In July 2015, it seemed that nothing could stop the incredible surge of Chipotle Mexican Grill, Inc.’s (NYSE: CMG) stock, which had risen 645% over the previous five years. The trajectory was still headed skyward when news broke of an E.coli outbreak in several of its restaurants, resulting in the closure of 43 locations and a huge loss in consumer confidence, which crippled store sales. From an October 2015 high of $750 per share, its stock tumbled to a low of $404 in January 2016. As of April 17, 2016, the stock price recovered to $469 per share following a major public relations effort to bring its customers back.
That was the big story for Chipotle in 2015. Before that, the restaurant chain was mired in a months-long struggle to keep its popular carnitas burritos on the menu after it fired one of its major pork suppliers in January for a breach of its animal-welfare protocols. For several months, Chipotle, which operates under the promise of “food with integrity,” simply left it off the menu, angering customers and frightening shareholders. Eventually, Chipotle found two more pork suppliers that met its requirements. These new suppliers are among several companies that generate significant portions of their revenues from Chipotle. The others are companies that have partnered with Chipotle in the last year to get its food delivered to the masses.
Groupon, Inc. (NASDAQ: GRPN) is widely known as the global leader of local commerce via its online coupons that help consumers find great deals from local shops and restaurants. In August 2015, Groupon paid $69 million for OrderUp, which uses a mobile app and a network of drivers to deliver food from restaurants in 40 markets across the country. OrderUp is one of three food delivery firms to sign on with Chipotle, which has been growing its delivery food sales. As of April 17, 2016, Groupon has a market capitalization of $2.63 billion, and its 2015 annual revenue was $3.2 billion. It is not known how much revenue Groupon generates from its OrderUp relationship with Chipotle.
Leverandørselskabet Danish Crown AmbA
Leverandørselskabet Danish Crown AmbA is a privately owned company that owns the Danish Crown Group of meat processing businesses. One of those businesses is the Tulip Food Company, which is a major processor of pork. After a worldwide search for a new pork supplier, Chipotle found Tulip, which generates a significant portion of its revenues from Chipotle.
Karro Food Ltd. is a private, U.K.-based meat processor signed on by Chipotle as another pork supplier in July 2015. When Karro Food came on board, Chipotle was able to announce it would be putting carnitas back on the menu in November 2015, which helped its stock rebound. Karro Foods sells its meat products through retail and wholesale clients in the United Kingdom, Germany and the Netherlands. Chipotle is Karro Food’s only major U.S. customer.
Postmates, Inc. is a San Francisco-based on-demand delivery company with a fleet of more than 10,000 couriers who deliver food, groceries, office supplies and other goods for users who have the Postmates app. Founded in 2012, the company competes with several, more established restaurant delivery services such as GrubHub (NYSE: GRUB) and Yelp (NYSE: YELP), and it faces new competition from ride-share giant Uber Technologies, Inc. In 2015, the company entered into an agreement with Chipotle to deliver its food in 67 cities. The cost of delivery is capped, so customers pay a flat fee of $4.99 up to $7.99 depending on the location. According to Chipotle, the company has experienced 30% month-over-month growth in delivery orders since Postmates began service. Postmates is privately owned, and according to company reports, it expected to generate about $60 million in revenue in 2015.
Tapingo, Inc. is another on-demand food delivery service Chipotle signed on in 2015, but this company offers a twist. Tapingo, which was founded in 2012, caters almost exclusively to the college community. Through its highly personalized service, Tapingo has become well-connected in college communities. Its app enables college students to place orders for delivery or pickup, and orders can be paid with campus meal dollars. In 2015, Tapingo averaged about 25,000 transactions per day from 85 universities with the average user ordering from the app five times per week. Tapingo is Chipotle’s only delivery service that focuses on college communities.