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 teaming up 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 slightly in Thursday morning's trading.
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The recent move by 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 a small number of customers. A Chipotle location in Rowlett, Texas will serve as the test's hub location, and Zipline drones will be loaded with orders and sent out toCustomer locationsOnce 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 made some comments about Chipotle, and apparently, one of his biggest problems is cheap food. Cramer called the $5 meal line at Chipotle "abhorrent." Although Cramer also pointed out that Chipotle's current problems may not have been due to poor management as much as a poor product decision.
"I don't want it to be," Cramer said when asked whetherpoor managementcaused 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, because 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 stock priceover the past year, theAverage CMG price targetof $59.08 per share implies 37.52% upside potential.
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