CHIPOTLE ANNOUNCES FIRST QUARTER 2024 RESULTS
- Total revenue increased by 14.1% to $2.7 billion in the first quarter of 2024.
- Comparable restaurant sales grew by 7.0% year over year.
- Operating margin improved to 16.3% from 15.5%.
- Diluted earnings per share increased by 23.9% to $13.01.
- Opened 47 new restaurants, including Chipotlanes, during the quarter.
- Digital sales represented 36.5% of total food and beverage revenue.
- Chairman and CEO, Brian Niccol, expressed confidence in achieving long-term business growth targets.
- Food, beverage, and packaging costs were 28.8% of total revenue.
- None.
Chipotle's recent earnings report paints a picture of robust growth, a detail that catches the eye of any investor looking for expanding margins and revenue. A 14.1% surge in total revenue signifies more than just an uptick – it's a strong indicator of the company's expanding footprint in the fast-casual dining space. A reported 7% rise in comparable restaurant sales, particularly noteworthy given it was propelled by a substantial 5.4% increase in transactions, suggests Chipotle is successfully attracting more customers and enhancing loyalty.
Furthermore, an uptick in the operating margin to 16.3% reflects disciplined cost management and operational efficiency. Chipotle's ability to elevate its restaurant-level operating margin by 190 basis points to 27.5% cannot be overlooked, as this demonstrates not only improved scalability but also the ability to leverage fixed costs over a larger sales base. Finally, the growth in diluted earnings per share by 23.9% to $13.01 and even more so the adjusted figure of $13.37, underscores a profitability that outpaces revenue growth, a sign of robust financial health.
From a market perspective, Chipotle's aggressive expansion strategy is reflected in the strategic opening of 47 new restaurants within the first quarter, indicative of a bullish stance on market capture. The inclusion of 'Chipotlanes,' which is the brand’s drive-thru option, highlights a focus on improving customer experience and accessibility, which may further cement market share in a competitive landscape.
The brand's marketing initiatives, such as the introduction of new menu items like Braised Beef Barbacoa and Chicken Al Pastor, play a pivotal role in driving sales. By aligning new offerings with consumer trends towards diverse and premium casual dining options, Chipotle is positioning itself well within the market dynamics. This strategic menu innovation, combined with their throughput improvements, appears to be a key factor in driving the aforementioned transaction growth—an essential metric for gauging consumer demand and brand strength in the fast-casual industry.
The integration of technology within Chipotle's business model is evident through the significant proportion of digital sales, accounting for 36.5% of total food and beverage revenue. This demonstrates a successful adoption of digital ordering systems which can lead to operational efficiencies, higher throughput and potentially drive customer loyalty. Their technological initiatives, which complement the traditional in-restaurant experience, are likely a contributing factor to their revenue growth and could be a defensive moat against competitors in the fast-casual sector.
Moreover, the use of technology is not only a response to evolving consumer preferences but also an investment in the scalability of operations. If Chipotle continues to enhance its digital infrastructure, it could maintain or even boost its market position by providing a seamless omnichannel experience for customers. This digital focus may also lead to improved data collection and analytics, enabling more targeted marketing campaigns and personalized customer experiences in the future.
COMPARABLE SALES INCREASE
First quarter highlights, year over year:
- Total revenue increased
14.1% to$2.7 billion
- Comparable restaurant sales increased
7.0%
- Operating margin was
16.3% , an increase from15.5%
- Restaurant level operating margin was
27.5% 1, an increase of 190 basis points
- Diluted earnings per share was
$13.01 23.9% increase from$10.50 $0.36 $13.37 27.3% increase from$10.50
- Opened 47 new restaurants with 43 locations including a Chipotlane
"We had another outstanding quarter driven by our improvement in throughput and successful marketing initiatives, including Braised Beef Barbacoa and Chicken Al Pastor, which drove strong sales and transactions. The results we are seeing from our focus on developing exceptional people, preparing delicious food and fast throughput gives me confidence that we can achieve our long-term target of more than doubling our business in
Results for the three months ended March 31, 2024:
Total revenue in the first quarter was
We opened 47 new restaurants during the first quarter with 43 locations including a Chipotlane. These formats continue to perform well and are helping enhance guest access and convenience, as well as increase new restaurant sales, margins, and returns.
Food, beverage and packaging costs in the first quarter were
Restaurant level operating margin in the first quarter was
General and administrative expenses for the first quarter were
The effective income tax rate for the first quarter was
Net income for the first quarter was
During the first quarter we repurchased
More information will be available in our Quarterly Report on Form 10-Q, which will be filed with the SEC by the end of April.
Outlook
For 2024, management is anticipating the following:
- Full year comparable restaurant sales growth in the mid to high-single digit range
- 285 to 315 new restaurant openings with over
80% having a Chipotlane
- An estimated underlying effective full year tax rate between
25% and27% before discrete items
Definitions
The following definitions apply to these terms as used throughout this release:
- Comparable restaurant sales, or sales comps, and comparable restaurant transactions, represent the change in period-over-period total revenue or transactions for restaurants in operation for at least 13 full calendar months.
- Average restaurant sales refer to the average trailing 12-month food and beverage revenue for restaurants in operation for at least 12 full calendar months.
- Restaurant level operating margin represents total revenue less direct restaurant operating costs, expressed as a percent of total revenue.
- Digital sales represent food and beverage revenue generated through the Chipotle website, Chipotle app or third-party delivery aggregators. Digital sales include revenue deferrals associated with Chipotle Rewards.
Conference Call Details
Chipotle will host a conference call on Wednesday, April 24, 2024, at 4:30 PM Eastern time to discuss first quarter 2024 financial results as well as provide a business update for the second quarter 2024.
The conference call can be accessed live over the phone by dialing 1-888-317-6003, or for international callers by dialing 1-412-317-6061, and use code: 7358132. The call will be webcast live from the company's website on the investor relations page at ir.chipotle.com/events. An archived webcast will be available approximately one hour after the end of the call.
About Chipotle
Chipotle Mexican Grill, Inc. (NYSE: CMG) is cultivating a better world by serving responsibly sourced, classically-cooked, real food with wholesome ingredients without artificial colors, flavors or preservatives. Chipotle had nearly 3,500 restaurants as of March 31, 2024, in
Forward-Looking Statements
Certain statements in this press release and in the April 24, 2024, conference call are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements under "Outlook" about our anticipated full year 2024 comparable restaurant sales growth, goals for number of new restaurant openings, and estimated underlying effective full year tax rate, as well as statements about expected restaurants with Chipotlanes, our ability to achieve our long-term target of more than doubling our business in
1 Restaurant level operating margin, adjusted diluted earnings per share, adjusted net income, non-GAAP general and administrative expenses, and non-GAAP effective income tax rate are non-GAAP financial measures. Reconciliations to GAAP measures and further information are set forth in the table at the end of this press release. |
CHIPOTLE MEXICAN GRILL, INC. CONDENSED CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data) (unaudited)
| |||||||
Three months ended March 31, | |||||||
2024 | 2023 | ||||||
Food and beverage revenue | $ 2,684,447 | 99.4 % | $ 2,351,009 | 99.3 % | |||
Delivery service revenue | 17,401 | 0.6 | 17,571 | 0.7 | |||
Total revenue | 2,701,848 | 100.0 | 2,368,580 | 100.0 | |||
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | |||||||
Food, beverage and packaging | 779,076 | 28.8 | 692,559 | 29.2 | |||
Labor | 659,450 | 24.4 | 583,794 | 24.6 | |||
Occupancy | 135,699 | 5.0 | 121,931 | 5.1 | |||
Other operating costs | 385,773 | 14.3 | 363,206 | 15.3 | |||
General and administrative expenses | 204,625 | 7.6 | 148,340 | 6.3 | |||
Depreciation and amortization | 83,243 | 3.1 | 76,585 | 3.2 | |||
Pre-opening costs | 7,211 | 0.3 | 6,198 | 0.3 | |||
Impairment, closure costs, and asset disposals | 5,479 | 0.2 | 8,361 | 0.4 | |||
Total operating expenses | 2,260,556 | 83.7 | 2,000,974 | 84.5 | |||
Income from operations | 441,292 | 16.3 | 367,606 | 15.5 | |||
Interest and other income, net | 19,364 | 0.7 | 8,949 | 0.4 | |||
Income before income taxes | 460,656 | 17.0 | 376,555 | 15.9 | |||
Provision for income taxes | 101,369 | 3.8 | 84,911 | 3.6 | |||
Net income | $ 359,287 | 13.3 % | $ 291,644 | 12.3 % | |||
Earnings per share: | |||||||
Basic | $ 13.09 | $ 10.56 | |||||
Diluted | $ 13.01 | $ 10.50 | |||||
Weighted-average common shares outstanding: | |||||||
Basic | 27,444 | 27,624 | |||||
Diluted | 27,624 | 27,788 | |||||
CHIPOTLE MEXICAN GRILL, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)
| |||
March 31, | December 31, | ||
(unaudited) | |||
Assets | |||
Current assets: | |||
Cash and cash equivalents | $ 727,394 | $ 560,609 | |
Accounts receivable, net | 89,836 | 115,535 | |
Inventory | 37,947 | 39,309 | |
Prepaid expenses and other current assets | 98,118 | 117,462 | |
Income tax receivable | - | 52,960 | |
Investments | 692,474 | 734,838 | |
Total current assets | 1,645,769 | 1,620,713 | |
Leasehold improvements, property and equipment, net | 2,202,739 | 2,170,038 | |
Long-term investments | 776,815 | 564,488 | |
Restricted cash | 26,138 | 25,554 | |
Operating lease assets | 3,670,983 | 3,578,548 | |
Other assets | 66,866 | 63,082 | |
Goodwill | 21,939 | 21,939 | |
Total assets | $ 8,411,249 | $ 8,044,362 | |
Liabilities and shareholders' equity | |||
Current liabilities: | |||
Accounts payable | $ 196,866 | $ 197,646 | |
Accrued payroll and benefits | 142,425 | 227,537 | |
Accrued liabilities | 171,612 | 147,688 | |
Unearned revenue | 187,317 | 209,680 | |
Current operating lease liabilities | 254,144 | 248,074 | |
Income tax payable | 44,989 | - | |
Total current liabilities | 997,353 | 1,030,625 | |
Long-term operating lease liabilities | 3,903,353 | 3,803,551 | |
Deferred income tax liabilities | 84,229 | 89,109 | |
Other liabilities | 64,985 | 58,870 | |
Total liabilities | 5,049,920 | 4,982,155 | |
Shareholders' equity: | |||
Preferred stock, of March 31, 2024 and December 31, 2023, respectively | - | - | |
Common stock, shares issued as of March 31, 2024 and December 31, 2023, respectively | 376 | 375 | |
Additional paid-in capital | 1,994,950 | 1,956,160 | |
Treasury stock, at cost, 10,096 and 10,057 common shares as of March 31, 2024 and December 31, 2023, respectively | (5,042,319) | (4,944,656) | |
Accumulated other comprehensive loss | (7,950) | (6,657) | |
Retained earnings | 6,416,272 | 6,056,985 | |
Total shareholders' equity | 3,361,329 | 3,062,207 | |
Total liabilities and shareholders' equity | $ 8,411,249 | $ 8,044,362 | |
CHIPOTLE MEXICAN GRILL, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) (unaudited)
| |||
Three months ended March 31, | |||
2024 | 2023 | ||
Operating activities | |||
Net income | $ 359,287 | $ 291,644 | |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 83,243 | 76,585 | |
Deferred income tax provision | (4,890) | (486) | |
Impairment, closure costs, and asset disposals | 4,209 | 8,152 | |
Provision for credit losses | (412) | 500 | |
Stock-based compensation expense | 36,003 | 20,084 | |
Other | 835 | (2,810) | |
Changes in operating assets and liabilities: | |||
Accounts receivable | 26,146 | 39,659 | |
Inventory | 1,331 | 1,086 | |
Prepaid expenses and other current assets | 16,291 | (14,569) | |
Operating lease assets | 64,797 | 59,135 | |
Other assets | 1,561 | 3,277 | |
Accounts payable | 12,588 | (2,732) | |
Accrued payroll and benefits | (85,289) | (53,428) | |
Accrued liabilities | 25,322 | 17,009 | |
Unearned revenue | (19,358) | (22,653) | |
Income tax payable/receivable | 97,960 | 85,400 | |
Operating lease liabilities | (51,537) | (51,584) | |
Other long-term liabilities | 1,147 | 767 | |
Net cash provided by operating activities | 569,234 | 455,036 | |
Investing activities | |||
Purchases of leasehold improvements, property and equipment | (132,703) | (120,369) | |
Purchases of investments | (366,798) | (214,819) | |
Maturities of investments | 198,462 | 99,639 | |
Net cash used in investing activities | (301,039) | (235,549) | |
Financing activities | |||
Acquisition of treasury stock | (27,005) | (126,709) | |
Tax withholding on stock-based compensation awards | (72,654) | (67,185) | |
Other financing activities | (415) | 11 | |
Net cash used in financing activities | (100,074) | (193,883) | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (752) | 290 | |
Net change in cash, cash equivalents, and restricted cash | 167,369 | 25,894 | |
Cash, cash equivalents, and restricted cash at beginning of period | 586,163 | 408,966 | |
Cash, cash equivalents, and restricted cash at end of period | $ 753,532 | $ 434,860 | |
Supplemental disclosures of cash flow information | |||
Income taxes paid (refunded) | $ 7,859 | $ (245) | |
Purchases of leasehold improvements, property and equipment accrued in accounts payable and accrued liabilities | $ 64,207 | $ 63,745 | |
Acquisition of treasury stock accrued in accounts payable and accrued liabilities | $ 3,646 | $ 9,422 | |
CHIPOTLE MEXICAN GRILL, INC. SUPPLEMENTAL FINANCIAL AND OTHER DATA (dollars in thousands) (unaudited)
| ||||||||||
For the three months ended | ||||||||||
Mar. 31, | Dec. 31, | Sep. 30, | Jun. 30, | Mar. 31, | ||||||
Number of restaurants opened | 47 | 121 | 62 | 47 | 41 | |||||
Chipotle permanent closures | (3) | (2) | (1) | - | - | |||||
Chipotle relocations | (2) | (3) | (2) | (3) | (4) | |||||
Non-Chipotle permanent closures | - | - | (6) | - | - | |||||
Number of restaurants at end of period | 3,479 | 3,437 | 3,321 | 3,268 | 3,224 | |||||
Average restaurant sales | $ 3,082 | $ 3,018 | $ 2,972 | $ 2,941 | $ 2,892 | |||||
Comparable restaurant sales increase | 7.0 % | 8.4 % | 5.0 % | 7.4 % | 10.9 % | |||||
CHIPOTLE MEXICAN GRILL, INC.
RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
The following tables provide a reconciliation of non-GAAP financial measures presented in the text above to the most directly comparable financial measures calculated and presented in accordance with GAAP.
Adjusted net income is net income excluding expenses related to certain legal proceedings. Adjusted general and administrative expense is general and administrative expense excluding expenses related to certain legal proceedings. The adjusted effective income tax rate is the effective income tax rate adjusted to reflect the after tax impact of non-GAAP adjustments. Restaurant Level Operating Margin, a non-GAAP financial measure, is equal to the revenues generated by our restaurants less their direct operating costs which consist of food, beverage and packaging, labor, occupancy and other operating costs. This performance measure primarily includes the costs that restaurant level managers can directly control and excludes other costs that are essential to conduct our business. Management uses restaurant level operating margin as a measure of restaurant performance. Management believes restaurant level operating margin is useful to investors in that it highlights trends in our core business that may not otherwise be apparent to investors when relying solely on GAAP financial measures. We present these non-GAAP measures in order to facilitate meaningful evaluation of our operating performance across periods. These adjustments are intended to provide greater transparency of underlying performance and to allow investors to evaluate our business on the same basis as our management, which uses these non-GAAP measures in evaluating the company's performance. Our adjusted net income, adjusted diluted earnings per share, adjusted general and administrative expenses, adjusted effective income tax rate and restaurant level operating margin measures may not be comparable to other companies' adjusted measures. These adjustments are not necessarily indicative of what our actual financial performance would have been during the periods presented and should be viewed in addition to, and not as an alternative to, our results prepared in accordance with GAAP. Further details regarding these adjustments are included in the tables below.
CHIPOTLE MEXICAN GRILL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Adjusted Net Income and Adjusted Diluted Earnings per Share (in thousands, except per share amounts) (unaudited)
| |||
Three months ended March 31, | |||
2024 | 2023 | ||
Net income | $ 359,287 | $ 291,644 | |
Non-GAAP adjustments: | |||
Legal proceedings(1) | 13,275 | - | |
Total non-GAAP adjustments | $ 13,275 | $ - | |
Tax effect of non-GAAP adjustments above(2) | $ (3,307) | $ - | |
After tax impact of non-GAAP adjustments | $ 9,968 | $ - | |
Adjusted net income | $ 369,255 | $ 291,644 | |
Diluted weighted-average number of common shares outstanding | 27,624 | 27,788 | |
Diluted earnings per share | $ 13.01 | $ 10.50 | |
Adjusted diluted earnings per share | $ 13.37 | $ 10.50 | |
(1) | Charges for estimated settlements for distinct legal matters that exceeded or are expected to exceed typical costs for these types of legal proceedings. |
(2) | Adjustments relate to the tax effect of non-GAAP adjustments, which were determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates. |
CHIPOTLE MEXICAN GRILL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Adjusted General and Administrative Expenses (in thousands) (unaudited)
| |||
Three months ended March 31, | |||
2024 | 2023 | ||
General and administrative expenses | $ 204,625 | $ 148,340 | |
Non-GAAP adjustments: | |||
Legal proceedings(1) | (13,275) | - | |
Total non-GAAP adjustments | (13,275) | - | |
Adjusted general and administrative expenses | $ 191,350 | $ 148,340 | |
(1) | Charges for estimated settlements for distinct legal matters that exceeded or are expected to exceed typical costs for these types of legal proceedings. |
CHIPOTLE MEXICAN GRILL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Adjusted Effective Income Tax Rate (unaudited)
| |||
Three months ended March 31, | |||
2024 | 2023 | ||
Effective income tax rate | 22.0 % | 22.5 % | |
Tax impact of non-GAAP adjustments(1) | 0.1 | - | |
Adjusted effective income tax rate | 22.1 % | 22.5 % | |
(1) | Adjustments relate to the tax effect of non-GAAP adjustments, which were determined based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates. |
CHIPOTLE MEXICAN GRILL, INC. RECONCILIATION OF NON-GAAP FINANCIAL MEASURES
Restaurant Level Operating Margin (in thousands) (unaudited)
| |||||||
Three months ended March 31, | |||||||
2024 | Percent of total revenue | 2023 | Percent of total revenue | ||||
Income from operations | $ 441,292 | 16.3 % | $ 367,606 | 15.5 % | |||
Non-GAAP Adjustments | |||||||
General and administrative expenses | 204,625 | 7.6 | 148,340 | 6.3 | |||
Depreciation and amortization | 83,243 | 3.1 | 76,585 | 3.2 | |||
Pre-opening costs | 7,211 | 0.3 | 6,198 | 0.3 | |||
Impairment, closure costs, and asset disposals | 5,479 | 0.2 | 8,361 | 0.4 | |||
Total non-GAAP Adjustments | $ 300,558 | 11.1 % | $ 239,484 | 10.1 % | |||
Restaurant level operating margin | $ 741,850 | 27.5 % | $ 607,090 | 25.6 % | |||
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SOURCE Chipotle Mexican Grill
FAQ
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