Chipotle Mexican Grill, Inc. Announces First Quarter 2012 Results

DENVER, Apr 19, 2012 (BUSINESS WIRE) --Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for its first quarter ended March 31, 2012.

Highlights for the first quarter of 2012 as compared to the first quarter of 2011 include:

  • Revenue increased 25.8% to $640.6 million
  • Comparable restaurant sales increased 12.7%
  • Restaurant level operating margin was 27.4%, an increase of 220 basis points
  • Net income was $62.7 million, an increase of 35.1%
  • Diluted earnings per share was $1.97, an increase of 34.9%

"We're delighted that our continuing efforts to serve the very best food made from high quality ingredients raised with respect for the animals, the environment, and the farmers are resonating with our customers, allowing us to deliver double digit comps and record earnings during the quarter," said Steve Ells, Founder, Chairman and co-CEO of Chipotle.

First quarter 2012 results

Revenue for the quarter was $640.6 million, up 25.8% from the prior year period. The growth in revenue was the result of new restaurants not in the comparable base and a 12.7% increase in comparable restaurant sales. Comparable restaurant sales growth was primarily driven by increased traffic in the quarter as well as the impact of menu price increases implemented last year.

During the quarter we opened 32 new restaurants including one in Toronto, Canada, bringing the total restaurant count to 1,262.

Restaurant level operating margin was 27.4% in the quarter, an increase of 220 basis points from the prior year period. The increase was primarily driven by the impact of comparable restaurant sales growth and lower promotional costs which was partially offset by higher food costs.

G&A costs were 7.7% of revenue, up 140 basis points from the prior year period. This includes a one-time catch-up adjustment of $5.6 million related to performance shares issued in 2010.

Net income for the first quarter of 2012 was $62.7 million, or $1.97 per diluted share, compared to $46.4 million, or $1.46 per diluted share, in the first quarter of 2011.

"Our strong people culture continues to drive our success in attracting loyal customers and delivering exceptional results. Our restaurant teams are ambitious, passionate, and dedicated to delivering the best dining experience possible. Our efforts to hire and develop top performing crews will continue to lead to stronger future leaders running our restaurants, and ensure our customers will enjoy the best customer service possible," said Monty Moran, co-CEO.


For the full year 2012, management expects the following:

  • 155-165 new restaurant openings
  • Mid-single digit comparable restaurant sales growth
  • Food inflation of mid-single digits
  • An effective tax rate of approximately 39.0%


The following definitions apply to these terms as used throughout this release:

Comparable restaurant sales increases represent the change in period-over-period sales for the comparable restaurant base. A restaurant becomes comparable in its 13 th full calendar month of operation. Average restaurant sales refers to the average trailing 12-month sales for restaurants in operation for at least 12 full calendar months. Restaurant level operating marginrepresents total revenue less restaurant operating costs, expressed as a percent of total revenue.

Conference Call

Chipotle will host a conference call to discuss the first quarter 2012 financial results today at 4:30 PM Eastern Time. The conference call can be accessed live over the phone by dialing 1-800-946-0744 or for international callers by dialing 1-719-325-2170. A replay will be available one hour after the call and can be accessed by dialing 1-877-870-5176 or 1-858-384-5517 for international callers; the password is 4538293. The replay will be available until April 26, 2012. The call will be webcast live from the Company's website at under the investor relations section. An archived webcast will be available one hour after the end of the call.

About Chipotle

Steve Ells, Founder, Chairman and Co-Chief Executive Officer, started Chipotle with the idea that food served fast did not have to be a typical fast food experience. Today, Chipotle continues to offer a focused menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads made from fresh, high-quality raw ingredients, prepared using classic cooking methods and served in a distinctive atmosphere. Through our vision of Food With Integrity, Chipotle is seeking better food from using ingredients that are not only fresh, but that where possible are sustainably grown and naturally raised with respect for the animals, the land, and the farmers who produce the food. A similarly focused people culture, with an emphasis on identifying and empowering top performing employees, enables us to develop future leaders from within. Chipotle opened its first restaurant in 1993 and currently operates over 1,250 restaurants. For more information, visit

Forward-Looking Statements

Certain statements in this press release, including statements under the heading "Outlook" of our expected number of new restaurant openings, comparable restaurant sales increases, food inflation, and effective tax rate in 2012, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We use words such as "anticipate", "believe", "could", "should", "estimate", "expect", "intend", "may", "predict", "project", "target", and similar terms and phrases, including references to assumptions, to identify forward-looking statements. The forward-looking statements in this press release are based on information available to us as of the date any such statements are made and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: factors that could affect our ability to achieve and manage our planned expansion, such as the availability of a sufficient number of suitable new restaurant sites and the availability of qualified employees; the uncertainty of our ability to achieve expected levels of comparable restaurant sales increases; the performance of new restaurants and their impact on existing restaurant sales; increases in the cost of food ingredients and other key supplies; the risk of food-borne illnesses and other health concerns about our food; the potential for increased labor costs or difficulty retaining qualified employees, including as a result of immigration enforcement activities; risks relating to our expansion into new markets; the impact of federal, state or local government regulations relating to our employees and the sale of food or alcoholic beverages; risks associated with our Food With Integrity strategy, including supply shortages; changes in consumer preferences, general economic conditions or consumer discretionary spending; the effect of competition in the restaurant industry; the effects of continuing economic uncertainty on our business and on our suppliers, landlords and potential developers; the impact of increasing general and administrative expenses due to higher non-cash stock-based compensation expense and other increased expenses; risks relating to litigation; risks relating to our insurance coverage and self-insurance; our dependence on key personnel; security risks associated with the acceptance of electronic payment cards; the uncertainty of our ability to protect our name, logo and other proprietary information or the reputation of our brand; the potential effects of inclement weather; risks related to the tax treatment of our separation from McDonald's; and other risk factors described from time to time in our SEC reports, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, all of which are available on our Investor Relations page of our Web site at

Chipotle Mexican Grill, Inc.
Condensed Consolidated Statement of Income and Comprehensive Income
(in thousands, except per share data)


        Three months ended March 31,
        2012           2011  
Revenue       $ 640,603         100.0 %         $ 509,384         100.0 %
Restaurant operating costs

(Exclusive of depreciation and amortization shown separately below):

Food, beverage and packaging         206,590         32.2             162,908         32.0  
Labor         151,985         23.7             125,288         24.6  
Occupancy         40,509         6.3             35,315         6.9  
Other operating costs         66,179         10.3             57,385         11.3  
General and administrative expenses         49,334         7.7             32,216         6.3  
Depreciation and amortization         20,084         3.1             18,494         3.6  
Pre-opening costs         2,448         0.4             1,296         0.3  
Loss on disposal of assets         1,250         0.2             1,661         0.3  
Total operating expenses         538,379         84.0             434,563         85.3  
Income from operations         102,224         16.0             74,821         14.7  
Interest and other income, net         434         0.1             287         0.1  
Income before income taxes         102,658         16.0             75,108         14.7  
Provision for income taxes         (39,994 )       (6.2 )           (28,726 )       (5.6 )
Net income       $ 62,664         9.8 %         $ 46,382         9.1 %
Earnings per share:                                  
Basic       $ 2.00                   $ 1.49          
Diluted       $ 1.97                   $ 1.46          
Weighted average common shares outstanding:                                  
Basic         31,410                     31,082          
Diluted         31,846                     31,717          

Comprehensive Income

      $ 63,347                   $ 47,000          

Chipotle Mexican Grill, Inc.

Condensed Consolidated Balance Sheet

(in thousands, except per share data)


March 31,


31, 2011

Current assets:                  
Cash and cash equivalents       $ 370,191           $ 401,243  

Accounts receivable, net of allowance for doubtful accounts of $200
and $208 as of March 31, 2012 and December 31, 2011 respectively

        9,087             8,389  
Inventory         10,017             8,913  
Current deferred tax asset         6,662             6,238  
Prepaid expenses and other current assets         26,159             21,404  
Income tax receivable         34,891             --  
Investments         94,480             55,005  
Total current assets         551,487             501,192  
Leasehold improvements, property and equipment, net         773,116             751,951  
Long term investments         149,072             128,241  
Other assets         31,954             21,985  
Goodwill         21,939             21,939  
Total assets       $ 1,527,568           $ 1,425,308  
Liabilities and shareholders' equity                  
Current liabilities:                  
Accounts payable       $ 49,154           $ 46,382  
Accrued payroll and benefits         37,160             60,241  
Accrued liabilities         38,098             46,456  
Current portion of deemed landlord financing         135             133  
Income tax payable         --             4,241  
Total current liabilities         124,547             157,453  
Deferred rent         148,421             143,284  
Deemed landlord financing         3,494             3,529  
Deferred income tax liability         66,606             64,381  
Other liabilities         14,705             12,435  
Total liabilities         357,773             381,082  
Shareholders' equity:                  

Preferred stock, $0.01 par value, 600,000 shares authorized, no
shares issued as of March 31, 2012 and December 31, 2011

        --             --  

Common stock, $0.01 par value, 230,000 shares authorized, 34,859
and 34,357 shares issued as of March 31, 2012 and December 31, 2011, respectively

        349             344  
Additional paid-in capital         765,880             676,652  

Treasury stock, at cost, 3,177 and 3,105 common shares at March
31, 2012 and December 31, 2011, respectively

        (331,437 )           (304,426 )
Accumulated other comprehensive income         880             197  
Retained earnings         734,123             671,459  
Total shareholders' equity         1,169,795             1,044,226  
Total liabilities and shareholders' equity       $ 1,527,568           $ 1,425,308  

Chipotle Mexican Grill, Inc.

Condensed Consolidated Statement of Cash Flows

(in thousands)


Three months ended
March 31,

          2012             2011  
Operating activities                  
Net income       $ 62,664           $ 46,382  

Adjustments to reconcile net income to net cash provided
by operating activities:

Depreciation and amortization         20,084             18,494  
Deferred income tax provision         1,803             2,703  
Loss on disposal of assets         1,250             1,661  
Bad debt allowance         12             3  
Stock-based compensation expense         20,240             8,923  
Excess tax benefit on stock-based compensation         (68,392 )           (8,700 )
Other         78             115  
Changes in operating assets and liabilities:                  
Accounts receivable         (710 )           (1,968 )
Inventory         (1,102 )           (1,639 )
Prepaid expenses and other current assets         (4,738 )           (4,297 )
Other assets         (9,946 )           456  
Accounts payable         2,909             2,501  
Accrued liabilities         (31,435 )           (25,941 )
Income tax payable/receivable         29,260             24,383  
Deferred rent         5,130             3,713  
Other long-term liabilities         2,269             1,516  
Net cash provided by operating activities         29,376             68,305  
Investing activities                  

Purchases of leasehold improvements, property and

        (41,864 )           (26,438 )
Purchase of investments         (60,382 )           (59,452 )
Maturities of investments         --             79,766  
Net cash used in investing activities         (102,246 )           (6,124 )
Financing activities                  
Acquisition of treasury stock         (27,011 )           (13,523 )
Proceeds from option exercises         81             372  
Excess tax benefit on stock-based compensation         68,392             8,700  
Payments on deemed landlord financing         (33 )           (29 )
Net cash provided by (used in) financing activities         41,429             (4,480 )
Effect of exchange rate changes on cash and

cash equivalents

        389             400  
Net change in cash and cash equivalents         (31,052 )           58,101  
Cash and cash equivalents at beginning of year         401,243             224,838  
Cash and cash equivalents at end of year       $ 370,191             282,939  
Supplemental disclosures of cash flow information                  

Decrease in purchases of leasehold improvements, property, and
equipment accrued in accounts payable

        ($149 )           ($286 )
Chipotle Mexican Grill, Inc.

Supplemental Financial and Other Data

(dollars in thousands)

          For the three months ended  
        Mar. 31,       Dec. 31,       Sep. 30,       Jun. 30,       Mar 31,  
            2012           2011           2011           2011           2011    
Number of restaurants opened           32           67           32           39           12    

Restaurant relocations or

          --           --           --           (3 )         (1 )  

Number of restaurants at end of

          1,262           1,230           1,163           1,131           1,095    
Average restaurant sales         $ 2,072         $ 2,013         $ 1,973         $ 1,927         $ 1,885    

Comparable restaurant sales

          12.7 %         11.1 %         11.3 %         10.0 %         12.4 %  

SOURCE: Chipotle Mexican Grill, Inc.



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