Fast food is disgusting.
Toxic slop shoved into empty calories with a side of corn syrup is not my idea of a meal. But there are millions of people who think otherwise. And that’s why companies like McDonald’s (NYSE: MCD), Taco Bell (NYSE: YUM), and Papa John’s (NASDAQ: PZZA) exist and are insanely profitable. The latter, by the way, I find to be not only vomit-inducing, but somewhat hilarious as the company’s CEO proudly boasts, “Better Ingredients, Better Pizza.”
Better than what?
I understand the company recently pulled all artificial ingredients from its menu, so I suppose that could make its ingredients “better” than some other pizza joints. But still, let’s be honest. Unless you’re insanely high or working off a hangover, the pizza sucks.
Of course, for investors, this is all irrelevant. After all, had you bought shares of Papa John’s ten years ago, you’d now be sitting on gains in excess of 338%.
Do you realize how many shitty Papa John’s pizzas you could buy with all that money?
Of course, there are some fast food restaurants that have been equally successful while attempting to re-invent the fast food experience and making a real attempt at sourcing better ingredients. Perhaps the most well-known is Chipotle (NYSE: CMG).
Had you bought shares of Chipotle ten years ago, you’d now be sitting on gains in excess of 750%.
Although that’s little comfort to the folks who bought the stock last year – right before an E.coli outbreak crushed it.
At one point, Chipotle was trading for more than $700 a share. Today, you can pick up shares for less than $430.
A Real Stinger
Looking back at how Chipotle’s E.coli scare affected the stock, this really is a bit of a stinger.
You see, after thousands of tests, the CDC was never able to determine the root cause of the outbreak. Some have even suggested that this was a case of corporate sabotage. I’m not typically one for conspiracy theories, but Chipotle did piss off a lot of very well-connected folks in the biotech world after advertising its “GMO-free” menu.
Not that any of the matters.
Even if the CEO of Monsanto snuck into a Chipotle store and took a giant dump in a vat of black beans, nothing changes the fact that the E.coli scare that crushed Chipotle has not gone gently into that good night.
A Tasty Burger?
Chipotle has tried a lot of things to put the asses back in their seats.
Free burritos and new rewards programs were intended to lure back nervous customers. But I’m not sure how well those campaigns worked. I suppose the jury’s still out on that.
In the meantime, Chipotle has recently announced that it’s opening its first “Tasty Made” burger restaurant in Ohio.
Incorporating the same philosophy of higher-quality ingredients and not treating animals like soulless widgets, the new burger joint will feature your typical burgers, fries and shakes. But expect them to taste a lot better than what you might find at McDonald’s or Burger King.
Tasty Made is likely to be very similar to Shake Shack (NYSE: SHAK), which has actually built a pretty impressive business peddling higher-priced, but better quality burgers and fries. The question, however, is will Tasty Made help or hinder Chipotle’s continued struggles?
What do you think?
Will Chipotle’s new burger idea help the company expand its footprint and serve as a repeat of Chipotle’s past success? Or is the “new burger” market already too crowded with restaurants like Shake Shake, Five Guys, and Smashburger, thereby making it even more difficult for the company to come back stronger?
I don’t know the answer to this question. However, I do know that if I did have to eat some fast food, I’d feel a lot safer sinking my teeth into a Chipotle burrito than a Big Mac.