10-QPeriod: Q3 FY2022

CHIPOTLE MEXICAN GRILL INC Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 26, 2022For Securities:CMG

Summary

Chipotle Mexican Grill, Inc. (CMG) reported its third-quarter results for the period ending September 29, 2022. The company demonstrated solid top-line growth, with total revenue increasing by 13.7% year-over-year to $2.2 billion. This growth was driven by a 7.6% increase in comparable restaurant sales and contributions from new restaurant openings. Diluted earnings per share (EPS) saw a significant increase of 28.1% to $9.20. Despite inflationary pressures impacting food costs, Chipotle managed to improve its restaurant operating costs as a percentage of total revenue, decreasing from 76.5% to 74.7% year-over-year. This efficiency was largely due to sales leverage and reduced delivery expenses, though partially offset by higher food and labor costs. The company continued its expansion efforts, opening 43 new restaurants, with a strong emphasis on the 'Chipotlanes' format. Management expressed confidence in the long-term growth potential and believes current cash and investments are sufficient to meet future obligations.

Financial Highlights

46 data points
Beta

Revenue

$2.22B

Net Income

$257.14M

11.6% Net Margin

EPS (Diluted)

$0.18

Total Assets

$6.82B

Cash & Equivalents

$366.62M

Free Cash Flow

$212.90M

Financial Statements
Beta
Revenue$2.22B
Operating Expenses$1.88B
Operating Income$336.25M
Net Income$257.14M
EPS (Basic)$0.19
EPS (Diluted)$0.18
Shares Outstanding (Basic)1.39B
Shares Outstanding (Diluted)1.40B

Key Highlights

  • 1Total revenue increased by 13.7% to $2.2 billion in Q3 2022 compared to Q3 2021.
  • 2Comparable restaurant sales grew by 7.6% in Q3 2022 year-over-year.
  • 3Diluted Earnings Per Share (EPS) rose significantly by 28.1% to $9.20 in Q3 2022.
  • 4Restaurant operating costs as a percentage of total revenue improved to 74.7% from 76.5% in Q3 2021.
  • 5The company opened 43 new restaurants in Q3 2022, with 38 featuring the 'Chipotlane' format.
  • 6Cash and marketable investments totaled $1.2 billion as of September 30, 2022, providing ample liquidity.
  • 7The company resolved a New York legal proceeding concerning Fair Work Week and Earned Safe and Sick Time laws for approximately $21 million.

Frequently Asked Questions

Chipotle's revenue growth was primarily driven by an increase in comparable restaurant sales of 7.6% and contributions from new restaurant openings. Menu price increases also played a role, alongside a resurgence in in-restaurant dining compared to digital sales.

Despite inflationary pressures on food costs, Chipotle improved its restaurant operating costs as a percentage of total revenue to 74.7% from 76.5% in the prior year. This was achieved through sales leverage and reduced delivery expenses. However, labor and food costs did increase due to wage inflation and higher ingredient prices.

Chipotle continues to expand its restaurant footprint, opening 43 new locations in Q3 2022, with a strong emphasis on the 'Chipotlane' format, which has proven effective in enhancing guest access and convenience. The company remains confident in its long-term opportunity to significantly increase its restaurant count in North America.

Chipotle reported a strong liquidity position with $1.2 billion in cash and marketable investments as of September 30, 2022. Management believes this, combined with expected positive cash flow from operations, is sufficient to meet ongoing capital expenditures and working capital requirements for the foreseeable future. The company also has $500 million in undrawn borrowing capacity under its credit facility.