Chipotle Mexican Grill Inc. (CMG, Financial) has been doing the restaurant business nearly for about 20 years. 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.
Third Quarter Results
During the third quarter revenue increased 31.1% to $1.08 billion and comparable restaurant sales increased 19.8%. Comparable restaurant sales growth was driven primarily by increased traffic and from an increase in average check, which includes the benefit of a nationwide menu price increase that was fully rolled out by the end of the second quarter. Food costs were 34.3% of revenue, an increase of 70 basis points, driven by increased prices for beef, avocados, and dairy, partially offset by the menu price increase. Net income increased by 56.9% and was $130.8 million. Diluted earnings per share were $4.15, an increase of 56.0%. Restaurant level operating margin was 28.8%, an increase of 200 basis points. CMG opened 43 new restaurants during the period.
“We are extremely pleased with our performance for the third quarter and throughout the year. Our relentless focus on our vision to change the way people think about and eat fast food results in better quality food and a compelling dining experience for our customers, and superior business results for our shareholders. The way we source, prepare and serve our food; the way we hire, develop and empower our people; and the way we operate our business is very different than the traditional fast food model. Recent industry trends suggest the Chipotle model is resonating with customers, who are realizing there are better alternatives to traditional fast food. We believe these trends will continue, and that’s good for our customers and our shareholders,” said Steve Ells, founder, chairman and co-CEO of Chipotle.
“We could not provide the quality of experience that our restaurants deliver or generate the results we do without having teams of top performers who are empowered to achieve high standards. We ask a lot of our restaurant managers and crews, and they are constantly stepping up to meet and even exceed our expectations. The leadership we are developing in our restaurants and throughout our company not only provides strong performance in the short term, but is developing the leaders we will need to accommodate our growth well into the future,” said Monty Moran, co-CEO at Chipotle. (Source: Company’s Website)
Growth Ahead
The management of CMG expects to open another 190-205 new restaurants in the year 2015. It may be expected that by the end of 2018, shares of CMG may jump by 45%. The company is expected to grow at a CAGR of 24.14% in the coming five years. It boasts of a strong economic moat and has a lot to offer in the near future. It is constantly innovating breakfast menus and a lot more growth is in store in this genre.
To End
Chipotle is seeking better food from using ingredients that are not only fresh, but that where possible, are sustainably grown and raised responsibly with respect for the animals, the land, and the farmers who produce the food. In order to achieve this vision, CMG focuses 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 to the customers, it also allows to develop future leaders from within.
CMG operates in the fast food segment and it is knot unknown that this industry has negative attributes attached to it. CMG is constantly innovating lot healthier menus for its investors. It has plenty of room to grow in the near future and still many emerging markets remain untapped, ehere CMG poses great potential. It is already known for promoting antibiotic-free meat and dairy products. With a market capitalization of around $20 billion, this company is known to have delighted the investors with healthy returns.
The company is very well positioned when it comes to cash. It is a company that may provide long-term prospects. It is expected to create shareholder returns. It may rightly be said that the company is all set to provide a healthy menu for its investors.
