10-QPeriod: Q1 FY2011

CHIPOTLE MEXICAN GRILL INC Quarterly Report for Q1 Ended Mar 31, 2011

Filed April 21, 2011For Securities:CMG

Summary

Chipotle Mexican Grill, Inc. (CMG) reported strong performance in its first quarter of 2011, with revenue increasing by 24.3% to $509.4 million, driven by both new restaurant openings and a significant 12.4% increase in comparable restaurant sales, primarily due to higher customer visits. Net income rose to $46.4 million, translating to diluted earnings per share of $1.46, up from $1.19 in the prior year quarter. The company demonstrated effective cost management, with labor and occupancy costs decreasing as a percentage of revenue, despite an increase in food, beverage, and packaging costs due to inflation and "Food With Integrity" initiatives. Management anticipates continued food cost pressures and plans menu price increases in the third quarter of 2011. Chipotle also continued its share repurchase program, acquiring $13.5 million in stock during the quarter, and maintains a strong liquidity position with $387.4 million in cash and investments to fund future growth.

Financial Highlights

43 data points
Beta

Net Income

$46.38M

EPS (Diluted)

$0.03

Total Assets

$1.16B

Cash & Equivalents

$282.94M

Free Cash Flow

$41.87M

Financial Statements
Beta
Operating Expenses$434.56M
Operating Income$74.82M
Net Income$46.38M
EPS (Basic)$0.03
EPS (Diluted)$0.03
Shares Outstanding (Basic)1.55B
Shares Outstanding (Diluted)1.59B

Key Highlights

  • 1Revenue grew 24.3% to $509.4 million, fueled by a 12.4% increase in comparable restaurant sales and the opening of 12 new restaurants.
  • 2Net income increased to $46.4 million, with diluted EPS rising to $1.46 from $1.19 in the prior year quarter.
  • 3Food, beverage, and packaging costs rose to 32.0% of revenue, primarily due to inflationary pressures on key ingredients and "Food With Integrity" initiatives.
  • 4Labor costs as a percentage of revenue decreased to 24.6% due to higher average restaurant sales, offsetting wage inflation.
  • 5The company repurchased $13.5 million of its common stock during the quarter under its authorized repurchase program.
  • 6Chipotle ended the quarter with 1,095 restaurants and plans to open 135-145 new restaurants in 2011.
  • 7The company maintains a healthy liquidity position with $387.4 million in cash and investments available for growth initiatives and other corporate needs.

Frequently Asked Questions

Chipotle's revenue increased by 24.3% to $509.4 million in Q1 2011. This growth was driven by two primary factors: the opening of 12 new restaurants, expanding the total restaurant count to 1,095, and a robust 12.4% increase in comparable restaurant sales, which was mainly attributable to higher customer visits.

While food, beverage, and packaging costs increased as a percentage of revenue to 32.0% due to inflation and sourcing "Food With Integrity" ingredients, Chipotle effectively managed other costs. Labor costs decreased as a percentage of revenue to 24.6% due to higher average sales, and occupancy costs also declined as a percentage of revenue. General and administrative expenses saw an increase, partly due to higher stock-based compensation.

Chipotle expects food costs to continue increasing throughout 2011 due to inflationary pressures on items like avocados, dairy, and meats, as well as ongoing "Food With Integrity" initiatives. In response to these rising costs, the company plans to implement menu price increases in the third quarter of 2011.

Chipotle aims to open between 135 and 145 new restaurants in 2011. Approximately 30% of these new openings will be 'A Model' restaurants, which are being built in secondary trade areas with attractive demographics but lower investment and occupancy costs, indicating a strategic approach to market penetration.