Chipotle Mexican Grill (CMG) Stock: Falling Hard On “Growth Strategy”

Chipotle Mexican Grill CMG Stock NewsChipotle Mexican Grill, Inc. (NYSE: CMG) is having an incredibly rough start to the trading session this morning after the company released what it called its “growth strategy”. Unfortunately, investors were not all that impressed, sending the stock tumbling down. Today, we’ll talk ablut:

  • The growth strategy that was outlined;
  • what we’re seeing from CMG as a result; and
  • what we’ll be watching for ahead.

CMG Announces Growth Strategy

As mentioned above, Chipotle Mexican Grill is having a rough start to the trading session as investors are less than impressed with an outlined growth strategy. In a press release issued after-hours last night, the company announced it’s plans to drive growth. Here are the key points of the strategy:

  • Becoming a more culturally relevant and engaging brand to grow love and loyalty;
  • Digitizing and modernizing the restaurant experience to be more convenient and enjoyable for customers;
  • Running great restaurants with great hospitality and throughput;
  • Being disciplined and focused to enhance the company’s powerful economic model; and
  • Building a great supporting culture as Chipotle innovates and executes across digital, access, menu and the restaurant experience.

As part of the growth strategy, CMG said that it would be closing up to 65 stores across the United States in an effort to focus on stores that are generating the strongest opportunities. The company also said that it would be upgrading technology. With digital sales accounting for about 9% of the company’s revenue, they see opportunity to grow in this area. Also, the company is going to be changing its menu. In a statement, Brian Niccol, CEO at CMG had the following to offer:

All our efforts will focus on making the brand more engaging, visible, and culturally relevant while our restaurant teams are dedicated to providing an excellent guest experience with great hospitality and real food cooked to perfection. Specifically, this will include three big initiatives – revamping our marketing communications and plans, leveraging our second make line to grow digital sales and expand access, and engaging with our customers by launching a new loyalty program in 2019.

We believe our digital business has a long runway for growth and ultimately can be a multi-billion-dollar business.

I can easily see a future where Chipotle more than doubles the business to $10 billion in revenue. We will execute flawlessly in our existing restaurants, add more high-performing restaurants, build brand relevance and engagement, expand digital capabilities for team members and customers, and build an organization with top tier talent that can win today and cultivate a better future.

What We’re Seeing From The Stock 

While Chipotle Mexican Grill might be working toward improving growth, investors are concerned. This is largely due to the company’s plans to close 65 stores. Of course, store closures can always be concerning. So, it’s no surprise to see the declines. Of course, our partners at Trade Ideas were the first to alert us to the movement. At the moment (9:23), CMG is trading at $432.53 per share after a loss of $24.71 per share or 5.40% thus far today.

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What We’ll Be Watching For Ahead

Moving forward, the CNA Finance team will continue to keep a close eye on CMG. In particular, we’re interested in following the story surrounding the company’s new growth plan to see if it does indeed yield results. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!

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