What is driving Chipotle's revenue growth?

Chipotle's revenue growth is primarily driven by two factors: the opening of new restaurants and strong comparable restaurant sales increases. In the second quarter of 2007, 32 new restaurants were opened, and comparable sales grew by 11.6%, leading to a 34.3% increase in total revenue.

Are food costs increasing, and what is the impact?

Yes, food costs are increasing. Chipotle reported that food, beverage, and packaging costs rose to 31.9% of revenue in the second quarter of 2007, up from 30.9% in the prior year. This is attributed to rising commodity prices, including citrus, avocados, corn, wheat, soybeans, and rice, due to factors like weather and increased demand for ethanol. The company expects these cost pressures to continue.

What is the company's outlook for new restaurant development?

Chipotle plans to open between 110 and 120 new restaurants in the full year 2007. They opened 60 new restaurants in the first six months of the year and expect openings to be relatively level-loaded throughout all four quarters of 2007.

Are there any significant legal matters impacting the company?

Chipotle is facing a class-action lawsuit in California alleging violations of state laws regarding employee record-keeping, meal and rest breaks, and overtime. The company is investigating these claims and cannot estimate potential liability at this time. While management believes other legal matters are unlikely to be material, significant increases in claims could adversely affect financial results.

CMG 10-Q Quarterly Report Q2 FY2007 — Revenue, Net Income, EPS

Summary

Chipotle Mexican Grill, Inc. (CMG) reported strong growth in its second quarter of 2007, with total revenue increasing by 34.3% year-over-year to $274.3 million. This growth was driven by the opening of 32 new restaurants during the quarter and a significant comparable restaurant sales increase of 11.6%, contributing to an overall 8.3% rise in average restaurant sales. The company continued to expand its store footprint, ending the quarter with 640 company-operated restaurants, a 25.5% increase from the prior year. Net income for the quarter rose to $19.98 million, or $0.60 per diluted share, a substantial improvement from $10.79 million, or $0.33 per diluted share, in the same period of 2006. While revenue and net income saw robust increases, investors should note the rising food costs due to commodity price pressures and anticipated continued cost increases into 2008. The company also saw a positive impact from the reversal of a credit card contingency reserve.

Key Highlights

1Total revenue for the second quarter of 2007 grew by 34.3% to $274.3 million, driven by new restaurant openings and strong comparable sales growth.
2Comparable restaurant sales increased by 11.6% in the second quarter, contributing to an 8.3% rise in average restaurant sales.
3Chipotle opened 32 new restaurants in the quarter, expanding its total company-operated restaurant count to 640, a 25.5% year-over-year increase.
4Net income surged to $19.98 million ($0.60 per diluted share) from $10.79 million ($0.33 per diluted share) in the prior year's second quarter.
5Food, beverage, and packaging costs as a percentage of revenue increased to 31.9% due to rising commodity prices, particularly for citrus, avocados, corn, wheat, soybeans, and rice.
6The company reversed a $1.2 million reserve related to a past credit card data theft incident, which positively impacted general and administrative expenses.
7Cash provided by operating activities was $62.0 million for the first six months of 2007, up from $45.1 million in the prior year, indicating strong operational cash generation.

CHIPOTLE MEXICAN GRILL INC Quarterly Report for Q2 Ended Jun 30, 2007

Summary

Key Highlights

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