Summary
Chipotle Mexican Grill, Inc. (CMG) announced significant operational restructuring plans via an 8-K filing on June 28, 2018. The company is relocating its headquarters to Newport Beach, California, consolidating administrative functions in Columbus, Ohio, and closing its Denver, Colorado headquarters and New York offices. This initiative, largely communicated to employees during the week of June 18, 2018, is expected to result in substantial one-time costs. In addition to the corporate restructuring, Chipotle also revealed plans to close between 55 and 65 restaurants, including five Pizzeria Locale locations, over the coming quarters. These closures, alongside the corporate office moves, will lead to significant charges, impacting both the current and upcoming fiscal periods. Investors should note the estimated total charges and the timeline for their realization.
Key Highlights
- 1Chipotle is relocating its headquarters to Newport Beach, California, and closing its Denver and New York offices.
- 2The company will consolidate certain corporate administrative functions in its Columbus, Ohio office.
- 3Total estimated one-time expenses for office moves and related changes are between $70 million and $80 million.
- 4These corporate transition costs include an estimated $40-$45 million in employee and other related costs, and $20-$25 million in office-related costs.
- 5Chipotle plans to close 55-65 restaurants, including five Pizzeria Locale locations, over the next several quarters.
- 6Restaurant closures are expected to result in cash charges of $15-$25 million and non-cash charges of approximately $25 million.