Quick-casual restaurant chain,
Chipotle Mexican Grill Inc.
) first-quarter 2013 earnings of $2.45 per share beat the Zacks
Consensus Estimate of $2.14 per share by 14.5%. The earnings grew
almost 24.4% from the prior-year quarter, driven by higher
revenues, lower taxes and share count.
In the quarter, revenues grew 13.4% year over year to $726.8
million. The increase can be attributed to new restaurant
openings. The top-line results also surpassed the Zacks Consensus
Estimate of $725 million.
Behind the Headline Numbers
Owing to the adverse effect of two less working days in the
quarter, comps grew only 1.0% compared with 12.7% in the year-ago
quarter. Chipotle traded two fewer days in the first quarter of
2013 compared with last year since the store was closed on Easter
and there was no leap day. Excluding the effect of these two
days, comps would have grown 3%, which was still lower than the
year ago, figure due to higher menu prices, a sluggish economy
and a difficult consumer-spending environment. Menu prices
expanded 70 basis points (bps) during the year while average
check grew 30 bps.
The restaurant level operating margin declined 110 bps
annually to 26.3%, owing to the rise in food as well as occupancy
costs. Food costs as a percentage of revenue increased 80 bps to
33.0% with the rise in prices for cheese, chicken and salsa.
Occupancy costs and other operating costs as a percentage of
revenue expanded 30 bps to 6.6%.
Total operating margin expanded 50 bps to 16.5% in the quarter
despite the decline in restaurant margins. Operating margins
gained from improved operating expense leverage and lower general
and administrative (G&A) expenses.
During the first quarter, Chipotle launched 48 new units. As
of Mar 30, 2013, the company operated 1,458 restaurants.
Chipotle ended the quarter with cash and cash equivalents of
$346.9 million versus $322.6 million in the previous quarter.
Total shareholders' equity was in line with the prior quarter at
In the first quarter, the company bought back 164,000 shares
worth $51 million. During February, the company announced the
addition of $100 million to the existing share repurchase
The company has reiterated its guidance for 2013. Management
expects comps to grow in the low single-digit level (rise in menu
price excluded) mainly due to uncertain economic environment.
Effective tax rate will be nearly 38.5%. Further, the company
remains on track to open nearly 165-180 new restaurants in
Although Chipotle's earnings and revenues grew year over year,
lowered comps growth in the past two quarters remains a major
concern. Moreover, higher input costs, difficult
consumer-spending environment and lower comps projection for 2013
is also concerning. However, its strong brand name and various
initiatives to drive sales could provide some offset to all the
Chipotle currently carries a Zacks Rank #3 (Hold). Other
restaurateurs which are performing well include
Red Robin Gourmet Burgers Inc.
Cracker Barrel Old Country Store Inc.
), both carrying a Zacks Rank #1 (Strong Buy), and
Burger King Worldwide Inc.
) carrying a Zacks Rank #2 (Buy).
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