Chipotle Mexican Grill, the Denver-based restaurant chain that skyrocketed from a single store near the University of Denver campus into one of the nation’s largest “fast-casual” eateries, is ready to go public.
The company, famous for its big burritos, plans to raise an estimated $90.8 million through an initial stock sale slated for Thursday.
Chipotle is expected to price 7.8 million shares between $15.50 and $17.50 on Wednesday, meaning shares will begin trading Thursday. The company will trade on New York Stock Exchange under the ticker CMG.
Chipotle, which operates 489 stores in 22 states, plans to use the proceeds to open new restaurants and repay $30 million in debt to its parent, hamburger giant McDonald’s Corp.
McDonald’s, which purchased Chipotle in 1998, will retain a 69 percent ownership stake and control 88 percent of the voting stock, according to securities filings.
Chipotle is expected to open about 80 restaurants this year, and considering the geographic territory it has yet to enter, its prospects for growth appear rosy, said Sam Snyder, a research analyst for Renaissance Capital, a Greenwich, Conn.-based firm that tracks IPOs.
“They have plenty of space to grow into,” Snyder said. “And they have the resources to do it.”
Snyder said Chipotle has started using organically grown vegetables and naturally raised meats and poultry, enabling it to attract health-conscious patrons.
“It’s more expensive, but they’ve been able to pass through some of those costs” to consumers, Snyder said.
In the nine months ended September 30, Chipotle reported total revenue of $454.3 million and $33.4 million total profit. That’s up from $343.2 million in revenue and $33.3 million in profit during the same period in 2004.
John Imbergamo, a Denver-based restaurant consultant, called Chipotle “an elegant concept” whose “potential for growth is dramatic.”
However, going public could sidetrack the company.
“They have to grow faster as a public company because the market demands it,” said Imbergamo. “That could cause quality and consistency problems.”
Even so, “we don’t currently see those issues,” he said.
A Chipotle spokesman, Chris Arnold, declined to comment on the IPO when contacted today, citing an SEC-mandated quiet period leading up the IPO.
Staff writer Will Shanley can be reached at 303-820-1260 or wshanley@denverpost.com
