Chipotle Mexican Grill, Inc. (CMG): New Analyst Report from Zacks Equity Research - Zacks Equity Research Report

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Summary:
Chipotle posted mixed first quarter 2014 results with earnings of $2.64 missing the Zacks Consensus Estimate, which we believe was due to higher expenses. However, earnings increased year over year owing to stronger top line. Revenues surpassed the consensus mark and increased 24.4% year over year, thanks to higher comps and unit expansion. Comps grew year over year as well as sequentially driven by higher traffic. The company has been witnessing a fairly stable traffic trend over the past few years driven by its strong market position, new menu launches and increased media exposure. However, the company's decision to raise menu prices can negatively impact traffic. This price hike comes in the wake of higher commodity costs that have pressurized margins. As a matter of fact, total operating expenses during the quarter surged 26.7% due to higher food, beverage and packaging and other operating expenses, thereby hurting margins.

Overview:

Founded in 1993 and based in Denver, CO, Chipotle Mexican Grill Inc. (CMG) operates quick-casual and fresh Mexican food restaurant chains in 35 states throughout the United States, the District of Columbia and Ontario, Canada and the U.K. Chipotle offers a focused menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads. Chipotle restaurants feature free-range, hormone-free pork, natural chicken and other meat products cooked through traditional methods and served in a unique atmosphere. Chipotle classifies its restaurants as end-caps (at the end of a line of retail chains), in-lines (in a line of retail chains), free-standing units and others. As of Mar 31, 2014, Chipotle Mexican Grill operated 1,614 restaurants globally.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



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