10-QPeriod: Q1 FY2021

CHIPOTLE MEXICAN GRILL INC Quarterly Report for Q1 Ended Mar 31, 2021

Filed April 29, 2021For Securities:CMG

Summary

Chipotle Mexican Grill Inc. (CMG) reported a strong first quarter for 2021, with total revenue increasing by 23.4% year-over-year to $1.74 billion. This growth was driven by a 17.2% increase in comparable restaurant sales and a significant 133.9% surge in digital sales, which now constitute 50.1% of total revenue. The company effectively leveraged these sales increases to improve restaurant operating costs as a percentage of revenue, which decreased by 470 basis points to 77.7%. Net income grew substantially to $127.1 million from $76.4 million in the prior year's quarter, translating to diluted earnings per share of $4.45. Despite a notable increase in general and administrative expenses, largely due to a significant rise in stock-based compensation related to a PSU modification, the company demonstrated robust operational performance. Chipotle continued its expansion, opening 40 new restaurants, with 26 featuring Chipotlanes, reinforcing its confidence in long-term growth potential. The company ended the quarter with a strong liquidity position, including $1.2 billion in cash and marketable investments.

Financial Highlights

46 data points
Beta

Revenue

$1.74B

Net Income

$127.10M

7.3% Net Margin

EPS (Diluted)

$0.09

Total Assets

$6.15B

Cash & Equivalents

$694.78M

Free Cash Flow

$219.35M

Financial Statements
Beta
Revenue$1.74B
Operating Expenses$1.58B
Operating Income$161.44M
Net Income$127.10M
EPS (Basic)$0.09
EPS (Diluted)$0.09
Shares Outstanding (Basic)1.41B
Shares Outstanding (Diluted)1.43B

Key Highlights

  • 1Total revenue increased by 23.4% to $1.74 billion in Q1 2021 compared to Q1 2020.
  • 2Comparable restaurant sales grew by 17.2%, indicating strong in-store and digital demand.
  • 3Digital sales surged by 133.9% and represented 50.1% of total revenue, highlighting the success of digital initiatives.
  • 4Restaurant operating costs as a percentage of revenue improved significantly, decreasing by 470 basis points to 77.7%.
  • 5Net income rose to $127.1 million, with diluted EPS of $4.45, demonstrating improved profitability.
  • 640 new restaurants were opened, including 26 with Chipotlanes, reflecting continued expansion and confidence in new unit growth.
  • 7The company maintained a strong liquidity position with $1.2 billion in cash and marketable investments at quarter-end.

Frequently Asked Questions

Chipotle's revenue growth was primarily driven by a 17.2% increase in comparable restaurant sales and a substantial 133.9% surge in digital sales. These factors, combined with menu price increases and increased attachment to higher-margin proteins, contributed to a 23.4% overall revenue increase.

Chipotle effectively managed its operating costs, with restaurant operating costs as a percentage of total revenue decreasing by 470 basis points to 77.7%. This improvement was mainly due to leverage from comparable restaurant sales increases, improved labor efficiency from digital enhancements, and favorable shifts in food costs, partially offset by increased delivery expenses and wage inflation.

Chipotlanes are drive-thru lanes specifically designed for digital order pick-up. They are performing very well, contributing to enhanced guest access and convenience, and are helping to increase new restaurant sales, margins, and overall returns. The company opened 26 new restaurants with Chipotlanes in Q1 2021, indicating their strategic importance for growth.

The COVID-19 pandemic continued to impact operations, but Chipotle demonstrated resilience. While the pandemic drove a significant shift to digital sales and delivery, it also led to increased delivery expenses and some elevated labor costs due to employee benefits. However, the company managed to leverage sales increases to improve overall operating costs as a percentage of revenue. The filing also notes a $0.91 after-tax impact on EPS from expenses related to a 2018 PSU modification tied to the pandemic's effects.