Chipotle Mexican Grill, Inc. (CMG) and Panera Bread Co (PNRA) vs. Fast Food

Anybody down for Asian?

Chipotle Mexican Grill, Inc. (NYSE:CMG) is smart, and realizes that it may have maxed out locations and can’t continue to expand by 200 restaurants per year without cannibalizing itself. This is where ShopHouse comes in. ShopHouse is a Southeast Asian kitchen restaurant developed by Chipotle. Mexican and Asian foods are on completely opposite ends of the spectrum, and this allows the company to open ShopHouse restaurants in literally every single town in which Chipotle is located and avoid cannibalizing the company.

With name recognition and a style of restaurant that people like, Chipotle Mexican Grill, Inc. (NYSE:CMG) and ShopHouse are just beginning their climb back to the top. Profit margins might decrease slightly while the company opens new ShopHouse locations and word of mouth spreads, but revenue growth should highly exceed 17%.

Bring out the numbers

Based on the numbers, if Chipotle Mexican Grill, Inc. (NYSE:CMG) continues to maintain a profit margin of 27%, a P/E of 39, and has revenue growth of  at least 18%, the share price next year should be $545. Buy Chipotle while it’s cheap, the numbers don’t lie and this year’s earnings report will leave investors sitting pretty.

The article Chipotle and Panera vs. Fast Food originally appeared on Fool.com and is written by Joel Wasserman.

Joel Wasserman has no position in any stocks mentioned. The Motley Fool recommends Chipotle Mexican Grill and Panera Bread. The Motley Fool owns shares of Chipotle Mexican Grill and Panera Bread. Joel is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.