• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Bruce Kamich
    • Doug Kass
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • TheStreet Smarts
  1. Home
  2. / Investing
  3. / Consumer Discretionary

Chipotle Has Massive Opportunity to Alter the Course of Its Future: Editor's Cut

Chipotle will hold a must-watch conference call with Wall Street after the close on Wednesday. In less than 500 words, Real Money tells you why to stay on the bullish side of this burrito trade.
By BRIAN SOZZI Jun 27, 2018 | 08:15 AM EDT
Stocks quotes in this article: CMG, DPZ

Let the new CEO's magic work at Chipotle (CMG) , it's very likely to serve up savory long-term gains.

To say Wall Street is bullish on new Chipotle CEO Brian Niccol would be a gross understatement. Since the former Taco Bell wonderkid was appointed to the top job on March 5, Chipotle shares have been hotter than its Tomatillo Red-Chili Salsa, skyrocketing by 42%. In the eyes of the market, Niccol's ability to cut through the fast-food clutter at Taco Bell with real innovation is a template long overdue at Chipotle. Already, Niccol has unveiled six new menu items that should have been available at Chipotle five years ago (see quesadillas).

A lack of innovation is one of many reasons why I slammed Chipotle in the past. So to see Niccol make an instant impact is impressive. This is how Chipotle's once strong sales and profit margins will begin to reverse course. Next up on the innovation front: some form of limited breakfast menu (which would be the first ever for Chipotle).

Ultimately, this early product innovation is called giving the market an early taste of what could lay ahead for Chipotle under the leadership of Niccol and his new team (another win for the brand). The market will expect more of this boldness when Niccol holds a key call with Wall Street after the close on Wednesday. I will be talking with Niccol in the evening after the call for TheStreet -- I got to know him while he was at Taco Bell so am looking forward to reconnecting.

Wall Street is generally optimistic on what he may unveil.

"CEO is expected to provide more specifics to his vision and plan within five focused areas: grow sales, margins and restaurant counts; elevate the brand; build sustainable performance; foster a people-first, innovative culture; and deliver best-in-class financial performance," says Telsey Advisory Group analyst Bob Derrington.

Wedbush analyst Nick Setyan, a long-time restaurant coverage guy, thinks Chipotle will reveal it's closing at least 100 under-performing restaurants. Again, another long overdue move as Chipotle opened up in some weak spots toward the tail end of prior leadership.  

Turning around Chipotle and living up to now much higher investor expectations won't be easy for Niccol & Co. But there is so much opportunity for Chipotle it borders on laughable. For example, Domino's Pizza (DPZ) now gets more than 50% of its sales from digital orders compared to a measly 9% for Chipotle. Just getting to 20% would be a major deal for Chipotle -- it not only gets the sales, but will help pull in lucrative data that it hasn't had in the past. That means better marketing and a chance at rebuilding the customer base for good.

Couple these opportunities with Wall Street's love for Niccol (which should last into year end, at least) and Chipotle could be one of the best consumer discretionary names to own over the next one to three years. Don't get spooked if there is a selloff on the news Wednesday evening, it's just part of the process. 

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

Employees of TheStreet are restricted from trading individual securities.

TAGS: Investing | U.S. Equity | Consumer Discretionary | Markets | Corporate Governance | E-Commerce | Stocks

More from Consumer Discretionary

Disney Could Use Some Magic Pixie Dust to Help Develop a Base

Bruce Kamich
Sep 20, 2023 8:40 AM EDT

The charts of the entertainment giant have not bottomed, though the shares could make an oversold bounce at any time.

Doing a Walk-Through of KB Home Ahead of Earnings

Bruce Kamich
Sep 20, 2023 7:45 AM EDT

In advance of the homebuilder reporting its third-quarter results, the charts are suggesting its shares could see more weakness ahead.

Bearish Bets: 3 Stocks You Certainly Should Think About Shorting This Week

Bob Lang
Sep 17, 2023 10:30 AM EDT

These recently downgraded names are displaying both quantitative and technical deterioration.

Estee Lauder Bounces But the Selloff Isn't Over Yet

Bruce Kamich
Sep 15, 2023 12:15 PM EDT

Is there a foundation for a rally?

Homebuilder Lennar Shows Signs of Wear and Tear Going Into Earnings

Bruce Kamich
Sep 14, 2023 8:45 AM EDT

Lennar's charts aren't robust in advance of the company reporting its third-quarter results.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 10:24 AM EDT BRUCE KAMICH

    This Could Get Messy

    A number of key stocks are getting close to import...
  • 01:41 PM EDT CHRIS VERSACE

    Latest AAP Podcast With Helene Meisler!

    Listen in as the Action Alerts PLUS podcast talks ...
  • 09:07 AM EDT JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    The Most Common and Costly Mistake in Investing
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2023 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login