Chipotle Mexican Grill, Inc. (CMG): The Practically Perfect Pasta IPO

Growth and Same Store Sales

Growth at Noodles compares favorably to the other three investor favorites: Chipotle, Panera, and BJ’s Restaurants, Inc. (NASDAQ:BJRI).

Noodles & Co. 5-year growth rates

Chipotle growth in revenue, gross, operating and net is more than 20% the past few years. Panera is a close second with revenue growth in the high teens and the rest in excess of 20%. BJ’s lags with slowing growth, declining to the mid-teens for revenue and  sliding into negative numbers for operating and net income.

Same store sales at Noodles are  increasing  and even beginning to approach the mighty Chipotle Mexican Grill, Inc. (NYSE:CMG).  Chipotle comps decreased to 7.1% in 2012 for the year (11.2% in 2011). Panera Bread Co (NASDAQ:PNRA)’s 2012 comps were 6.5% and largely due to price increases. BJ’s Restaurants, Inc. (NASDAQ:BJRI) saw 3.2% comps made possible only by a 3.3% increase in price and mix offset by declining traffic. Price increases were the basis for these three restaurants positive comps and they struggled to increase traffic. Noodles comps were 5.2% and the company says it was due to traffic but gives no number.

Noodles comps and AUVs

Average unit volumes (AUV) are in thousands

Both AUVs and same store sales have been increasing.

There is a lot to like about Noodles & Company. Growth, same store sales and gross margins are the equal of other investor favorites. They have room to grow, have low restaurant building costs, competitive meal prices, increasing comps and AUVs, with a Chipotle-pedigreed management team.

The margins are concerning and without more years of data and listening in on conference calls for information, we can’t tell if these are amenable to improvement. The investing community loves a good restaurant story and this may be one. It almost certainly will price high and go higher until they have the opportunity to disappoint with slowing growth and worsening margins. Clearly, we can’t know how that will turn out, but the IPO deserves our attention.

The article The Practically Perfect Pasta IPO originally appeared on Fool.com and is written by jean graham.

j graham has no position in any stocks mentioned. The Motley Fool recommends BJ’s Restaurants, Chipotle Mexican (NYSE:CMG) Grill, and Panera Bread (NASDAQ:PNRA). The Motley Fool owns shares of BJ’s Restaurants, Chipotle Mexican Grill, and Panera Bread. Jean is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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