Chipotle Mexican Grill (CMG) owns and operates a network of CMG restaurants that offer burritos, burrito bowls, quesadillas, tacos, and salads. Presently, CMG is listed in the United States and has US$ 56.2 billion in market capitalisation. In this article, I’ll list down 5 things to know about CMG before investing. They are as follows: 


1. CMG Increased its Number of Restaurants to 3,321 in Q3 2023

CMG has expanded its number of restaurants from 1,084 in 2010 to 3,321 in Q3 2023. In that 10-year period, the average annual sales per restaurant grew from US$ 1.8 million in 2010 to US$ 2.8 million in 2022.

Source: CMG


2. CMG had 5x its Profitability in 12 Years

Contributed by its expansion in restaurants and average sales per restaurant for the past 12 years, CMG had increased its revenues by 4.7x from US$ 1.84 billion  in 2010 to US$ 8.64 billion in 2022. Its net income has increased by 5x from US$ 180 million in 2010 to US$ 899 million in 2022. 

CMG’s revenues and profits were impacted in 2016-2018. They are impacted by food safety incidents involving E. coli, C. perfringens bacteria and norovirus in a number of restaurants in that period. Hence, food safety and food-borne illness concerns remain as a key risk to CMG. Excluding 2016-2018, CMG had achieved above 20% in return on equity (ROE) in most of the years in 2010-2022. 

Source: CMG

Calculated from Data Sourced from CMG


3. CMG’s Balance Sheet Remains Steady. 

CMG has zero long-term debt. In Q3 2023, CMG has US$ 1.669 billion in current assets and US$ 1.088 billion in current liabilities. Thus, its current ratio is 1.53. 


4. CMG’s Operating Cash Flows Remained Positive for 12 Years

In 2010-2022, CMG generated US$ 8.4 billion in free cash flows. Of which, CMG had spent them on: 

  • US$ 3.5 billion in net purchases of leasehold improvements, property & equipment. 
  • US$ 0.8 billion in net purchases of investments. 
  • US$ 3.9 billion in acquisition of treasury shares. 

Source: CMG


5. CMG’s P/E Ratio Averages 53.5.

CMG has 10x its stock price from US$ 200+ in 2010 to US$ 2,040.53 presently. 

But, its stock price growth was not smooth sailing. The company’s stock price in 2015-2018 has fallen by 66% from US$ 750+ in mid-2015 to US$ 255 in 2018. At that time, the fall was due to its fall in revenues, net profits, and operating cash flows in 2016-2018 because the operations of a number of its restaurants were affected by food-borne illnesses as discussed above. 

Excluding abnormalities in 2016 and 2020, CMG’s P/E Ratio averages 53.5 in the period of 2010-2022. 

There is no need to calculate its dividend yields as CMG doesn’t pay dividends. 

Source: Google Finance

Calculated from Data Sourced from CMG and Google Finance


Conclusion: 

Overall, CMG had recovered well from its setback in 2016-2018. It has grown its restaurant network and recorded improvements in its financial results. CMG, as a company, keeps a sound balance sheet with no long-term debt and its current ratio is >1. The key lies in stock valuation as its average P/E Ratio remains >50 at present. As investors, it is vital for us to understand our objectives, the business fundamentals and risks involved before considering investing in CMG. 

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Ian Tai
Ian Tai

Financial Content Machine. Dividend Investor. Produced 500+ Financial Articles featured in KCLau.com in Malaysia and the Fifth Person, Value Invest Asia, and Small Cap Asia in Singapore. Regular Host and Presenter of a Weekly Financial Webinar with KCLau.com. Co-Founded DividendVault.com, an online membership site that empowers retail investors to build a stock portfolio that pays rising dividends year after year in Malaysia and Singapore.

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