Chipotle: The One That Got Away From McDonald’s

The Corporate Hall of Shame is wallpapered with press releases from decades of regrettable mergers.

It’s time to tack one on from a split, however amicable: McDonald’s (MCD) 2006 divestiture of Chipotle Mexican Grill (CMG), in which the world’s biggest restaurant company let go of what would rapidly become the hottest restaurant brand in the land. Chipotle has disrupted everything up and down the food chain, forcing everyone from Taco Bell (YUM) to Chili’s (EAT) to scramble to stay relevant. And for what? When it sold out completely seven years ago, after ramping Chipotle up from 16 locations to more than 500, the Golden Arches pocketed $1.5 billion. Chipotle, which has since tripled its store count, is now valued at just more than $13 billion.

Shares of the fast-casual burrito roller are up 44 percent this year and 1,316 percent since its initial public offering in January 2006. Chipotle commands a price-earnings ratio of 45, more than twice that of its longtime parent. It’s increasing earnings and sales at 20 percent and 28 percent, respectively, compared with McDonald’s at 1.5 percent and 2 percent, according to data compiled by Bloomberg.

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