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Holly LaFon
Holly LaFon
Articles (9179)  | Author's Website |

Bill Ackman Comments on Chipotle Mexican Grill

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May 17, 2018 | About:
Chipotle Mexican Grill, Inc. (NYSE:CMG)

Chipotle reported first quarter 2018 results on April 25th. Results for the quarter were materially ahead of consensus expectations for same-store sales, margins, and earnings. Underlying same-store sales increased 2.7%, an acceleration from the prior two quarters driven by 6.2% average check growth and a 3.5% decline in transactions. Restaurant margin was 19.5%, up nearly two percentage points from the prior year quarter, as decreased food costs and reduced marketing and promotional expenses as a percentage of sales, more than offset labor inflation and other cost increases.

This quarter’s earnings call was the first time that new CEO Brian Niccol publicly addressed investors. Brian shared the key leadership principles that inform the culture he intends to create at Chipotle, which include focusing on results over activity, holding people accountable, harnessing the power of innovation, and instilling a winning work ethic driven by a focus on delighting the customer. The executive team was most recently strengthened with the addition of a new Chief Marketing Officer who previously held the same position at Taco Bell, and a new Chief Human Resources Officer with previous experience at Kate Spade and Starbucks.

Brian also shared his initial thoughts on the wealth of opportunities that he sees to improve Chipotle’s business and drive growth. Near-term initiatives include a reallocation of marketing spend to more productive uses, implementation of a “test and learn” approach for new products and other initiatives, extended hours, and use of marketing and innovation to convert current downtimes into transaction-driving opportunities. Management intends to drive innovation across the business in customer access, digital, and menu, while focusing on fundamentals. Longer-term opportunities may include breakfast, drive-throughs, and international expansion.

Chipotle has scheduled a special investor call on Wednesday, June 27th during which management will share more details about the strategies management plans to employ to drive a successful turnaround.

From Bill Ackman (Trades, Portfolio)'s first-quarter 2018 shareholder letter.

About the author:

Holly LaFon
I'm a financial journalist with a master of science in journalism from Medill at Northwestern University.

Visit Holly LaFon's Website


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