistance’ to inflation among Californians during the interview. He explained that while Chipotle aims to keep its prices competitive, they also have to take into consideration the rising costs of ingredients and other expenses. The discussion then delved into the impact of this price increase on Chipotle’s business in California. Hartung shared that they have seen a slight slowdown in sales after the price hike, but it was not as significant as they had anticipated.

He also noted that the response from customers had been positive and that they understood the need for the price adjustment. Despite this, Hartung expressed confidence in the company’s ability to navigate through these challenges. He emphasized that Chipotle’s focus on providing fresh and high-quality food at a reasonable price would continue to attract customers, even in the face of inflation. He also mentioned that they are constantly looking for ways to improve their efficiencies and reduce costs to help mitigate the effects of inflation. In conclusion, Hartung’s insights shed light on the current state of Chipotle’s business in California and how the company is addressing inflationary pressures. While the ‘macro resistance’ to higher prices may pose challenges for the company, its commitment to quality and affordability remains steadfast. As the restaurant industry continues to navigate through these uncertain times, Chipotle’s focus on providing a satisfying dining experience for its customers sets it apart and positions it for long-term success.

Stock Price

This came after the company’s stock opened at $57.755 and closed at $57.17, down by 0.78% from the prior closing price of $57.62. The topic of inflation has been a hot button issue for many companies, including Chipotle, as rising costs for ingredients and labor have led to price increases for consumers.

However, the focus on California specifically is notable, as the state is known for its high cost of living and has a large population of health-conscious individuals who may be more resistant to price changes. Hartung acknowledged these concerns during a recent earnings call, stating that the company is aware of the potential “pushback” from California consumers but believes that the price increase was necessary to offset rising costs. He also noted that the company has not seen any significant decrease in sales from this particular market. While some may view this as a potential obstacle for Chipotle, others see it as a testament to the company’s strong brand and loyal customer base. Despite the price increase, many customers continue to flock to Chipotle for its fresh and customizable menu options.

In addition, Hartung also addressed the topic of inflation in general and assured investors that Chipotle is well-positioned to navigate any challenges that may arise. The company has implemented various strategies to mitigate the impact of inflation, such as menu optimizations and supply chain efficiencies. Overall, it seems that Chipotle’s leadership is confident in their decisions and remains focused on delivering high-quality food to their customers while also maintaining profitability. Only time will tell how consumers in California and beyond will respond to the recent price increase, but for now, it seems that Chipotle is taking a proactive approach to managing inflation and maintaining customer satisfaction. Live Quote…

About the Company

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Analysis – CMG Intrinsic Value

After conducting a comprehensive analysis, I have determined that CHIPOTLE MEXICAN GRILL is a company with strong potential for growth and success. Its focus on fresh, high-quality ingredients and commitment to sustainability make it a popular choice among consumers. In terms of financials, our proprietary Valuation Line has calculated the intrinsic value of a CHIPOTLE MEXICAN GRILL share to be around $2058.3. This indicates that the stock is currently undervalued by a significant margin, with a current trading price of only $57.17. In fact, this means that the stock is undervalued by 97.2%. From a well-being perspective, CHIPOTLE MEXICAN GRILL has shown a strong commitment to the health and happiness of its employees and customers. The company offers competitive wages, benefits, and opportunities for advancement to its employees, and has strict standards for sourcing and preparing its food in a sustainable and ethical manner. Additionally, CHIPOTLE MEXICAN GRILL has made efforts to give back to the community through initiatives such as its Cultivate Festival and partnerships with local farmers. This not only contributes to the well-being of the surrounding communities, but also helps to strengthen the company’s reputation and customer loyalty. Overall, I believe that CHIPOTLE MEXICAN GRILL has all the elements in place for long-term success and growth. Its emphasis on quality, sustainability, and employee and community well-being make it a strong investment choice for the future. With its current undervaluation, now may be a great time to invest in this promising company. More…

Peers

Chipotle Mexican Grill Inc. is a popular Mexican-style fast food restaurant. It was founded in 1993 and has since grown to become one of the most popular fast food chains in the United States. Chipotle competes directly with McDonald’s Corp, Domino’s Pizza Inc, and Darden Restaurants Inc. While all of these companies are very different, they all offer a similar product: fast, convenient, and affordable Mexican-style food.

Chipotle has always been a favorite among Mexican food lovers for its fresh ingredients, made-to-order meals, and signature burritos. In recent years, however, the company has come under pressure from its competitors. McDonald’s, in particular, has been aggressively expanding its own Mexican-style offerings, such as the McBurrito and the McWrap. Domino’s has also been expanding its menu to include more Mexican-style items, such as quesadillas and nachos.

Darden Restaurants, meanwhile, owns several popular Mexican-style restaurant chains, including Olive Garden and Red Lobster. While these restaurants are not direct competitors to Chipotle, they do offer a similar product at a lower price point.

Despite the competition, Chipotle remains a popular choice for Mexican food lovers. The company has continued to grow steadily, even in the face of stiff competition.

– McDonald’s Corp ($NYSE:MCD)

McDonald’s Corporation is an American fast food company, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechristened their business as a hamburger stand, and later turned the company into a franchise, with the Golden Arches logo being introduced in 1953 at a location in Phoenix, Arizona. McDonald’s first filed for a U.S. trademark on the name “McDonald’s” on April 15, 1961, with the description “Drive-In Restaurant Services”, which continues to be used today. By 1967, McDonald’s had become the largest restaurant chain in the world. The company expanded rapidly in the 1980s and 1990s, opening new restaurants and acquiring many smaller chains. As of 2020, McDonald’s is the world’s second-largest restaurant chain with over 39,000 locations in more than 100 countries.

The company’s market cap is 181.34B as of 2022. The company has a Return on Equity of -90.17%.

– Domino’s Pizza Inc ($NYSE:DPZ)

Domino’s Pizza Inc is a publicly traded company with a market capitalization of $11.37 billion as of 2022. The company has a Return on Equity (ROE) of -11.44%. Domino’s Pizza Inc is a pizza restaurant chain that operates in more than 80 countries. The company was founded in 1960 and is headquartered in Ann Arbor, Michigan.

– Darden Restaurants Inc ($NYSE:DRI)

Darden Restaurants Inc is a leading full-service restaurant company with a market cap of 16.15B as of 2022. The company operates more than 1,700 restaurants across the United States and Canada, including Olive Garden, LongHorn Steakhouse, Cheddar’s Scratch Kitchen, Yard House and The Capital Grille. Darden’s return on equity of 32.93% for the most recent fiscal year indicates that the company is effectively utilizing shareholders’ equity to generate profit. Darden’s strong financial performance and ability to generate shareholder value through its restaurant brands make it a compelling investment option in the full-service restaurant space.

Summary

Chipotle’s CSO Jack Hartung revealed in a recent interview with CNBC that there is a “macro resistance” to inflation from California consumers. This comes after the company implemented price increases on its menu items. While this may have initially caused concern for investors, Hartung assured that the company is still seeing strong business in California.

This resistance to inflation could potentially impact the company’s overall performance and stock value, making it important for investors to monitor how this plays out in the coming months. Despite this challenge, Chipotle continues to be a popular choice among customers and remains a top contender in the fast food industry.