Chipotle's stunning growth is screeching to a halt
Chipotle went public in 2006, and the share value has increased 1500%. In that time, the company has ballooned to thousands of restaurants and inspired changes at competitors like McDonald's and Subway.
But now Chipotle's sudden growth appears to be screeching to a halt. Same store sales rose 19.8% in the third quarter of 2014. This year's third quarter saw an increase of only 2.6%.The once-sexy brand is now approaching "middle age," according to analysts at Morgan Stanley, adding that waning growth is inevitable when a brand becomes so large.
But Chipotle still has 3 growth drivers, according to the analysts.
Here's how the brand will grow sales in the future.
1. Additional restaurant concepts.
The brand's Asian-themed ShopHouse and Pizzeria Locale are still in the early stages.
ShopHouse, which serves build-your-own Southeast Asian cuisine, has 11 restaurants.
Pizzeria Locale has just two locations, with plans to add two more in Cincinnati by the end of the year. The restaurant lets customers build their own pizzas, which are then quickly cooked in a wood-fired oven.
Analysts at Morgan Stanley say the brands are " highly promising concepts that could substantially extend Chipotle's growth curve."
Chipotle CEO Steve Ells said the brand will continue to build out the concepts.
2. International markets
As Chipotle becomes nearly ubiquitous in America, it will have to turn to international markets to drive sales and profits.
The company is in the process of expanding in Europe, with several restaurants in London, Munich, and Paris.
But Morgan Stanley analysts point out that the brand has just 19 restaurants outside the US and Canada.
The international presence will have to grow much larger in order to impact Chipotle's business.
3. Mobile orderingStarbucks is working to expand its mobile ordering.
The burrito chain created a new position for a chief information officer to oversee its mobile app and other technology products, and hired Starbucks' CIO, Curt Garner, to fill the role.
Under Garner, Starbucks' mobile orders have grown to represent 20% of all US sales.
Chipotle is in the process of adding a second production line in the back of stores to make online and mobile orders.
The brand is also offering delivery on college campuses across America.