10-QPeriod: Q3 FY2024

CHIPOTLE MEXICAN GRILL INC Quarterly Report for Q3 Ended Sep 30, 2024

Filed October 30, 2024For Securities:CMG

Summary

Chipotle Mexican Grill Inc. (CMG) reported strong performance for the third quarter of fiscal year 2024, with total revenue increasing by 13.0% year-over-year to $2.8 billion. This growth was driven by a 6.0% increase in comparable restaurant sales, reflecting both higher transaction volumes and an increased average check. Profitability also showed improvement, with diluted earnings per share (EPS) rising 21.7% to $0.28. This EPS growth was aided by a favorable shift in stock-based compensation expense, partially offset by an impairment charge related to a software asset. The company continued its aggressive expansion strategy, opening 86 new restaurants, with 73 featuring Chipotlanes, reinforcing its commitment to growth and operational efficiency. Management expressed confidence in future performance, anticipating continued positive cash flow generation and sufficient liquidity to fund operations and strategic initiatives, including ongoing share repurchases.

Financial Highlights

46 data points
Beta

Revenue

$2.79B

Net Income

$387.39M

13.9% Net Margin

EPS (Diluted)

$0.28

Total Assets

$9.01B

Cash & Equivalents

$698.55M

Free Cash Flow

$298.97M

Financial Statements
Beta
Revenue$2.79B
Operating Expenses$2.32B
Operating Income$473.26M
Net Income$387.39M
EPS (Basic)$0.28
EPS (Diluted)$0.28
Shares Outstanding (Basic)1.37B
Shares Outstanding (Diluted)1.37B

Key Highlights

  • 1Total revenue surged 13.0% to $2.8 billion for Q3 2024, driven by strong sales performance.
  • 2Comparable restaurant sales increased by 6.0%, indicating healthy growth in existing locations.
  • 3Diluted Earnings Per Share (EPS) grew 21.7% to $0.28, showcasing improved profitability.
  • 4The company opened 86 new restaurants, with 73 featuring Chipotlanes, underscoring its aggressive expansion strategy.
  • 5Food, beverage, and packaging costs as a percentage of revenue increased slightly to 30.6% due to ingredient inflation.
  • 6Labor costs as a percentage of revenue remained stable at 24.9%, benefiting from sales leverage that offset wage inflation.
  • 7General and administrative expenses decreased significantly by 20.6% in dollar terms, primarily due to lower stock-based compensation expenses and the absence of certain one-time conference costs from the prior year.

Frequently Asked Questions

Revenue growth was primarily driven by a 6.0% increase in comparable restaurant sales. This was a result of a 3.3% increase in transactions and a 2.7% increase in average check size. The company also benefited from the opening of 86 new restaurants during the quarter.

Diluted Earnings Per Share (EPS) increased by 21.7% to $0.28 compared to the prior year. This improvement was positively impacted by a net benefit in stock-based compensation expense related to forfeitures by the former CEO and grants of retention awards, along with an unrealized gain on an investment. However, this was partially offset by an impairment charge related to a software asset.

Chipotle continues to expand aggressively, opening 86 new company-operated restaurants in the third quarter, 73 of which included Chipotlanes. The company anticipates opening approximately 285-315 new restaurants in fiscal year 2024 and 315-345 in fiscal year 2025, with a continued focus on incorporating Chipotlanes in at least 80% of new locations.

Chipotle maintains a strong liquidity position with approximately $2.2 billion in cash and marketable investments as of September 30, 2024. The company expects to generate positive cash flow from operations, which will be used for new restaurant development, share repurchases, restaurant refurbishments, and general corporate purposes. A significant amount, $1,059.6 million, remained authorized for share repurchases.