Chipotle Mexican Grill, Inc. Reports Second Quarter 2009 Results

Chipotle Mexican Grill, Inc. (NYSE: CMG and CMG.B) today reported financial results for its second quarter ended June 30, 2009.

Highlights for the second quarter of 2009 as compared to the second quarter of 2008 include:

• Revenue increased 14.1% to $388.8 million

• Comparable restaurant sales increased 1.7%

• Restaurant level operating margin was 26.0%, an increase of 360 basis points

• Net income was $35.4 million, an increase of 44.7%

• Diluted earnings per share was $1.10, an increase of 48.6%

Highlights for the six months ended June 30, 2009 as compared to the prior year period include:

• Revenue increased 15.0% to $743.3 million

• Comparable restaurant sales increased 1.9%

• Restaurant level operating margin was 24.8%, an increase of 290 basis points

• Net income was $60.8 million, an increase of 45.6%

• Diluted earnings per share was $1.88, an increase of 50.4%

'We are pleased with our financial results in the second quarter, as we were able to produce industry leading margins that were the highest Chipotle has ever achieved,' said Founder, Chairman and Co-CEO Steve Ells. 'But I'm even more pleased with the recent increased interest in how food in this country is raised, with the release of the critically acclaimed documentary 'Food, Inc.', continuing media attention to related issues, and pending legislation that would ban the sub-therapeutic use of antibiotics in livestock. Chipotle continues to be a leader on these issues, and we believe that greater curiosity and transparency about how food is raised will result in consumers becoming more discerning and more demanding about the food they eat, which ultimately will result in a greater appreciation for our Food With Integrity efforts.'

Second quarter 2009 results

Revenue for the second quarter of 2009 increased 14.1% to $388.8 million from $340.8 million in the second quarter of 2008. This growth in revenue was attributable to new restaurants not in the comparable base and a 1.7% increase in comparable restaurant sales in the second quarter. Comparable restaurant sales growth was due to the impact of menu price increases partially offset by a decline in customer visits. Chipotle opened 24 new restaurants during the second quarter of 2009.

Restaurant level operating margins increased to 26.0% in the second quarter of 2009 from 22.4% in the second quarter of 2008, primarily due to menu price increases, more efficient labor staffing, and a decrease in marketing and promotional spend. We expect marketing and promotional spend as a percentage of revenue for the full year 2009 to remain consistent with 2008.

General and administrative expenses were $25.8 million in the second quarter of 2009, or 6.6% of revenue, compared to $20.7 million in the second quarter of 2008, or 6.1% of revenue. The increase as a percentage of revenue resulted from higher performance based bonus accruals in 2009 and a reversal during the second quarter of 2008 of bonus accruals from the first quarter, partially offset by menu price increases.

Net income for the second quarter of 2009 was $35.4 million, or $1.10 per diluted share, compared to $24.5 million, or $0.74 per diluted share in the second quarter of 2008.

Results for the six months ended June 30, 2009

Revenue for the six months ended June 30, 2009 increased 15.0% to $743.3 million from $646.1 million in the prior year period. This growth in revenue was attributable to new restaurants not in the comparable base and a 1.9% increase in comparable restaurant sales. Comparable restaurant sales growth was due to the impact of menu price increases partially offset by a decline in customer visits.

Chipotle opened 50 new restaurants during the six months ended June 30, 2009 and as of June 30th operated 886 restaurants.

Restaurant level operating margins increased to 24.8% in the period, versus 21.9% in the six months ended June 30, 2008 primarily due to menu price increases and a decrease in marketing and promotional spend.

General and administrative expenses were $49.5 million for six months ended June 30, 2009, or 6.7% of revenue, compared to $42.2 million, or 6.5% of revenue, for the prior year period. General and administrative expenses increased as a percentage of revenue primarily due to the higher performance-based bonus accruals for 2009 partially offset by the impact of menu price increases.

Net income for the six months ended June 30, 2009 was $60.8 million, or $1.88 per diluted share, compared to $41.8 million, or $1.25 per diluted share in the prior year period.

'At a time when we need to work harder than ever to earn each customer's visit, our managers and crews are rising to the occasion,' said Monty Moran, Co-CEO of Chipotle. 'Our teams are better than ever, and this is leading to better food, better service, and better restaurant level margins.'

Outlook

For 2009, management expects the following:

• Full year comparable restaurant sales increases in the low single digits

• 120-130 new restaurant openings

• An effective tax rate of approximately 38.4%

• Diluted weighted average common shares outstanding of approximately 32.2 million

Definitions

The following definitions apply to these terms as used throughout this release:

Comparable restaurant sales increases include company-operated restaurants only and represent the change in period-over-period sales for the comparable restaurant base. A restaurant becomes comparable in its 13th full calendar month of operation.

Average restaurant sales refers to the average trailing 12-month sales for company-operated restaurants in operation for at least 12 full calendar months.

Restaurant level operating margin represents total revenue less restaurant operating costs, expressed as a percent of total revenue.


Logos, product and company names mentioned are the property of their respective owners.

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