ah okay, that makes sense.
Is the media being over zealous about this whole thing then? I realize e-coli is less common (and more serious) but it seems like Chiptole is getting a lot of media coverage lately.
getting negative press for norovirus is brutal but it’s what happens when you’ve been in the media for food borne illnesses. to put it in perspective, the best restaurant in the world for an extended period of time, Noma, has had bouts with norovirus. the e coli issue is a problem, but it should be easily solved by demanding more stringent product testing. i’m actually very surprised the e coli thing has gone on for so long and i’d expect it to pass very soon. it’s simple. stop growing your lettuce in cow poo, clean your vegetables properly (maybe even with veggie cleaning solution for the time being), clean countertops with bleach solution and cook the meat to temperature.
I shorted this and am out now with about a 20% profit. I thought about flipping and going long but even if I give CMG optimistic credit for the continued store rollout, the stock is probably only worth $300-400 long-term. If it really gets washed out in the mid-400s or lower I would probably buy it for a quick flip but the shares are not “cheap” even if they were down significantly from here. It’s kind of amazing how much people are willing to overpay for growth in this market. CMG is a good business but it’s not THAT good and it’s definitely not worth $600-700+.
^you shorted as soon as the ecoli stuff hit?
Before the e coli stuff was out and the stock was in the $600s, I covered on the e coli event
It’s because they’ve had multiple such outbreaks recently, five to be exact, that is not common for a restaurant chain. That and it’s a reputation thing.
I thought the same thing for years and watched the stock continue to crush analysts targets. Looking 4-years out, annualized EPS growth of 16-22% is expeced per year, which seems unlikely which is why i’ve been waiting so damn long to buy.
Looking outside of CMG, it looks like the fast-food / casual-dinning space has some pretty lofty valuations. Just a quick glimps and I see trailing P/Es of 25-46x… makes CMG look “cheap” in comparision.
Restaurant stocks in general are in a mini-bubble.