Chipotle Is Getting Too Big For It’s Britches

What would you like on that, the polite Chipotle burrito engineer asks me? Well isn’t the answer obvious, everything that looks good. That may be the precise problem with Chipotle today. A customer peering through the glass protecting the precious ingredients to a perfect burrito doesn’t follow the calorie counter, but rather ones taste buds. In a time when Americans have gotten larger and larger, we have, and will see a trend towards smaller and smaller calorie counts.

It is obvious that Americans love to eat and in particular like to eat Chipotle. The issue resides in the coming years. We are not seeing a fad, but rather a societal change; A massive move towards a healthier and fitter america. We have seen this movement take shape in some major fast food companies. Take a look at McDonalds, a few years ago people would have thought fruit instead of french fries was ridiculous; today not having the fruit option is an absurdity. It is likely that the Chipotle business will need to follow health trend, or those same store sales will be dealt a heavy blow. Chipotle is a great company, but in the ever changing landscape of the American consumer, Chipotle must transition to serve the health conscious American consumer.

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The U.S. Recovery Cannot Stand Alone

Recent chatter among the professionals suggests that the United States can stand alone, with no regard for the faltering global economies. Did I miss some recent regression back to the 18th century? These very intelligent men and women are suggesting that the world we live in today resembles the protectionism of the ancient past, rather then the connectivity of the current era. Maybe I am just oblivious to this new world, but much more likely I am right and those pros are just trying to sucker you into the market.

Since the masses want to ignore the connectivity of 2011, and the free lessons one can learn from last year, they shall suffer. Last year was a prime example of the global impact on financial markets. The fear of economic problems throughout the world took the wind out of last years rally. But now the global world and the United States are no longer connected? Come on, don’t play dumb with me, this interpretation is not only ignorant, it is foolish for your money. The global fast paced world we live in today is connected in all shapes and forms. Keep an eye on our friends around the globe, because the worse things get, the U.S. financial markets will realize they cannot stand on their own.

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March Madness: Molson Coors vs. Buffalo Wild Wings

While watching the Basketball games, a good sports fan is expected to have a chicken wing in one hand and an ice cold beer in the other. Who better to represent those necessities than Molson Coors and Buffalo Wild Wings. Sports is a key industry for both adult beverage companies and sports bars, and a lot of money is made during the March mayhem. In the theme of March madness lets put two top scorers together and see who comes out ahead.

First Half

Let’s take a look at how these companies have performed over the past year to see who takes the lead in the opening half.

Molson Coors recently announced the launching of its iced T Coors Light. The CEO of the company suggests that this hybrid drink is exactly what the consumers want. They want to take their two favorite beverages and combine them. If it were this easy Coca-Cola would have a never ending supply of new drinks. There are a few issues with this so called growth engine. First off the sweet tea alcohol arena is a extremely crowded space. Second, those most likely to buy the hybrid product are in the demographics that would prefer sweet tea (instead of iced tea). This growth engine turns out to be more of a big question for investors rather then a growth engine.As obvious through the above images, Buffalo wild wings seems to have outperformed Molson Coors and the broader market over the past year. What may be more significant to investors is the strong uptrend seen over the last year in BWLD. It looks as though the wings have outperformed the beer over the past year, but that may just mean Molson Coors is preparing to pop. We’ll take a look at that come the second half (below)

Second Half

Taking a quick look at Buffalo Wild Winds, they have something that many restaurants before them have failed to grasp. BWLD has got the formula for success. This success can be seen through their numbers and in their stores. The Buffalo Wild Wings experience is a different sports bar experience. One cannot quite place their figure on what exactly makes them stand out, but whatever it is, myself and many other Americans can’t stop spending money there. Nor is BWLD a trend by any sense, Americans have loved beer and wings in the past and will continue to do so into the future.

Final Score

There is no buzzer beater here. Buffalo Wild Wings comes out the strong leader. One cannot argue with their growth potential. There is just something about those BWLD that myself and many others just can’t get enough off. They have figured out the formula for success and will continue to use it.
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They Took Fear Out Back And Shot It

If you trade and have any sense, you keep an eye on the volatility indexes. As of lately they have been taken out back and shot, or more apropriately, they have been given a long, slow, and painful death over the past few months. At new lows for the year, the VXX is in the low nineteens. My point is not to bring up the obvious, rather to suggest with no bottom in the VXX, buying to hedge your portfolio is moronic.

We all know the saying, don’t try to catch a failing knife, and it seems that may pertain to this crazy ETF. Many people on CNBC and around the net have suggested hedging with the VXX. This has failed miserably for everyone who has partaken over the past few months. Those experts have suggested doing it around $25 on the VXX, the VXX now trades at $19, a 25% loss on your hedge isn’t such a good idea. Ask around to those that didn’t believe in the rally and bought the VXX to try to outsmart the trend. They are now screwed, royally. When the waters are a little more choppy, in the coming months, would be a more appropriate time to buy the VXX. Currently though, it is one horse race and the VXX wasn’t invited. There are still headwinds in the U.S. and abroad, but until the markets start taking those into account, the VXX will be taken out back and laid to waste on a daily basis.

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McDonald’s Customers Are In It For The Ambiance

We all know that McDonald’s stands out from all the other fast food restaurants. It may have to do with their keen ability to take popular entrees and make them the perfect fast food meal. Most likely its the fact that they make the best breakfast on the planet. More recently they took Starbucks drinks and made them not only affordable, but desirable to the masses that you wouldn’t even think to enter Starbucks store. Though I love a good frappe, there is more to the McDonald’s story then that, there are the continually updated restaurants.

Many investors miss the obvious when it comes to evaluating McDonald’s. As average Americans (maybe in your case above average) we travel throughout the United States, or go through our hometown, and see many different fast food chains. As we mentioned above they are not all made the same, but more particularly their stores are not make the same. A key point many fail to realize about McDonald’s is the power that the franchisor holds. McDonald’s does not merely sell stores or regions, they lease these stores. Which in turn gives them the power to retract the store from the leasee. This means that McDonald’s can tell the franchisee to update their store and they must do so. In fact this happens quite often and is likely why McDonald’s continues to stay on top of their game.

This store policy  separates McDonald’s from all the other fast food chains. Drive by your local Wendy’s, Hardees, or Dairy Queen and the difference is obvious. What is important from an investors standpoint is the importance of aesthetics. A nice store, means happy customer, and anyone who has worked in a service industry knows happy customers are repeat customers. You may say aesthetics are a mute point. Let’s take a look at your recent dining experience. The last time you went out to a nice restaurant, what separated it from the other places you regularly dine? Let’s think, it was obviously the food, and oh yeah the atmosphere. The presentation often plays a huge role but is presented so subtly that we don’t realize it.

“The closest thing to home.” – McDonald’s Slogan (1966-1969)

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