Print Page  |  Close Window

SEC Filings

10-Q
CHIPOTLE MEXICAN GRILL INC filed this Form 10-Q on 10/25/2017
Entire Document
 << Previous Page | Next Page >>



Food, beverage and packaging costs remained consistent as a percentage of revenue for the three months ended September 30, 2017. The benefit of the menu price increases taken in select restaurants during the second quarter of 2017 and decreased paper cost and usage were offset by higher avocado and beef prices, as well as steak making up a higher portion of our product mix compared to the third quarter of 2016.  The decrease in food, beverage and packing costs as a percentage of revenue for the nine months ended September 30, 2017, was due primarily bringing the preparation of lettuce and bell peppers back into our restaurants after using pre-cut produce during portions of 2016, reduced testing and waste costs, and the benefit of the menu price increase that went into effect during the second quarter of 2017.  The decrease was partially offset by higher avocado prices. Lower projected avocado prices are expected to drive decreased food costs as a percentage of revenue during the fourth quarter of 2017, and we expect food costs for the full year to be consistent with the first nine months of 2017.



Labor Costs



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Three months ended September 30,

 

%

 

Nine months ended September 30,

 

 



2017

 

2016

 

increase

 

2017

 

2016

 

% increase



(dollars in millions)

 

 

 

(dollars in millions)

 

 

Labor costs

$

306.9 

 

$

286.1 

 

7.2% 

 

$

900.6 

 

$

820.8 

 

9.7% 

As a percentage of revenue

 

27.2% 

 

 

27.6% 

 

 

 

 

26.8% 

 

 

28.6% 

 

 



Labor costs as a percentage of revenue decreased for the three months ended September 30, 2017, primarily due to labor efficiencies resulting from more efficient crew deployment and fewer managers in each of our restaurants, partially offset by wage inflation. Labor costs as a percentage of revenue decreased for the nine months ended September 30, 2017 due to labor efficiencies from more efficient crew deployment and fewer managers in each of our restaurants, as well as sales leverage, partially offset by wage inflation. Labor efficiencies in the three and nine months ended September 30, 2017 benefitted from abnormally high labor expenses in the comparable 2016 periods as a result of being fully staffed during the heavy sales promotional activity we were conducting during those periods.

Occupancy Costs



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Three months ended September 30,

 

%

 

Nine months ended September 30,

 

 



2017

 

2016

 

increase

 

2017

 

2016

 

% increase



(dollars in millions)

 

 

 

(dollars in millions)

 

 

Occupancy costs

$

83.2 

 

$

74.2 

 

12.1% 

 

$

242.5 

 

$

217.1 

 

11.7% 

As a percentage of revenue

 

7.4% 

 

 

7.2% 

 

 

 

 

7.2% 

 

 

7.6% 

 

 



Occupancy costs as a percentage of revenue increased for the three months ended September 30, 2017, primarily due to lower average daily restaurant sales due to new restaurants opening at lower sales volumes than restaurants in the comparable base, and those sales volumes being applied across a partially fixed-cost base. Occupancy costs as a percentage of revenue decreased for the nine months ended September 30, 2017, primarily due to sales leverage on a partially fixed-cost base.

Other Operating Costs



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



 

 

 

 

 

 

 

 

 

 

 

 

 

 

 



Three months ended September 30,

 

%

 

Nine months ended September 30,

 

 



2017

 

2016

 

decrease

 

2017

 

2016

 

% increase



(dollars in millions)

 

 

 

(dollars in millions)

 

 

Other operating costs

$

162.3 

 

$

166.0 

 

(2.2%)

 

$

476.6 

 

$

473.4 

 

0.7% 

As a percentage of revenue

 

14.4% 

 

 

16.0% 

 

 

 

 

14.2% 

 

 

16.5% 

 

 



Other operating costs include, among other items, marketing and promotional costs, bank and credit card fees, and restaurant utilities and maintenance costs. Other operating costs as a percentage of revenue decreased for the three and nine months ended September 30, 2017 due primarily to decreased marketing and promotional spend, and decreased kitchen supplies expense. While marketing and promotional spend decreased to 3.4% of revenue for the first nine months of 2017, as compared to 5.2% for the first nine months of 2016, it remains above historical levels as we continue our efforts to drive customer traffic. We expect to increase marketing and advertising expenses in the fourth quarter of 2017 as we continue national television advertising, and as a result, we expect full year 2017 other operating costs as a percentage of revenue to be higher in the fourth quarter and the full year 2017 than they were in the first nine months of 2017, but lower than the full year 2016.

12

 


 

 << Previous Page | Next Page >>