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Chipotle Mexican Grill Inc. Reports Operating Results (10-Q)

October 21, 2011 | About:

Chipotle Mexican Grill Inc. (NYSE:CMG) filed Quarterly Report for the period ended 2011-09-30.

Chipotle Mexican Grill has a market cap of $9.65 billion; its shares were traded at around $307.91 with a P/E ratio of 50.9 and P/S ratio of 5.3. Chipotle Mexican Grill had an annual average earning growth of 36.2% over the past 5 years.

Highlight of Business Operations:

Restaurant Development. As of September 30, 2011, we had 1,163 restaurants, of which 1,159 were located throughout the United States, two in Toronto, Canada as well as two in London, England. New restaurants have contributed substantially to our revenue growth. We opened 83 restaurants during the nine months ended September 30, 2011, including ShopHouse Southeast Asian Kitchen, our new concept serving bowls and banh mi sandwiches. We expect to open at or above the high end of the range of 135 to 145 restaurants in 2011, and we expect to open 155 to 165 restaurants in 2012. Among the expected restaurant openings in the fourth quarter of 2011 is a restaurant in Paris, France. Further, about 30% of our total openings in 2011 and 2012 will be what we call A Model restaurants. A Model restaurants are built primarily in secondary trade areas which have attractive demographics but are typically characterized by lower investment and occupancy costs.

Sales Growth. Average restaurant sales were $1.973 million as of September 30, 2011. We define average restaurant sales as the average trailing 12-month sales for restaurants in operation for at least 12 full calendar months. Our comparable restaurant sales increase for the first nine months of 2011 was 11.2% driven primarily by an increase in customer visits, as well as the impact of menu price increases implemented during the year. Comparable restaurant sales represent the change in period-over-period sales for restaurants beginning in their 13th full month of operation.

Stock Repurchase. In accordance with stock repurchases authorized by our Board of Directors we purchased stock with an aggregate total repurchase price of $41.8 million during the first nine months of 2011. As of September 30, 2011, $28.3 million was available to be repurchased under the current repurchase authorization. We have entered into an agreement with a broker under SEC rule 10b5-1(c), authorizing the broker to make open market purchases of common stock from time to time, subject to market conditions. The existing repurchase agreement and the Boards authorization of the repurchases may be modified, suspended, or discontinued at any time.

The significant factors contributing to our increase in revenue for the three and nine months ended September 30, 2011 were restaurant openings and comparable restaurant sales increases. Revenue for the three and nine months ended September 30, 2011 for restaurants not in the comparable restaurant base contributed $63.8 million and $175.0 million of the increase in revenue, respectively, of which $28.9 million and $46.2 million was attributable to restaurants opened in 2011. Comparable restaurant sales increases contributed to $51.1 million of the increase in revenue for the third quarter of 2011, and $144.2 million of the increase in revenue for the first nine months of 2011. Comparable restaurant sales growth was due primarily to increases in customer visits, as well as the impact of menu price increases implemented during the year.

The 2011 estimated annual effective tax rate is expected to be 38.4% compared to 38.1% for 2010. The increase of 0.3% reflects an increased estimated state rate and the impact of operational changes on our food donation program, partially offset by one-time employment tax credits. We expect a higher income tax rate in 2012, although the increase may not be as significant if the federal tax credits weve benefitted from in 2011 are renewed by Congress.

Read the The complete Report

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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