Two restaurants that continue to provide great financial results are Chipotle Mexican Grill and Panera Bread. These companies have been headlined by many Wall Street magazines and websites due to the fact that they continue to see double digit growth each and every quarter. Even during some of the worst times in our recent history these restaurants found a way to make money.
Panera Bread has increased assets from $837 million in December 2009 to $925 million in December of 2010 (10.5% gain). Chipotle Mexican Grill has been even more impressive as they have seen an increase from $961 million to $1.12 billion durin the same period (16.5% gain). In a time when many restaurant chains are struggling to gain market share these two companies have outperformed which has pushed stock prices much higher in the last year.
In the last year Panera Bread (PNRA) has been up 52.7% while Chipotle Mexican Grill (CMG) has soared 128.28%. The growth potential for each company is quite impressive as they continued to increase assets even through the “Great Recession” when many Americans were not willing to go out to eat out on a consistent basis. Over the last several years many struggling households have stayed in and created home cooked meals to save a little bit of extra cash.
Over the next several quarters it will be interesting to see how restaurant stocks react to consumer sentiment. It is often the case that consumer sentiment predicts the stock prices of retailers and restaurants. With that being said, it is important to remember that customers are very fickle and they can change their mind with any major news story that paints a negative picture. Many remember how much Food Lion suffered in the 1990’s due to negative press and BP last year.
If the overall economy improves and the unemployment rate continues to drop to multi year lows it will likely be the case that Americans are much more willing to spend time with the family eating out. Panera Bread and Chipotle also benefit greatly from the lunch crowd and this will expand as more and more Americans are employed.
Panera and Chipotle have a great presence in the Cleveland, Ohio area but it will be interesting to see if they can continue to expand in the near months. With the summer months just around the corner most of the construction on new locations will be completed. As we head into the Christmas holiday shopping season it will be fun to see if these food retailers are still planning on growing at a fast pace.
Author: Jerome Watson
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