McDonald’s Corporation (MCD), Starbucks Corporation (SBUX), Chipotle Mexican Grill, Inc. (CMG): Three Tasty Companies for Your Portfolio

A Spicy Burrito

Chipotle Mexican Grill, Inc. (NYSE:CMG) is one of the most explosive success stories in the restaurant business over the last years. The fast casual category, which maintains the basic speed and experience of the fast food industry while offering higher quality food and atmosphere, is a booming niche, and Chipotle Mexican Grill, Inc. (NYSE:CMG) is a growth leader in that segment.

While most companies in the industry move into highly processed ingredients as they grow in size, Chipotle Mexican Grill, Inc. (NYSE:CMG) has done exactly the opposite, focusing every day more on fresh ingredients for its tacos and burritos.  Instead of looking for low cost suppliers, Chipotle Mexican Grill, Inc. (NYSE:CMG) has developed its own network of high quality providers of natural and environmentally sustainable food.

This strategy is obviously more expensive than the typical cost reduction road, but judging by the company´s financial performance, customers have been more than willing to pay a few extra bucks to get better ingredients: Chipotle Mexican Grill, Inc. (NYSE:CMG) has delivered compounded annual sales growth of more than 20% per year over the last five years.

The company is successfully expanding its store base in the US, and international markets are practically untapped, so this spicy Mexican food restaurant will most likely continue delivering above average growth rates over the coming years.

Shares of Chipotle Mexican Grill, Inc. (NYSE:CMG) are selling for a P/E ratio above 43, so valuation is as hot as the company´s burritos. However, long term investors looking for the best growth opportunities in the restaurant industry have good reason to take a look at this innovative, high growth restaurant

Bottom Line

There are many interesting alternatives to consider in the restaurant industry, and each has its pros and cons. McDonald’s Corporation (NYSE:MCD) value, Starbucks’ quality and Chipotle’s growth can provide a yummy and varied menu for investors to choose from according to their own taste.

The article Three Tasty Companies for Your Portfolio originally appeared on Fool.com and is written by Andrés Cardenal.

Andrés Cardenal has no position in any stocks mentioned. The Motley Fool recommends Chipotle Mexican (NYSE:CMG) Grill, McDonald’s, and Starbucks. The Motley Fool owns shares of Chipotle Mexican Grill, McDonald’s, and Starbucks. Andrés 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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