Chipotle Vs. Shake Shack: Which Fast Casual Restaurant Stock Is A Better Buy?

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Founded in 1993, Chipotle Mexican Grill, Inc. (CMG) operates fast-casual and fresh restaurants. CMG categorizes its restaurants as endcaps, in-lines, free-standing or other, and serves a menu of burritos, tacos, burrito bowls, and salads. As of December 31, 2020, it operated 2,724 Chipotle restaurants in the United States, 40 international Chipotle restaurants, and 4 non-Chipotle restaurants.

Shake Shack, Inc. (SHAK) operates as a fast-casual restaurant chain in the United States and internationally. Its menu focuses on food and beverages crafted from a range of classic American foods. As of December 30, 2020, it operated 311 Shacks, including 183 domestic company-operated Shacks, 22 domestic licensed Shacks, and 106 international licensed Shacks.

Fast-casual restaurant operators have strengthened their online presence and added delivery schedules, gift-card sales, and other services on their websites to continue operating amid the pandemic, making them the most resilient segment in the restaurant industry. Delivery services witnessed increased net sales during the fourth quarter of 2020. The fast-casual restaurants market in the U.S. is expected to grow at a CAGR of almost 8% over the next four years.

CMG has returned 11.8% year-to-date versus SHAK’s 30% gains. CMG has gained 9.1% over the past month, but SHAK lost 10%. In terms of the past year’s performance, SHAK is a clear winner with 153.3% returns versus CMG’s 89%. But which of these two stocks is a better pick now? Let’s find out.

Latest Movements

According to CMG’s 2020 Sustainability Report, published on April 15, it had achieved a 51% waste diversion rate through recycling, composting, and waste-to-energy programs, reaching a key goal outlined in its 2018 Sustainability Report.

CMG opened a new restaurant in Surrey, BC, Canada on March 30. The company has plans to open seven additional restaurants over the next year and unveil its first Canadian Chipotlane–CMG’s drive-thru digital order pickup lane–in Canada at the next restaurant opening in Port Coquitlam.

On March 25, CMG invested in Nuro, a leader in autonomous delivery vehicles, as part of its Series C funding round. After generating growth in excess of  174% year-over-year in digital business last year, CMG hopes to access Nuro’s autonomous vehicles using robotics in their delivery through this investment.

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Alpha Stockman 2 weeks ago Member's comment

BurgerFi is the best!