Restaurant Finance Monitor Stock Index Update


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Brian Niccol is moving from Taco Bell to Chipotle (CMG) and takes over as CEO on March 5. Will Niccol be the right person to reverse Chipotle’s abysmal stock performance over the past two years? Who knows for sure, but for now the Restaurant Finance Monitor Stock Index will keep Chipotle out of the companies included in the index.

That’s because the rules governing the calculation of the index leaves out companies that are delivering volatile results versus the rest of the companies in the index. Chipotle’s stock traded as high as $720 in 2015 before the company’s foodborne illness problems became widespread, and last week the shares were trading as low as $250.  This morning, following Niccol’s announcement, CMG’s shares traded higher mid-day by approximately 14%.

Management execution under Niccol will be a challenge, but pulling an insider from one of Chipotle’s main competitors, a competitor that has been performing well, is interesting.  That presents a question: 
Who will succeed Niccol at YUM Brands (YUM), which together with its Chinese franchisee, YUM China (YUMC), represents almost 10% of the Restaurant Finance Monitor Stock Index weighting?  

Click here to view the companies that make up the Restaurant Finance Index

What happens to their respective share prices over the next 12 months? Time will tell.

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