Three Reasons Chipotle Is Destroying McDonald’s

February 16, 2014 Leave a comment

Three Reasons Chipotle Is Destroying McDonald’s

ASHLEY LUTZ RETAIL  FEB. 14, 2014, 3:57 AM

Chipotle is thriving.

The fast-casual chain posted a 9.3% sales gain in 2013. Meanwhile, former parent company McDonald’s saw sales fall by 1.4%.

The companies employ completely opposite strategies, Brian Sozzi at Belus Capital Advisors wrote in a recent note to clients.

Sozzi shares a few reasons why Chipotle is dominating McDonald’s.

1. Sticking to a classic menu. While McDonald’s tacks on new menu items to entice customers, Chipotle has stuck to the same menu since it opened. The menu at McDonald’s has grown 70% since 2007, Bloomberg reported last year. Chipotle does a few things really well, making it easier to execute and reduce customer wait times.

2. Making lines faster. Chipotle has aggressively worked to reduce wait times during peak periods. Meanwhile, McDonald’s is struggling with the longest drive-thru wait times in decades. McDonald’s is attempting to fix wait times by cutting some menu items and adding employees to assist at check-out. But the overloaded menu makes it difficult for operations to run smoothly, Sozzi says.

3. Emphasizing an ethical menu. Chipotle is in the process of eliminating GMOs from its menu, and has long boasted about its antibiotic-free meats. As a result, “people feel better about eating at Chipotle and share with others, personally or on social media, that positive experience,” Sozzi writes. Meanwhile, McDonald’s has struggled to shake its reputation as an unhealthy restaurant.

 

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Kee Koon Boon (“KB”) is the co-founder and director of HERO Investment Management which provides specialized fund management and investment advisory services to the ARCHEA Asia HERO Innovators Fund (www.heroinnovator.com), the only Asian SMID-cap tech-focused fund in the industry. KB is an internationally featured investor rooted in the principles of value investing for over a decade as a fund manager and analyst in the Asian capital markets who started his career at a boutique hedge fund in Singapore where he was with the firm since 2002 and was also part of the core investment committee in significantly outperforming the index in the 10-year-plus-old flagship Asian fund. He was also the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. Prior to setting up the H.E.R.O. Innovators Fund, KB was the Chief Investment Officer & CEO of a Singapore Registered Fund Management Company (RFMC) where he is responsible for listed Asian equity investments. KB had taught accounting at the Singapore Management University (SMU) as a faculty member and also pioneered the 15-week course on Accounting Fraud in Asia as an official module at SMU. KB remains grateful and honored to be invited by Singapore’s financial regulator Monetary Authority of Singapore (MAS) to present to their top management team about implementing a world’s first fact-based forward-looking fraud detection framework to bring about benefits for the capital markets in Singapore and for the public and investment community. KB also served the community in sharing his insights in writing articles about value investing and corporate governance in the media that include Business Times, Straits Times, Jakarta Post, Manual of Ideas, Investopedia, TedXWallStreet. He had also presented in top investment, banking and finance conferences in America, Italy, Sydney, Cape Town, HK, China. He has trained CEOs, entrepreneurs, CFOs, management executives in business strategy & business model innovation in Singapore, HK and China.

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