Chipotle, the fast-casual burrito chain, is slated to go public this week under the symbol CMG. Shares are scheduled to price in the $15.50 to $17.50 range, valuing the company at over $500 million. McDonald's, who gained a majority stake in Chipotle in 1999, will still own most of the company's shares. Chipotle's prospectus and all of its current print, radio, and TV ads are now available at ChipotleIPO.com.
I haven't invested in the stock market since the Internet boom days, but Chipotle's offering intrigues me. I realize that the restaurant business is an incredibly fickle one, but Chipotle has such a loyal following that I think the company can succeed where others have failed. Reaction from the media has been mixed; Forbes wonders if Chipotle's rapid expansion might falter and the Motley Fool complains about McDonald's retaining an unfair share of voting rights, while BusinessWeek favorably compares Chipotle to the last hot fast-casual IPO, Panera Bread.
An interesting fact I gleaned from the prospectus is that Chipotle owns almost all of its restaurants. This allows the company to open new restaurants close to existing restaurants without having to deal with franchisees who want geographic exclusivity. People got really upset when Starbucks flooded the market like this, because it forced a lot of local coffeehouses out of business. But it's unlikely that any local taquerias will suffer, since there aren't that many in the first place, and those that do exist probably serve a better burrito anyway (see Dan's Chipotle article for further discussion).
I haven't decided if I'm going to buy in or not. I can't help but look at the success that Panera and Starbucks have had, though...is there any reason to think that Chipotle won't be as equally rewarding an investment?
I haven't invested in the stock market since the Internet boom days, but Chipotle's offering intrigues me. I realize that the restaurant business is an incredibly fickle one, but Chipotle has such a loyal following that I think the company can succeed where others have failed. Reaction from the media has been mixed; Forbes wonders if Chipotle's rapid expansion might falter and the Motley Fool complains about McDonald's retaining an unfair share of voting rights, while BusinessWeek favorably compares Chipotle to the last hot fast-casual IPO, Panera Bread.
An interesting fact I gleaned from the prospectus is that Chipotle owns almost all of its restaurants. This allows the company to open new restaurants close to existing restaurants without having to deal with franchisees who want geographic exclusivity. People got really upset when Starbucks flooded the market like this, because it forced a lot of local coffeehouses out of business. But it's unlikely that any local taquerias will suffer, since there aren't that many in the first place, and those that do exist probably serve a better burrito anyway (see Dan's Chipotle article for further discussion).
I haven't decided if I'm going to buy in or not. I can't help but look at the success that Panera and Starbucks have had, though...is there any reason to think that Chipotle won't be as equally rewarding an investment?
