Chipotle Considers Big Changes to Its Brand

by Christopher Freeburn | October 25, 2012 1:37 pm

Chipotle Considers Big Changes to Its Brand

Chipotle Mexican Grill (NYSE:CMG[1]) restaurants could soon feature drive-through pickup windows and breakfast menus[2].

The changes, which also include more advertising,¬†would shift the restaurant chain away from the “fast casual” vision that has long been its trademark, toward a fast-food-style experience more commonly associated with Burger King (NYSE:BKW[3]), McDonalds’ (NYSE:MCD[4]), Wendy’s (NASDAQ:WEN[5]) or Yum‘s (NYSE:YUM[6]) Taco Bell, Bloomberg noted.

After missing Wall Street estimates for two consecutive quarters, and seeing its shares plunge with each miss[7], the restaurant chain is looking for ways to boost sales growth.

Earlier this month, activist investor and hedge fund manager David Einhorn warned that Chipotle was overvalued[8]. However, some analysts warned that changing the chain’s operating identity could ultimately backfire, driving away long-time customers.

Chipotle officials denied that the company was abandoning its long-term strategy and suggested that the proposals were just tweaks.

Shares of Chipotle moved up more than 1% in Thursday afternoon trading.

Endnotes:
  1. CMG: http://studio-5.financialcontent.com/investplace/quote?Symbol=CMG
  2. drive-through pickup windows and breakfast menus: http://www.businessweek.com/news/2012-10-25/chipotle-seen-becoming-mcdonald-s-with-drive-throughs#p1
  3. BKW: http://studio-5.financialcontent.com/investplace/quote?Symbol=BKW
  4. MCD: http://studio-5.financialcontent.com/investplace/quote?Symbol=MCD
  5. WEN: http://studio-5.financialcontent.com/investplace/quote?Symbol=WEN
  6. YUM: http://studio-5.financialcontent.com/investplace/quote?Symbol=YUM
  7. seeing its shares plunge with each miss: http://investorplace.com/2012/10/chipotle-shares-plunge-on-q3-revenue-profit-misses/
  8. David Einhorn warned that Chipotle was overvalued: http://investorplace.com/2012/10/cmg-has-einhorn-smelling-like-roses-again/

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