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Just a little FYI on Shophouse, the CMG offspring



December 12, 2011 – Comments (1) | RELATED TICKERS: CMG

As most of you likely know, Chipotle opened a little Asian spot in Dupont Circle, DC, called Shophouse.  The concept is nearly identical to Chipotle.  Wait in line, choose from a group of simple ingredients, and seat yourself.  The only reason you'd be there longer than 30-45 minutes is if you're waiting in line or waiting for a seat.

I live a few blocks from Dupont, just across Rock Creek, and have eaten at Shophouse about half a dozen times, so I glanced at a couple reviews to see what people were saying.  Some people whine that its not authentic, while other people argue that its too complicating.  One review was sour because there weren't side dishes, like the chips and salsa at Chipotle.

The "complication" argument is ridiculous (considering its scoop and serve), while the "authentic" argument is simlar to a claim that Chipotle isn't authentic Mexican food.  I'm not really sure what side dish they'd serve, and if you think the dishes "as are" aren't enough food, you need to go on a diet.

If you try to go during lunch or dinner rush hours (weekdays or weekends - it doesn't matter), don't plan on grabbing a seat, just get it to go.  The seating is similar to most Chipotle's I've been to - the restaurant holds about 40 people or so.  I've finally found my personal favorite dish, after a few trials.  Its steak over brown rice, with the eggplant and red (spicy) curry.  I also add a few of the trimmings.  I haven't heard great things about the sandwiches, but the pork meatballs are fantastic.  The spiciness on both the red and green curry sauces is pretty hot - they'll probably have to tone it down if they decide to expand to other markets.

I'm pretty sure that the concept would work well in most large markets - I could see another 3 to 5 being successful in the DC area, alone.  I'm not sure about slightly smaller markets. All I can say at this point is that I think its great.  Between Chipotle and Shophouse, they now get my money at least a couple times per week, although I probably eat out 10 times per week, being I'm a student and my kitchen is the size of a medium closet.

That being said, I still can't green thumb CMG.  FCF over the past three years has been (roughly - I'm just eyeballing here) $140M, $170M, and will likely be about $220M this year.  That leaves a FCF yield on the current market cap of about 2% - even with the growth, that's just a little too expensive for me.

If you live in the DC area, Shophouse is a great go-to spot.  For $6.50-$7.50 you get a healthy, tasty meal.  And they sell beer, too.

1 Comments – Post Your Own

#1) On December 15, 2011 at 3:20 PM, chk999 (99.97) wrote:

Excellent channel check! I love Chipotle the company, but am out of the stock now, just too expensive. I plan to re-buy on a correction.

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