Investment firm: Chipotle should forget burgers, stick to burritos

Maxim Group thinks now is a good time to get into the burger business — except for Chipotle, which is about to get into the burger business.

staff photo
Chipotle on Broadway and 6th. (Kevin J. Beaty/Denverite)  chipotle; denver; colorado; denverite; kevinjbeaty

Chipotle on Broadway and 6th. (Kevin J. Beaty/Denverite)

Analysts think now is a good time to get into the burger business — except for Chipotle, which is about to get into the burger business.

The New York City investment firm Maxim Group expressed their disapproval of Chipotle Mexican Grill Inc.’s latest direction after the Denver-based restaurant chain operator unveiled plans to open a fast-casual burger joint in Ohio during the fall.

“… now is not the appropriate time for Chipotle to introduce its new concept,” Maxim Group wrote in a post for Barron’s magazine.

Chipotle is in recovery mode after a string of high-profile food safety issues caused hundreds to become sick during 2015. The company reported last week revenue for the first half of 2016 was down about $454,000 or 20 percent from the first six months of 2015.

Given the less than stellar financial news, Maxim Group thinks the fast-casual chain should focus on bringing back customers and restoring the reputation of its flagship brand before starting a new venture.

That’s not to say there isn’t room for more competitors in fast-casual burger space, Maxim Group wrote. Just not room for Chipotle.

The company shouldn’t go up against Denver-based Smashburger, Virginia-based Five Guys or other burger stops unless “management can return the core Chipotle concept back to health, which we argue is unlikely in at least the next one to two years,” Maxim Group wrote.

The financial market seemed to agree. Chiptole shares fell about 1.5 percent Friday to $423.99, after initially making modest gains following Thursday’s announcement.

Shares in Chipotle peaked Aug. 5, 2015 at $757.77, before the company’s name was paired with the unsavory words “norovirus,” “salmonella” and “E. Coli.”

Subscribe to Denverite’s newsletter here

Business & data reporter Adrian D. Garcia can be reached via email at agarcia@denverite.com or twitter.com/adriandgarcia.

Hi! You’re like us!

Looks like you’re the type of person who reads to the ends of articles! Well, true believer, you might really like our morning newsletter. It’s quick, free and gets you up to speed on the important and delightful things happening right here in Denver.

Thanks for reading another Denverite story

Does Denverite help you feel more connected to what’s up in your area? Do you want to be a part of it?

Member donations are critical to our continued existence and growth.

You’re our superpower

Denverite supporters have made the decision to financially support local journalism that matters to you. Ready to tell your networks why? Sharing our “About” page with your own personal comments could really help us out.

You’re our superpower

Denverite members have made the decision to financially support local journalism that matters to you. Ready to tell your networks why? Sharing our “About” page with your own personal comments could really help us out.