WHOLE FOODS SET TO CAP­I­TAL­IZE ON CHIPO­TLE LOSSES

National Post (Latest Edition) - - FINANCIAL POST - Jonathan Rat­ner

Chipo­tle Mex­i­can Grill Inc.’s loss may be Whole Foods Mar­ket Inc.’s gain.

RBC Cap­i­tal Mar­kets es­ti­mates that Chipo­tle’s food safety con­cerns rep­re­sent a US$933-mil­lion rev­enue op­por­tu­nity for com­peti­tors, with Whole Foods po­ten­tially be­ing one of the big­gest ben­e­fi­cia­ries since half its lo­ca­tions are within a mile of a Chipo­tle, and nearly 85 per cent are within three miles of a Chipo­tle.

An­a­lyst Wil­liam Kirk be­lieves Whole Foods can cap­ture 25 per cent of the near­est Chipo­tle’s lost sales when within a mile, and lower per­cent­ages when lo­ca­tions are fur­ther away.

All in, he es­ti­mates Whole Foods could take ap­prox­i­mately three per cent of Chip­tole’s sales, re­sult­ing in 20 ba­sis points of growth this year and 30 bps next quar­ter.

“The set- up for Whole Foods is favourable for the next quar­ter, as the sen­ti­ment is low enough for the sales gained from Chipo­tle to gen­er­ate some up­side,” Kirk told clients.

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