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Chipotle: The Next Starbucks?

Summary

Whether knowingly or unknowingly, Chipotle has adopted similar successful moves used by the iconic Starbucks when facing adversity.

But there are other pages of the Starbucks playbook Chipotle should definitely consider.

The most glaring of these needs is customer loyalty, which Chipotle is suffering a massive lack of.

In January, I highlighted Why I Finally Decided To Buy Chipotle Mexican Grill (NYSE:CMG). It was met with mostly negative feedback

arguing that shares were still bound to go lower. That was okay with me, and actually, preferred considering it's still the smallest position in my portfolio.

While there could be more downside - and quite frankly, I hope there is so I can finish building out this position - Chipotle intrigued me because I like the product, the company's still young and management is focused on high quality.

It also reminded me of a similar growth stock that had previously lost its way: Starbucks (NASDAQ:SBUX).

Starbucks has bloomed into my largest single-stock holding, but it too didn't have a smooth ascent to greatness. Some of Chipotle's recent actions have reminded me of those that Starbucks has taken in the past.

For instance, in 2008, fresh off returning to his position as CEO, Howard Schultz decided to shut down the stores and retrain all of his baristas on how to pull the perfect shot of espresso. At the time, Starbucks traded with a market cap near $13 billion.

Granted, this was in February 2008 in the midst of a financial crisis as well. But the similarity to Chipotle is reminiscent at the very least. Today, shares of Chipotle trade with a market...


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