October 12, 2023

Investment Thesis Simplified: Chipotle

Chipotle Unit Count

  1. Chipotle (CMG) has grown unit count at an incredible rate over the last 15 or so years, and I believe it will achieve it 7k unit count by approximately 2033, and I believe it will grow well beyond that in its international markets, where we've already seen success (Use Google Maps to search "Chipotle" in London, England, for data underpinning this assertion). Additionally, it recently announced its intention to expand into the Middle East.
  2. Chipotle's 27.5%+ restaurant-level profit margin poises it to bring its company-wide operating margins back to ~20%, and this poises Chipotle to produce ~15% in free cash flow margins.
  3. Chipotle has $1.8B in cash and no long term debt.
  4. Chipotle will continue to repurchase shares of its stock in a disciplined manner in the decades ahead, which will thereby accelerate the growth of free cash flow per share above Chipotle's top line revenue growth of about 10-15%.

Related posts