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David Einhorn, iconic hedge fund manager of Greenlight Capital, spoke at the ValueInvesting Congress on Tuesday October 2, where he outlined his bearish case for ChipotleMexican Grill (CMG) saying that the fast food chain is overvalued. Chipotle, he asserts, is vulnerable to competition from Taco Bell’s recently launched Cantina menu. This presentationcaused Chipotle stock to plunge more than six percent on Tuesday. Taco Bell (YUM) launched its Cantina menu in July and was a thinly veiled attempt atChipotle-styled fast food. The menu features both burritos and bowls in chicken, steak, or veggie combined with fresh salsa, guacamole, and roasted corn salsa on a bed of cilantro and limerice. Sound familiar? To help put to rest some of the natural skepticism of Taco Bell providinganything “gourmet,” the menu launch was accompanied with a guarantee that if customers don’tlike it, Taco Bell would replace their meal with something they do.In Chipotle’s last earnings release on July 19 it missed analysts’ growth estimates thoughit was able to beat the guidance it gave. Chipotle’s phenomenal growth seems to have slowedand this realization caused a huge drop in stock valuation, falling more than 20 percent in asingle day. So with the uncertainty in the strength of Chipotle’s sales, Einhorn’s words took quite a hit to investor confidence.
 The BurritoBattle
 
 
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Looking at both the quantitative and qualitative differences between Chipotle and TacoBell’s new Cantina menu, we don’t feel it is a real threat to Chipotle. We at Davian Capital Advisors ordered a burrito from each restaurant to perform a comparable analysis. The burritos were ordered with similar ingredients:
Chipotle Barbacoa Burrito Cantina Steak Burrito
Black Beans Black Beans White Rice White RiceMild Tomato Pico de GalloHot Salsa SalsaCorn Salsa Roasted Corn SalsaGuacamole ($1.80 Charge) GuacamoleLettuce Lettuce$8.45 $4.99
 We weighed both burritos to get a per ounce price and to the surprise of many, Chipotleis cheaper on a price per ounce basis! Value conscious consumers get a better deal at Chipotle($0.316/ounce) than at Taco Bell ($0.336/ounce), not even considering the premium that shouldbe factored in for the difference in food quality. Chipotle sources vegetarian-fed, antibiotic free,naturally-raised meats, purchases organic ingredients when possible, and has made notablestrides in sourcing locally. This all equals fresher, high quality, better tasting food. Not quite thesame story with Taco Bell. We broke out the price per ounce as well as the nutritional facts forboth burritos per ounce just to demonstrate the true “value” of Taco Bell. Based on our analysis,
 
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a Chipotle burrito has more fiber, about the same protein but lower fat, cholesterol, sodium, andcalories per ounce.
Chipotle Barbacoa Burrito Taco Bell Steak Cantina Burrito
Item Total BurritoCost Per itemItemPer Oz Item Total BurritoCost Per itemItemPer Oz 
Cost $8.45 0.316 Cost $4.99 0.336 Weight (oz) 26.75 $0.32 Weight (oz) 14.85 $0.34Calories 1005 $0.01 37.57 Calories 750 $0.01 50.505 Total Fat (g) 36 $0.24 1.346 Total Fat (g) 28 $0.18 1.886Calories from Fat 325 $0.03 12.15 Calories from Fat 250 $0.02 16.835Saturated Fat (g) 8 $1.06 0.299 Saturated Fat (g) 6 $0.83 0.404Cholesterol (mg) 60 $0.14 2.243 Cholesterol (mg) 45 $0.11 3.03Sodium (mg) 3160 $0.00 118.131 Sodium (mg) 2040 $0.00 137.374 Total Carbs (g) 127 $0.07 4.748 Total Carbs (g) 76 $0.07 5.118Sugar (g) 15 $0.56 0.561 Sugar (g) 7 $0.71 0.471Fiber (g) 26 $0.33 0.972 Fiber (g) 12 $0.42 0.808Protein (g) 48 $0.18 1.794 Protein (g) 28 $0.18 1.886
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