Chipotle Mexican Grill, Inc. Announces First Quarter 2014 Results

DENVER - (BUSINESS WIRE) - Apr. 17, 2014 - Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for its first quarter ended March 31, 2014.

Highlights for the first quarter of 2014 as compared to the first quarter of 2013 include:

  • Revenue increased 24.4% to $904.2 million
  • Comparable restaurant sales increased 13.4%
  • Restaurant level operating margin was 25.9%, a decrease of 40 basis points
  • Net income was $83.1 million, an increase of 8.5%
  • Diluted earnings per share was $2.64, an increase of 7.8%
  • Opened 44 new restaurants

"We are delighted that more and more people are choosing to visit our restaurants every day allowing us to deliver double digit comps during the quarter. Our food culture has always been a defining characteristic of Chipotle and continues to set us apart from other restaurants. We are confident that our special food culture will continue to attract more customers to visit Chipotle as customers better understand and connect how natural and high quality ingredients that are freshly prepared result in better tasting food," said Steve Ells, Founder, Chairman and co-CEO of Chipotle.

"Our unique and compelling people culture is having a tremendous and growing impact on our business and is one of the key drivers behind our success. Our Restaurateurs, and the cultures they are creating in their restaurants, are allowing us to serve better tasting food and provide a better dining experience to our guests," said Monty Moran, co-CEO.

First quarter 2014 results

Revenue for the quarter was $904.2 million, up 24.4% from the prior year period. The growth in revenue was from a 13.4% increase in comparable restaurant sales and new restaurants not in the comparable base. Comparable restaurant sales growth was driven primarily by increased traffic and to a lesser extent by an increase in average check and the benefit of one additional trading day in the quarter as compared to the first quarter of 2013.

During the quarter we opened 44 new restaurants, bringing the total restaurant count to 1,637.

Food costs were 34.5% of revenue, an increase of 150 basis points driven by higher commodity costs. Higher commodity costs were primarily driven by inflationary pressures in beef, avocados, and cheese prices.

Restaurant level operating margin was 25.9% in the quarter, a decrease of 40 basis points from the prior year period. The decrease was driven by higher food costs, partially offset by favorable sales leverage in labor and occupancy costs.

G&A costs were 7.4% of revenue, up 130 basis points from the prior year period primarily due to higher non-cash, non-economic stock compensation expense, and to a lesser extent from higher litigation costs.

Net income for the first quarter of 2014 was $83.1 million, or $2.64 per diluted share, compared to $76.6 million, or $2.45 per diluted share, in the first quarter of 2013. The first quarter of 2013 benefited by about $.10 per share related to 2012 tax credits.

Our Board of Directors has also approved the investment of up to an additional $100 million, exclusive of commissions, to repurchase shares of our common stock. This repurchase authorization, in addition to up to $77 million available as of March 31st for repurchases under previously announced repurchase authorizations, may be modified, suspended, or discontinued at any time.

Outlook

For 2014, management expects the following:

  • 180 - 195 new restaurant openings
  • High single digit comparable restaurant sales increases, excluding any menu price increase
  • An effective full year tax rate of approximately 39.1%.

Definitions

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

Comparable restaurant sales represent the change in period-over-period sales for the comparable restaurant base. A restaurant becomes comparable in its 13th 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 margin represents total revenue less restaurant operating costs, expressed as a percent of total revenue.

Conference Call

Chipotle will host a conference call to discuss complete first quarter 2014 financial results on Thursday, April 17, 2014 at 11:00 AM Eastern time. The conference call can be accessed live over the phone by dialing 1-888-490-2763 or for international callers by dialing 1-719-325-2249. 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 2712305. The replay will be available until April 24, 2014. The call will be webcast live from the Company's website at chipotle.com 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-CEO, 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 Responsibly Raised® with respect for the animals, the land, and the farmers who produce the food. In order to achieve this vision, we focus on building a special people culture that is centered on creating teams of top performers empowered to achieve high standards. This people culture not only leads to a better dining experience for our customers, it also allows us to develop future leaders from within. Chipotle opened with a single restaurant in 1993 and currently operates more than 1,600 restaurants including six ShopHouse Southeast Asian Kitchen restaurants, and is an investor in an entity that owns and operates one Pizzeria Locale. For more information, visit Chipotle.com.

Forward-Looking Statements

Certain statements in this press release, including statements regarding our attracting more customers to our restaurants, as well as statements under the heading "Outlook" of our expected number of new restaurant openings, comparable restaurant sales increases, and effective tax rates in 2014, 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: the uncertainty of our ability to achieve expected levels of comparable restaurant sales increases due to factors such as decreased consumer spending and economic uncertainty or our failure to attract customers to our brand or retain our existing customers; our possible inability to increase menu prices or realize the benefits of menu price increases, or the impact of competition; 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 performance of new restaurants and their impact on existing restaurant sales; increases in the cost of food ingredients and other key supplies; the potential for increased labor costs or difficulty retaining qualified employees, including as a result of immigration enforcement activities; security risks associated with the acceptance of electronic payment cards or electronic storage of confidential customer or employee information; the risk of food-borne illnesses and other health concerns about our food; risks relating to our expansion into international markets; the impact of federal, state or local government regulations relating to our employees, our restaurant design, or the sale of food or alcoholic beverages; risks associated with our Food With Integrity strategy, including supply shortages; the effect of competition in the restaurant industry; risks relating to litigation and negative publicity; risks that our investments in new concepts will not be successful; risks related to our marketing and advertising strategies; our dependence on key personnel; risks relating to our insurance coverage and self-insurance; 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; 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 Web site at chipotle.com.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three months ended March 31

 

 

2014

 

 

2013

Revenue

 

$

904,163

 

    

 

100.0

 

%

 

    

$

726,751

 

    

 

100.0

 

%

Restaurant operating costs

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Exclusive of depreciation and amortization shown separately below):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Food, beverage and packaging

 

 

311,792

 

 

 

34.5

 

 

 

 

 

239,589

 

 

 

33.0

 

 

Labor

 

 

208,208

 

 

 

23.0

 

 

 

 

 

171,469

 

 

 

23.6

 

 

Occupancy

 

 

54,846

 

 

 

6.1

 

 

 

 

 

47,620

 

 

 

6.6

 

 

Other operating costs

 

 

95,137

 

 

 

10.5

 

 

 

 

 

76,656

 

 

 

10.5

 

 

General and administrative expenses

 

 

66,917

 

 

 

7.4

 

 

 

 

 

44,211

 

 

 

6.1

 

 

Depreciation and amortization

 

 

25,754

 

 

 

2.8

 

 

 

 

 

22,936

 

 

 

3.2

 

 

Pre-opening costs

 

 

4,300

 

 

 

0.5

 

 

 

 

 

2,886

 

 

 

0.4

 

 

Loss on disposal of assets

 

 

1,559

 

 

 

0.2

 

 

 

 

 

1,340

 

 

 

0.2

 

 

Total operating expenses

 

 

768,513

 

 

 

85.0

 

 

 

 

 

606,707

 

 

 

83.5

 

 

Income from operations

 

 

135,650

 

 

 

15.0

 

 

 

 

 

120,044

 

 

 

16.5

 

 

Interest and other income (expense), net

 

 

689

 

 

 

0.1

 

 

 

 

 

266

 

 

 

0.0

 

 

Income before income taxes

 

 

136,339

 

 

 

15.1

 

 

 

 

 

120,310

 

 

 

16.6

 

 

Provision for income taxes

 

 

(53,270

)

 

 

(5.9

)

 

 

 

 

(43,726

)

 

 

(6.0

)

 

Net income

 

$

83,069

 

 

 

9.2

 

%

 

 

$

76,584

 

 

 

10.5

 

%

Earnings per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

$

2.67

 

 

 

 

 

 

 

$

2.47

 

 

 

 

 

Diluted

 

$

2.64

 

 

 

 

 

 

 

$

2.45

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

31,061

 

 

 

 

 

 

 

 

31,012

 

 

 

 

 

Diluted

 

 

31,486

 

 

 

 

 

 

 

 

31,229

 

 

 

 

 

Comprehensive income

 

$

82,938

 

 

 

 

 

 

 

$

75,480

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chipotle Mexican Grill, Inc.
Condensed Consolidated Balance Sheet
(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

March 31

    

 

December 31    

 

 

2014

 

 

2013

 

 

 

 

 

 

 

 

 

(unaudited)

 

 

 

 

Assets

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

411,592

 

 

 

$

323,203

 

Accounts receivable, net of allowance for doubtful accounts of $1,170 and $1,190 as of

 

 

16,582

 

 

 

 

24,016

 

March 31, 2014 and December 31, 2013, respectively

 

 

 

 

 

 

 

Inventory

 

 

15,202

 

 

 

 

13,044

 

Current deferred tax asset

 

 

13,799

 

 

 

 

13,212

 

Prepaid expenses and other current assets

 

 

38,213

 

 

 

 

34,204

 

Income tax receivable

 

 

-

 

 

 

 

3,657

 

Investments

 

 

295,403

 

 

 

 

254,971

 

Total current assets

 

 

790,791

 

 

 

 

666,307

 

Leasehold improvements, property and equipment, net

 

 

983,047

 

 

 

 

963,238

 

Long term investments

 

 

313,601

 

 

 

 

313,863

 

Other assets

 

 

46,302

 

 

 

 

43,933

 

Goodwill

 

 

21,939

 

 

 

 

21,939

 

Total assets

 

$

2,155,680

 

 

 

$

2,009,280

 

Liabilities and shareholders' equity

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

Accounts payable

 

$

66,729

 

 

 

$

59,022

 

Accrued payroll and benefits

 

 

56,332

 

 

 

 

67,195

 

Accrued liabilities

 

 

68,703

 

 

 

 

73,011

 

Income tax payable

 

 

35,478

 

 

 

 

-

 

Total current liabilities

 

 

227,242

 

 

 

 

199,228

 

Deferred rent

 

 

199,480

 

 

 

 

192,739

 

Deferred income tax liability

 

 

57,576

 

 

 

 

55,434

 

Other liabilities

 

 

26,349

 

 

 

 

23,591

 

Total liabilities

 

 

510,647

 

 

 

 

470,992

 

Shareholders' equity:

 

 

 

 

 

 

 

Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of

 

 

 

 

 

 

 

March 31, 2014 and December 31, 2013, respectively

 

 

-

 

 

 

 

-

 

Common stock $0.01 par value, 230,000 shares authorized, and 35,323 and 35,245

 

 

 

 

 

 

 

shares issued as of March 31, 2014 and December 31, 2013, respectively

 

 

353

 

 

 

 

352

 

Additional paid-in capital

 

 

956,382

 

 

 

 

919,840

 

Treasury stock, at cost, 4,235 and 4,212 common shares at March 31, 2014 and

 

 

 

 

 

 

 

December 31, 2013, respectively

 

 

(673,157

)

 

 

 

(660,421

)

Accumulated other comprehensive income

 

 

1,489

 

 

 

 

1,620

 

Retained earnings

 

 

1,359,966

 

 

 

 

1,276,897

 

Total shareholders' equity

 

 

1,645,033

 

 

 

 

1,538,288

 

Total liabilities and shareholders' equity

 

$

2,155,680

 

 

 

$

2,009,280

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chipotle Mexican Grill, Inc.
Condensed Consolidated Statement of Cash Flows
(in thousands)

 

 

 

 

 

 

 

Three months ended March 31

 

2014

 

2013

Operating activities

 

 

 

 

 

Net income

$

83,069

 

    

$

76,584

 

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

 

 

 

 

 

Depreciation and amortization

 

25,754

 

 

 

22,936

 

Deferred income tax provision (benefit)

 

1,551

 

 

 

(1,923

)

Loss on disposal of assets

 

1,559

 

 

 

1,340

 

Bad debt allowance

 

(20

)

 

 

9

 

Stock-based compensation expense

 

27,359

 

 

 

15,387

 

Excess tax benefit on stock-based compensation

 

(8,955

)

 

 

(1,869

)

Other

 

64

 

 

 

177

 

Changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable

 

7,439

 

 

 

1,309

 

Inventory

 

(2,160

)

 

 

(340

)

Prepaid expenses and other current assets

 

(4,014

)

 

 

(4,376

)

Other assets

 

(2,365

)

 

 

(1,588

)

Accounts payable

 

8,006

 

 

 

773

 

Accrued liabilities

 

(15,159

)

 

 

(33,893

)

Income tax payable/receivable

 

48,088

 

 

 

42,721

 

Deferred rent

 

6,764

 

 

 

5,880

 

Other long-term liabilities

 

2,798

 

 

 

2,123

 

Net cash provided by operating activities

 

179,778

 

 

 

125,250

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

Purchases of leasehold improvements, property and equipment

 

(47,230

)

 

 

(36,495

)

Purchases of investments

 

(89,782

)

 

 

(54,598

)

Maturities of investments

 

49,500

 

 

 

39,500

 

Net cash used in investing activities

 

(87,512

)

 

 

(51,593

)

 

 

 

 

 

 

Financing activities

 

 

 

 

 

Acquisition of treasury stock

 

(12,736

)

 

 

(50,965

)

Excess tax benefit on stock-based compensation

 

8,955

 

 

 

1,869

 

Other financing proceeds (payments)

 

(56

)

 

 

120

 

Net cash used in financing activities

 

(3,837

)

 

 

(48,976

)

 

 

 

 

 

 

Effect of exchange rate changes on cash and cash equivalents

 

(40

)

 

 

(304

)

Net change in cash and cash equivalents

 

88,389

 

 

 

24,377

 

Cash and cash equivalents at beginning of period

 

323,203

 

 

 

322,553

 

Cash and cash equivalents at end of period

$

411,592

 

 

$

346,930

 

 

 

 

 

 

 

Supplemental disclosures of cash flow information

 

 

 

 

 

Increase (decrease) in purchases of leasehold improvements, property and

 

 

 

 

 

equipment accrued in accounts payable

$

(290

)

 

$

2,813

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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,

 

 

2014

 

2013

 

2013

 

2013

 

2013

Number of restaurants opened

 

 

44

 

 

 

56

 

 

 

37

 

 

 

44

 

 

 

48

 

Restaurant relocations

 

 

(2

)

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Number of restaurants at end of period

 

 

1,637

 

 

 

1,595

 

 

 

1,539

 

 

 

1,502

 

 

 

1,458

 

Average restaurant sales

 

$

2,226

 

 

$

2,169

 

 

$

2,140

 

 

$

2,119

 

 

$

2,105

 

Comparable restaurant sales increases

 

 

13.4

%

 

 

9.3

%

 

 

6.2

%

 

 

5.5

%

 

 

1.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SOURCE Chipotle Mexican Grill, Inc.

Contact:

Alex Spong
Chipotle Mexican Grill, Inc.
Investor Relations:
303-222-2552

###

Share this Story:

Comments:

comments powered by Disqus

Franchise News Room »


News By Industry »


Featured Opportunities

Homewatch CareGivers
Homewatch CareGivers gives entrepreneurs a proven path to financial success as well as the opportunity to make a positive change in the world. We are...
Sonic Drive-In
Here's your chance to own a SONIC® Drive-in Franchise Restaurant. As the nation's largest drive-in chain, SONIC® has successfully served up hot,...
the inside coup
the inside coup™ is a unique franchise opportunity in a multi billion dollar industry, Direct Mail.
Sky Zone
Sky Zone created, built and franchises the first of its kind wall-to-wall trampoline playing courts with unlimited purposes and endless possibilities.
SpeedPro Imaging
SpeedPro Imaging is the ONLY franchise available exclusively focusing on wide format printing, the highest margin and fastest growing niche in the...

Subscribe to Franchising.com Express

A Franchise Update Media Production
Franchise Update Media | P.O. Box 20547 // San Jose, CA 95160 // PH. (408) 402-5681
Copyright © 2001 - 2017. All Rights Reserved.

In Loving Memory Of Timothy Gardner (1987-2014)