Chipotle (CMG) to Expand in Middle East With New Partnership
Chipotle Mexican Grill, Inc. CMG recently entered into a franchise agreement with Alshaya Group for the development of new restaurants in the Middle East. The agreement focuses on continued regional expansion and the opening of new restaurant openings in Dubai and Kuwait (in 2024).
More Focus on expansion
The company emphasizes on accelerating its international expansion to drive growth. During the first quarter of 2023, Chipotle opened 41 new restaurants, with 34 locations, including a Chipotlane. The addition of Chipotlane enhanced customer access and convenience and bolstered new store restaurant sales, margins and returns. The company opened a digital-only kitchen as well.
The company owns and runs more than 3,200 restaurants across North America. It also owns and operates several restaurants in Canada (33 restaurants), the U.K. (15), France (6) and Germany (2).
Backed by impressive unit economics and the success of small-town locations, the company anticipates operating more than 7,000 restaurants in the long term in North America. The company anticipates its annual unit growth rate in the range of 8-10% year over year. It is optimistic with respect to expansion plans in Canada. In 2023, the company expects to open 255-285 restaurants with at least 80% of them including a Chipotlane.
Price Performance
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Shares of Chipotle have gained 60.4% in the past year compared with the industry’s 18.8% growth. The company is benefiting from its strong comparable restaurant sales growth, digital efforts, Chipotlane add-ons and menu innovation. This and strength in digital sales, rise in menu prices, new restaurant openings and higher restaurant-level operating margin have been driving the company’s performance.
It also witnesses solid benefits from Project Square One with improvements, including throughput on the frontline, on-time and accuracy on the digital make line. The company emphasizes on testing changes to the smarter pickup times logic to boost growth. Earnings estimates for 2023 have increased in the past 30 days, depicting analysts’ optimism over the stock’s growth potential.
Zacks Rank & Other Top Picks
Chipotle currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the Retail-Wholesale sector include:
Dave & Buster's Entertainment, Inc. PLAY sports a Zacks Rank #1 (Strong Buy). PLAY has a trailing four-quarter earnings surprise of 6.8%, on average. Shares of PLAY have gained 31% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for PLAY’s 2024 sales and earnings per share (EPS) indicates a rise of 16.9% and 28.3%, respectively, from the year-ago period’s levels.
Chuy's Holdings, Inc. CHUY sports a Zacks Rank #1. The company has a trailing four-quarter earnings surprise of 23.4%, on average. Shares of CHUY have skyrocketed 88.8% in the past year.
The Zacks Consensus Estimate for Chuy’s Holdings’ 2023 sales and EPS suggests growth of 9.9% and 27.7%, respectively, from the year-ago period’s levels.
BJ's Restaurants, Inc. BJRI sports a Zacks Rank #1. BJRI has a long-term earnings growth rate of 15%. The stock has rallied 52.1% in the past year.
The Zacks Consensus Estimate for BJ's Restaurants’ 2023 sales and EPS suggests growth of 5.5% and 317.7%, respectively, from the year-ago period’s levels.
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Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
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