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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.


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%.


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 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

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

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


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


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.

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

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