The Economics Of Chipotle

Many successful restaurants make a margin in the single-digit percentages... if they make any profit at all. Chipotle is on another level, reporting a 17.7% margin for the first nine months of this year, with operating profit of $1.5 billion on sales just shy of $8.5 billion.

Indeed, per its latest earnings, Chipotle’s food, beverage, and packaging costs only accounted for $2.5 billion out of its $8.5 billion in sales — around 30%. 

We’re now living in the era of bowlification, where diners are trading up from $5 value meals to $13-$14 customizable creations piled high with premium ingredients. Chipotle’s limited-time-only smoked brisket and Cava’s grilled steak have driven demand and traffic in the latest quarter, despite its higher input costs — up to 30% more than other ingredients. For investors, that’s a bowl worth betting on.

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