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Module 4: parsimonious forecasting Company: chipotle

Module 4: parsimonious forecasting Company: chipotle. Matt Ramirez. Chipotle background. Mexican grill that focuses on serving quality food while maintaining speed and efficiency Found in 1993 by Steve Ells in Denver, Colorado

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Module 4: parsimonious forecasting Company: chipotle

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  1. Module 4: parsimonious forecastingCompany: chipotle Matt Ramirez

  2. Chipotle background • Mexican grill that focuses on serving quality food while maintaining speed and efficiency • Found in 1993 by Steve Ells in Denver, Colorado • Considered a “fast-casual” restaurant: food that is served fast without the “fast food” methods or ambiance, allows customers to eat “on the go” or in a nicer restaurant environment • Not franchised, centrally-owned

  3. Data analysis

  4. General data

  5. RNEA

  6. EPm

  7. Epm from sales

  8. Epm explanation • EPM/EPM from sales stable (roughly 10%) • Chipotle seems to efficiently control costs/pricing at all levels • EPM from Sales: eliminates foreign currency translation & loss on disposal of assets (impossible to accurately forecast these values)

  9. eato

  10. Eato explanation • Chipotle is average to its comparable companies (roughly 3-4%) • Chipotle’s enterprise assets are productive and generate 3-4 times sales per each $1 of assets • Relatively stable throughout time for Chipotle & its comparables

  11. Sales growth

  12. forecasting

  13. Information needed to forecast • 1) Forecasted sales growth rates determines forecasted revenues (*most difficult & important estimate) • 2) Forecasted EPM/EPM from sales determines forecasted EPAT • 3) Forecasted EATO determines forecasted NEA

  14. Forecasting assumptions

  15. Sales growth assumption • Comparable companies not a significant factor in assumption: different & unsteady growth years (Panera/Starbucks), Einstein’s small growth, Starbucks’ size • Significant decrease from 2011 to 2013 (6%): only relevant to use 2013 as historical figure • Analyst estimates: consensus estimates for 2014 & 2015 • Growth will slow, but will “even out” for next 5 years

  16. Epm assumption • EPM from sales used: more stable & accurate forecasting measure • Growth varies between years & comparable companies: average taken to smooth number • Starbucks: abnormal growth from 2012 to 2013? (not factored into decision) • Only 2012 & 2013 used: less discrepancy between numbers

  17. Eato assumption • Regular EATO used: relatively stable for all 4 companies throughout past years • Starbucks/Panera used as influences: also stable and roughly 3-4 • Average of 2013, 2012, & 2011: Average gives more accurate estimate due to the varied decline/growth seen among Chipotle, Panera, and Starbucks

  18. 5-year forecast

  19. Factors to consider • Starbucks is much larger than Chipotle & Panera • Einstein Noah is much smaller than the other 3 comparables • Starbucks is not as “pure-play” as Chipotle/Panera (coffee and well as fast-casual food)

  20. Overall thoughts • Chipotle will continue to grow for some time: focused on maintaining growth, opening up new restaurants, and overall expansion • It is difficult to predict how big Chipotle will grow, when it will slow down, and for how long it will grow for • Forecasts are optimistic based on analyst estimates, current/past data: no signs of slowing down

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