Chipotle Balanced Scorecard
As of the 2012 annual report Chipotle has $472.9 million in cash and short term investments. This growth strategy worked to build 183 restaurants in 2012 while only closing three. Furthermore this low debt has managed to make their debt to equity ratio a .26 giving them very low leverage. Additionally they have an astounding current ratio of 4.12. This shows that Chipotle anticipates unforeseen problems and remains flexible with low debt. This has resulted in the minimization of the many risks Chipotle and other members of the industry face. However, with a beta of .79 Chipotle proves that their stock will remain very stable. With such aggressive growth Chipotle depends heavily on choosing sites that will provide an adequate return on investment. They have been successful at various types of locations. Their predictive modeling uses proprietary formulas determines projected sales taking into account competitors, area demographics, and the amount of information on competitors. The result has been a 21.7% return on investment (2012 Annual Report and Proxy Statment, 2012). This is above the industry average, however, profit margin is a different story. At 10.5% Chipotle is three percent below the industry average. Much of this is due to the to the rising costs of food. As Chipotle committed to such high food standards they were forced to limit their suppliers. With a low supply the cost will rise creating these below the industry average margins.