Chipotle Mexican Grill has reported financial results for its third quarter ended September 30, 2011.
Highlights for the third quarter of 2011 as compared to the third quarter of 2010 include:
- Revenue increased 24.1% to $591.9 million
- Comparable restaurant sales increased 11.3%
- Restaurant level operating margin was 26.7%, a decrease of 100 basis points
- Food costs were 33.1% of sales, an increase of 250 basis points driven by rising commodity costs
- Net income was $60.4 million, an increase of 25.3%
- Diluted earnings per share was $1.90, an increase of 25.0%
Highlights for the nine months ended September 30, 2011 as compared to the prior year include:
- Revenue increased 23.6% to $1.67 billion
- Comparable restaurant sales increased 11.2%
- Restaurant level operating margin was 25.9%, a decrease of 100 basis points
- Food costs were 32.7% of sales, an increase of 230 basis points driven by rising commodity costs
- Net income was $157.5 million, an increase of 18.8%
- Diluted earnings per share was $4.96, an increase of 18.7%
“Chipotle’s strong performance in the quarter and throughout the year is the result of our strong food culture, where we are constantly striving for more sustainable sources for all of our ingredients; and our special people culture, where top performers throughout the company are creating an extraordinary dining experience for each customer,” said Steve Ells, Founder, Chairman and Co-CEO of Chipotle.
Third quarter 2011 results
Revenue for the quarter was $591.9 million, up 24.1% from the prior year period. The growth in revenue was the result of new restaurants not in the comparable base and an 11.3% 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 between March and August.
During the quarter we opened 32 new restaurants including our new ShopHouse Southeast Asian Kitchen, bringing the total restaurant count to 1,163.
Restaurant level operating margin was 26.7% in the quarter, a decrease of 100 basis points from the prior year period. The decrease was primarily driven by food cost inflation partially offset by leverage from higher restaurant sales.
G&A costs were 6.3% of revenue, down 70 basis points from the prior year period. The decrease as a percent of revenue was driven by favorable sales leverage, and an all manager conference held during the third quarter of 2010, partially offset by an increase in non-cash stock-based compensation.
Net income for the third quarter of 2011 was $60.4 million, or $1.90 per diluted share, compared to $48.2 million, or $1.52 per diluted share, in the third quarter of 2010.
Results for the nine months ended September 30, 2011
Revenue for the first nine months of 2011 was $1.67 billion, up 23.6% from the prior year period. The growth in revenue was the result of new restaurants not in the comparable base and an 11.2% increase in comparable restaurant sales. Comparable restaurant sales growth was primarily driven by increased traffic.
During the first nine months of the year, we opened 82 new Chipotle restaurants as well as ShopHouse, bringing the total restaurant count to 1,163.
Restaurant level operating margin was 25.9% for the first nine months, a decrease of 100 basis points from the prior year period. The decrease was primarily driven by increased food costs partially offset by the impact of leverage from higher restaurant sales.
G&A costs for the first nine months of 2011 were 6.7% of revenue, up 10 basis points from the prior year period primarily due to higher stock based compensation and partially offset by greater sales leverage.
Net income for the first nine months of 2011 was $157.5 million, or $4.96 per diluted share, compared to $132.5 million, or $4.18 per diluted share, in the first nine months of 2010.
“I’m very pleased with our performance in the third quarter and throughout the year, but I’m even more pleased we’re delivering these strong financial results by advancing our special people culture, where top performers are empowered to deliver high standards in their restaurants. Our people culture is the strongest it has ever been, and it’s getting stronger every day, which gives me great confidence that we are well on our way toward our vision to change the way people think about and eat fast food,” commented Co-CEO Monty Moran.
Outlook
For 2011, management expects the following:
- Openings at or above the high end of our 135-145 opening range
- Low double digit comparable restaurant sales growth for the full year
- An effective tax rate of approximately 38.4%
For 2012, management expects the following:
- 155-165 new restaurant openings
- Low single digit comparable restaurant sales growth
- An effective tax rate of approximately 39.2%
Chipotle opened its first restaurant in 1993 and currently operates over 1,100 restaurants.