Chipotle Mexican Grill Inc CMG:NYSE
Chipotle: Taco Bell's new menu not hurting sales
5:17 PM ET
SAN FRANCISCO (MarketWatch) -- Chipotle Mexican Grill isn't seeing Taco Bell's new Cantina Bell menu pressuring its sales. "Taco Bell doesn't present threats to Chipotle," company spokesman Chris Arnold told MarketWatch in response to comments made Tuesday by noted investor David Einhorn. "We haven't seen Taco Bell to be a threat at all." Einhorn, speaking at the Value Investing Congress conference, said he was short Chipotle, a bet that the stock will go down -- rather than up -- over time. He cited the rising threat of Taco Bell and its Cantina Bell menu, which competes directly with Chipotle. "It's easy to mimic the things we do," Arnold added. "The things that can't be copied is the soul of a chef (Chipotle was started by a chef). Our food is prepared with that attention to detail. We have very loyal customers. We believe our customers understand the difference between what Chipotle is doing and what Taco Bell is doing." Taco Bell is owned by Yum Br ands . Chipotle shares fell 4% to $302.96 Tuesday. Year-to-date, the stock is down 10% despite a run up over the past month. Yum shares lost 1% to $66.45 Tuesday.
He has a very good reputation for having done his homework b4 releasing any statement like this. So don't take him too lightly. Specially when he says this close to cmg reports, it may say something about the whispering of the tea leaves!
I think Einhorn will do fine on this short, but not for the reason he identified. The issue isn't taking sales away from EXISTING CMG stores, it is about creating a heightened barrier for future growth. Further, the economic headwinds will continue to weigh more heavily on this sector as time passes. FWIW, this isn't even close to my #1 restaurant short...
Listen to this impartial review this summer.......Taco Bell review: Looking behind the counter to the production line, I noticed that the new chicken comes pre-sliced and pre-cooked in plastic bags from the warehouse. It's merely opened and put into the metal containers to be reheated and served -- which is unlike Chipotle's model, if you care. I also noticed that while the guacamole was in fact, now being served with a spoon, the sour cream for the other items was still shot out of a caulking gun -- so I still have something to poke fun of at Taco Bell despite all the changes.On Oct 1, 2012, at 5:39 PM, Stephen Karasick wrote:
It's amazing how the company felt it had to respond Einhorn. by the way I also find the timing of einhorns public comments to be interesting with the chipotle 3rd quarter concluding at the end of last week.
cmg has said on prior conf. calls they don't know if they have competition. they don't do marketing analysis, so what they say above is nothing but boilerplate trash. "the soul of a chef?" are you kidding me? LOL they dignify Einhorn's remarks by even bothering to comment on them
beyond that, competition from taco bell was only one of the headwinds facing cmg
I can't remember the last time I ate at a taco bell, and who knows the next time I will, but I do know that I had Chipotle last week and probably will next week too. Einhorn is wrong here and time will prove it.
I had 2 burritos today at chipotle. Delicious. Have not been to Taco Belle in 10 years. Won't put that in my body even if they paid me to eat it. I'll take the organic, hormone free higher quality experience at Chipotle. Seems I'm not the only one as the store was very busy when I was there.