Stock Profile: Chipotle Mexican Grill

In the broad landscape of fast food — largely dominated by fried and processed food — the fast-casual food company Chipotle Mexican Grill stands out as a pioneer in cleaner options with a priority on sustainable agricultural practices at comparative value. In 1993, the company opened its first restaurant in Denver, Colorado with a mission to “cultivate a better world,” serving fresh, quality food using responsibly sourced, wholesome ingredients. Thirty years later, the company has over 3,500 restaurants, almost all in the U.S.

As Chipotle continues to expand and increase profitability, the company’s “food with integrity” values and messaging are rolled up into a filling, ongoing commitment to sustainable business practices.

Current Snapshot: A Health-Minded Company with Future Growth Potential

Chipotle demonstrates future growth potential, particularly due to its strong financial condition and management as a “people-first” company.

Having emerged as a staple of fast-casual dining offering a healthier alternative to other established fast food options, Chipotle is able to charge higher prices for a menu that touts “real,” nutritious ingredients. Considered a “small luxury,” the chain provides relatively good value to higher-income customers, affording it a level of economic resilience. Over time, Chipotle has demonstrated the ability to grow through times of economic stress. 

While the fast food industry generally has high employee turnover, Chipotle’s is lower than the industry average and has been falling recently — a reflection of strong human capital management. In spring 2024, the company held a managers’ conference where they highlighted that their long-term goal is to more than double the number of current stores and that they target 90% internal promotions, providing growth opportunities to a workforce in an industry that typically does not provide many. They also provided an equity bonus to all restaurant managers and restaurant crew that have been with the company for 20 years, a delicious move that is in alignment with the company’s people-first values.   

Social and Environmental Impact Review

Since its founding, Chipotle has focused on offering fresh, simple food sourced increasingly from local/regional suppliers practicing regenerative agriculture and raising livestock humanely. The company aims for 100% of its produce to be grown organically, though that isn’t consistently feasible. In 2023, 100% of its beef and chicken suppliers met its No Antibiotics Ever standard and 100% of its pork suppliers met its no Sub-Therapeutic Antibiotics Ever standard. The company audits all of its domestic meat and dairy suppliers annually to ensure compliance with its standards for animal welfare. 

Chipotle collaborates with the National Young Farmers Coalition as part of its work to uplift young and diverse farmers. Over 85% of the company’s 225 seed grant winners in the past four years have been distributed to BIPOC organizations and farmers to support them in growing their farms. 

Chipotle has a $100M venture capital fund that aims “to pursue new investments in supply chain, agriculture, restaurant innovation, automation, and other areas that support Chipotle’s mission to cultivate a better world.” The company’s website profiles several investments, including ones focused on mushrooms, fermented food oils, low GHG fertilizers, and restaurant and farming automation.  

Throughout its decades-long history, Chipotle has not been without controversy. The company has had challenges in several areas, ranging from labor to food quality and safety issues. A series of food safety violations between 2015 and 2018 yielded a fine from the Department of Justice, and led to a down year for the company in 2016. That period also resulted in the hiring of a new CEO in 2018 who was effective at “righting the ship.” The company has been on a winning streak ever since.Chipotle is a stock loaded with the right ingredients to serve up a positive impact. That’s a wrap!