Chipotle flies with aggressive Expansion plans

Chipotle Mexican Grill, Inc. (Chipotle or 'the company') headquartered in Denver, Colorado is a restaurant company that offers a menu of burritos, tacos, burrito bowls (a burrito without the tortilla), and salads, made from fresh ingredients. As of December 31, 2013, the company operated 1,595 restaurants across the US, Canada and Europe.

Large scale cost saving measures in 2013 increase annual operating margins

Chipotle opened 185 new restaurants in 2013, bringing the total to 1,595, and delivered a solid revenue of $3.21 billion, an increase of 17.7% from the prior year. Company’s operating profit was $532.7 million in FY2013, an increase of 16.9% over FY2012. However, company’s operating margin remained flat at 16.6% as operating expenses masked the effect of increasing revenue growth. Company’s revenue from new restaurants lifted the Net profit to $327.4 million which represented an increase of 17.8% over FY2012. This impressive performance trickled down and positively impacted the EPS which came in at $10.58 for the fiscal year 2013 versus $8.82 in FY 2012.

Latest quarterly results provides evidence to company’s positive growth trajectory as Chipotle further expanded and opened 89 new restaurants in the first six months ended June 2014. Revenue for the second quarter ended June 30, 2014(2014 Q2: $1.05 billion) displayed an impressive growth of 28.6% from the same period in the prior year. On the back of increasing revenue, operating profit and net profit also made notable advancement as operating profit increased by 23% to reach $179 million and net income increased by 25.5% to $110 million for the second quarter in FY 2014 as measured from the same period in FY 2013.

No Dividend plans and zero leverage

The Company has not paid dividends to date and does not plan to pay dividends in the near future. Being a company in the growth stage Chipotle is deploying resources to energetically pursuing growth opportunities as seen in its revenue growth. It is interesting to note that company has nil long term debt as on June 30, 2014. Analysing further in to company’s balance sheet accounts for FY 2013 paints a similar picture.

Market consensus

The market estimates for Chipotle is in line with the company’s operating performance in the past years. Aggressive expansion plans will propel Chipotle to greater heights as market foresees growth in restaurant openings.


Upcoming events

Third quarter earnings release scheduled on 15th October 2014.

Annual Shareholder Meeting to be held on 11th May 2015.

Major shareholders

Following are 3 major shareholders of company:

  • T. Rowe Price Associates, Inc. 11.37% holding with 3.53 million shares
  • Fidelity Management & Research Company 10.31% holding with 3.20 million shares
  • Sands Capital Management, LLC 7.56% holding with 2.35 million shares

    significant change in shareholding

    Following are the major shareholding transactions that took place recently:

  • Winslow Capital Management, LLC buying 0.44 million shares
  • Edgewood Management LLC selling 0.54 million shares
  • Coatue Capital, L.L.C. selling 0.41 million shares
  • Eton Park Capital Management, L.P selling 0.40 million shares

    Chipotle has seen newer highs in 2013 following substantial growth in its revenue growth.