Exciting news for anyone who ever wanted a burrito from Chipotle Mexican Grill (CMG), but did not want to make the drive to it or otherwise could not get it delivered. Chipotle is getting together with Zipline for a test of autonomous drone food delivery, though for now, only the greater Dallas area will have access to the service. Investors seemed skeptical, though, and sent shares slipping fractionally in Thursday morning’s trading.
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The recent move from the Department of Transportation to allow more drone delivery services seems to have opened the floodgates. Zipline and Chipotle are teaming up to provide what is called “Zipotle” delivery service for that handful of customers. A Chipotle location in Rowlett, Texas will serve as the test’s hub location, and Zipline drones will be packed with orders and sent out to customer locations. Once the drone reaches the location, it will hover around 300 feet above the location, and then lower a droid known as a Zip to complete the order.
Chipotle’s president and chief strategy and technology officer, Curt Garner, noted, “Because of the coverage radius of drones, it might only be one restaurant in a particular neighborhood that can service the entire neighborhood. So that makes national expansion easier, finding those locations and then equipping them with Zipline.” Why these tests never seem to be conducted in rural locations, which most want services like this, is beyond me.
Jim Cramer Hates Cheap Chipotle
Meanwhile, infamous market analyst Jim Cramer came out with some remarks about Chipotle, and apparently, one of his biggest problems is cheap food. Cramer declared the $5 meal line at Chipotle “abhorrent.” Though Cramer also pointed out that Chipotle’s current problems may not have been a fault of bad management so much as it was a bad product decision.
“I don’t want it to be,” Cramer said when prompted about whether poor management caused Chipotle’s recent troubles. “I like him very much. That line was abhorrent. I didn’t want to hear it. That the five dollar meal company that you would never eat at, cause it’s just chemicals, is beating a company that’s clean. That’s how I felt.”
Is Chipotle a Buy, Sell or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on CMG stock based on 21 Buys and five Holds assigned in the past three months, as indicated by the graphic below. After a 19.42% loss in its share price over the past year, the average CMG price target of $59.08 per share implies 37.52% upside potential.
