Chipotle's biggest competitor is a sandwich-and-soup chain
According to UBS analysts, its biggest competition is from Panera Bread, the fast-casual chain that serves up sandwiches, soups, and salads.
Panera is outside Chipotle's cuisine niche, but contests its core brand of using fresh, additive-free ingredients.
More importantly, consumers who are looking for alternatives to Chipotle - perhaps because of lingering concerns from the 2015 E.coli saga - are most likely to find a Panera nearby.
"Our geospatial analysis indicates notable competitive overlap within fast casual from Panera, with ~87% of Chipotle's competing with Panera within a 10 minute drive, and from Qdoba within fresh Mexican (~34% overlap)," said UBS' Dennis Geiger in a note on Wednesday.
About a year ago, Reuters reported a similar finding from the market-analysis firm Placed, which added that defectors from Chipotle might have helped Panera's sales in the first quarter.
"While Chipotle has much less competitive overlap coming from the smaller, emerging fast casual Mexican brands, these concepts are exhibiting significant growth rates while also increasing competition for attractive market/site selection," UBS' Geiger said.
UBS
Geiger's analysis found that based on new store openings, Chipotle faces the biggest pressure from Panera Bread. It also showed that many of Chipotle's new restaurants are being opened in lower-quality markets as judged by population size and income.Chipotle is still working to recover sales after incidents of E.coli and norovirus were linked to its food. The company hired food-safety experts, gave away free food, and took out full-page newspaper ads to lure its loyal customers back.
But a complete turnaround is likely still some time away, Geiger said. For the full year 2016, net income plunged 95% to $22.9 million. In December, sales at stores open for at least a year were up nearly 15%, suggesting some recent improvement.
In recent interviews with Business Insider, the companies contested each other's claims to "clean" food. Mark Crumpacker, Chipotle's chief marketing officer, said that the "the biggest difference" between Chipotle's and Panera's claims of a clean menu was that Chipotle didn't have industrial additives of any kind.
In response, Panera CEO Ron Shaich told Business Insider's Hayley Peterson that given Chipotle's problems with food safety, "maybe they shouldn't be throwing bombs."