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Thursday, 12 September

Chipotle’s winning growth recipe

How do you build one of North America’s best known restaurant brands while still maintaining high quality, low price, and industry leading margins? Chief Financial Officer of Chipotle Mexican Grill, Jack Hartung chats with Emma Henderson, Magellan’s Acting Sector Head of Franchises and Healthcare, on how Chipotle has maintained its commitment to food integrity while achieving remarkable profitability. Discover the winning growth recipe below.

They delve into the strategic decisions that have allowed Chipotle to scale successfully, leveraging its size for supply chain diversification, embracing digital innovation, and maintaining ownership of its restaurants to preserve quality and drive growth. Hear valuable insights into the financial and operational strategies behind Chipotle’s sustained success and its winning growth recipe

“We knew that we were going to invest in things like food and people for the long term, and so there wouldn’t necessarily be a short term payoff again, which is sometimes challenging for franchisees to be able to buy in that kind of a longer term horizon. And we also felt like we could run our own restaurants. And so the typical things that restaurant companies would want to resort to franchising for, where they either need capital or they are unable to run the restaurants, or they don’t have enough people to run the restaurants. Or in some cases, the economics just may not be attractive. We didn’t have any of those things. We had capital, we had great economics, and we could run our own restaurants.” – Jack Hartung, Chipotle.

In last month’s discussion from Magellan’s Investment team ‘From Resilient Retailers to Struggling Brands – A consumer sector deep dive’, Emma Henderson, Acting Head of Magellan’s Consumer Franchises and Healthcare team, along with Investment Analysts, Tracey Wahlberg and Lucina Martin, discussed the complexities of the consumer landscape.

“It has been a far more complex environment than usual, and it requires a real look under the hood before investing. The environment has caused really large divergences in share price performance across the sector as a result.” – Tracey Wahlberg, Investment Analyst.

They share key factors influencing market caution, the impact of inflation on consumer behaviour, and the investment opportunities emerging amidst these challenges. From the resilience of retail giants like Costco and Amazon to the challenges for iconic brands like Nike and Estee Lauder, the team provide valuable insights for investors navigating a volatile market.

This podcast was recorded 13 August 2024 (AEST), prior to the news of Chipotle’s CEO transition. Listen to the podcast here.

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