10-QPeriod: Q3 FY2023

CHIPOTLE MEXICAN GRILL INC Quarterly Report for Q3 Ended Sep 30, 2023

Filed October 27, 2023For Securities:CMG

Summary

Chipotle Mexican Grill Inc. (CMG) reported strong third-quarter 2023 results, demonstrating robust revenue growth and improved profitability. Total revenue increased by 11.3% year-over-year to $2.5 billion, driven by a 5.0% increase in comparable restaurant sales and the opening of new locations, particularly those featuring Chipotlanes. Diluted earnings per share saw a significant 23.0% jump to $11.32, reflecting effective cost management and sales leverage. The company continues to expand its store base, with 62 new restaurants opened in the quarter, 54 of which included Chipotlanes. This strategic expansion, coupled with efforts to control operating costs, contributed to a decrease in restaurant operating costs as a percentage of total revenue. Chipotle also maintained a strong balance sheet with substantial cash and investments, providing ample resources for continued growth, share repurchases, and potential strategic investments.

Financial Highlights

46 data points
Beta

Revenue

$2.47B

Net Income

$313.22M

12.7% Net Margin

EPS (Diluted)

$0.23

Total Assets

$7.91B

Cash & Equivalents

$602.31M

Free Cash Flow

$349.27M

Financial Statements
Beta
Revenue$2.47B
Operating Expenses$2.08B
Operating Income$394.95M
Net Income$313.22M
EPS (Basic)$0.23
EPS (Diluted)$0.23
Shares Outstanding (Basic)1.38B
Shares Outstanding (Diluted)1.38B

Key Highlights

  • 1Total revenue for Q3 2023 increased by 11.3% to $2.5 billion compared to the prior year.
  • 2Comparable restaurant sales grew by 5.0% in Q3 2023, driven by increased transactions and a higher average check.
  • 3Diluted earnings per share (EPS) rose by 23.0% to $11.32, indicating enhanced profitability.
  • 4The company opened 62 new restaurants in Q3 2023, with 54 featuring Chipotlanes, underscoring continued expansion.
  • 5Restaurant operating costs as a percentage of total revenue decreased to 73.7% from 74.7% in the prior year's quarter, demonstrating improved efficiency.
  • 6Chipotle reported approximately $1.9 billion in cash and marketable investments as of September 30, 2023, providing strong liquidity.
  • 7The company announced an additional $300 million authorization for share repurchases, demonstrating a commitment to returning capital to shareholders.

Frequently Asked Questions

Chipotle's revenue growth was primarily driven by two factors: new restaurant openings and an increase in comparable restaurant sales. Comparable restaurant sales rose by 5.0%, attributed to a 4.1% increase in transactions and a 0.9% rise in average check, the latter benefiting from a 2.8% menu price increase partially offset by a decrease in check mix.

Chipotle has shown improvement in managing its operating costs. Restaurant operating costs as a percentage of total revenue decreased from 74.7% in Q3 2022 to 73.7% in Q3 2023. This improvement was mainly due to sales leverage, which helped offset inflation in food costs and wage inflation.

Chipotle continues to prioritize new restaurant development. In Q3 2023, they opened 62 new restaurants, with 54 featuring Chipotlanes. The company expects to open approximately 255-285 new restaurants in 2023 and anticipates opening 285-315 new restaurants in 2024, with at least 80% of these new locations expected to include a Chipotlane.

Chipotle maintains a strong financial position with approximately $1.9 billion in cash and marketable investments as of September 30, 2023. The company plans to use its cash flow from operations for new restaurant development, share repurchases, restaurant investments, and general corporate purposes. Additionally, $368.4 million remained available for share repurchases, with a recent $300 million authorization increase.