McDonald's Stock Swap Divestiture of Chipotle a Win-Win

Implications: 1.  The demand for Chipotle shares from McDonald's stock holders signals the strength in the quick casual foodservice market, legitimizing Chipotle as a growth stock for the future.

2.  McDonald's on the other hand is signaling a focus on their bread and butter, the quick-serve restaurant industry, as their stock is enjoying renewed success on the market.

3.  Their decision to cut all ties with its top growth division can also be viewed as a very curious move.

Analysis: In its first decade of existence Chipotle has been the bell-weather for the trendy new foodservice segment of quick casual restaurants.  Quick casual represents approximately $8 billion in sales nationally and continues to grow at a double digit pace.  The overwhelming response to McDonald's offer solidifies it as a bell-weather stock as well.  This is definitely good news for other leading quick casual chains like Baja Fresh, Firehouse Subs, and Pot Belly Sandwich Works.

The implications for McDonald's or more importantly their shareholders is that the company is laser focused on their core.  Their stock recently hit a 6 year high with many analysts seeing continued growth on the back of same store growth in the 3-4% area, which is double the industry segment average. The turnaround from a dismal outlook just 2-3 years ago has been fueled by menu innovation and focusing on the basics.

On the other hand, it is somewhat concerning that McDonald's has completely divested a strong growth engine like Chipotle.  With their recent performance it sends somewhat of a mixed signal with respect to the company's short term focus on growth.

Either way, both stocks are worth watching, as well as the other leading quick casual chains based on the demand for Chipotle stock.