Cramer Disagree: Zoe’s Kitchen Inc (ZOES) Will Not Be Next Chipotle Mexican Grill, Inc. (CMG)

In another exciting coverage about the growing food chain Zoe’s Kitchen Inc (NYSE:ZOES) and the speculations of it being the next Chipotle Mexican Grill, Inc. (NYSE:CMG), Jim Cramer did a thorough comparison of the company with Chipotle Mexican Grill, Inc. (NYSE:CMG) when it had merely 100 stores.

As mentioned by Jim Cramer, Zoe’s Kitchen Inc (NYSE:ZOES) is too young to be compared with Chipotle Mexican Grill, Inc. (NYSE:CMG) and the chain would have to perform unflawed for several years to come. There are a few things that does fall in favor of Zoe’s Kitchen Inc (NYSE:ZOES) such as:

  • Zoe’s have an average sale of $1.5 million per unit, which is twice the sales Chipotle had at the 100 stores mark.
  • The current store count growth of 36% for Zoe’s Kitchen Inc (NYSE:ZOES) outnumber the 19% growth of Chipotle Mexican Grill, Inc. (NYSE:CMG) when the company had 100 stores.

Zoes Chicken (ZOE)

However, Zoe’s fall a lot short when it comes to the sales growth for same stores with growth rate of 7.3% as compared to Chipotle’s 19%. An exhaustive research done by Zoe’s indicates that the company can support 1,600 stores throughout the country but Cramer believes that the concept of Zoe’s is not strong enough to propel this growth and it is quite early to compare it with the likes of Chipotle.

Zoe’s Kitchen Inc (NYSE:ZOES) is one the emerging restaurant chains in the U.S. with 110 stores across 15 different states. The company is expecting the second quarter 2014 revenue to fall between $41.6 million and $41.8 million with a 7.3% to 7.5% increase in its restaurant sales. Zoe’s estimates its operational income (loss) to lie between $1.4 million and $1.6 million.

Chipotle Mexican Grill, Inc. (NYSE:CMG) announced its second quarter results with revenue of $1.05 billion with 28.6% improvement from the same quarter last year. The company had a net income of $110.3 million and had an increase of 17.3% in its restaurant sales. Chipotle Mexican Grill Inc. (NYSE: CMG) has offered return of 2,980% since its IPO in 2006.

This article has been written by Prakash Pandey and edited by Serkan Unal.


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