Chipotle Mexican Grill, Inc. Comments on Third Quarter Trends
Chipotle Mexican Grill, Inc. (NYSE: CMG and CMG.B) announced a preliminary view of third quarter results today. Details for the full three month period ending September 30, 2008 will be discussed on the Company’s upcoming quarterly conference call which is scheduled for the third week of October.
Based on third quarter results to date, the impact of the weakened economy has been greater than anticipated resulting in further sales deceleration leading to comparable restaurant sales in the low single digits for the third quarter of 2008. The combination of a weak economy as well as food costs rising faster than expected during the quarter will result in the Company’s diluted earnings per share for the third quarter of 2008 being slightly below third quarter 2007. The Company is working on national pricing plans for the fourth quarter of 2008 to offset rapidly rising food costs. Specific details regarding the Company’s overall pricing strategy will be addressed on the October earnings conference call.
“Our preliminary view of the third quarter reflects a further deceleration in comparable restaurant sales combined with continued increases in food costs. We attribute current trends to the same macro-economic pressures that have affected other restaurant companies. Despite these short term challenges, we remain focused on delivering an extraordinary dining experience to each and every customer, by serving great tasting food made with the best ingredients we can find. Combined with our efforts to build a culture of top performing restaurant managers and crew, we believe that pursuing our vision to change the way the world thinks about and eats fast food will continue to strengthen our brand with customers over time,” said Chipotle Founder, Chairman and CEO Steve Ells.
Management expects the following for the full-year 2008:
— Comparable restaurant sales increase in the mid to low single digits
— 130 – 140 new restaurant openings
— Non-cash stock compensation expense of approximately $12.5 to $13.0 million
— An effective tax rate of approximately 38%
— Diluted weighted average common shares outstanding of approximately 33.4 million
Chipotle Mexican Grill offers a focused menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads made from fresh, high-quality raw ingredients, prepared using classic cooking methods and served in a distinctive atmosphere. Through our vision of Food With Integrity, Chipotle is seeking better food not only from using fresh ingredients, but ingredients that are sustainably grown and naturally raised with respect for the animals, the land, and the farmers who produce the food. Chipotle opened its first restaurant in 1993 and currently operates over 775 restaurants. For more information, visit www.chipotle.com.
Certain statements in this press release, including statements regarding expected comparable restaurant sales increases, food cost trends, pricing changes and earnings per share, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We use words such as “anticipate”, “believe”, “could”, “should”, “estimate”, “expect”, “intend”, “may”, “predict”, “project”, “target”, “plan”, and similar terms and phrases, including references to assumptions, to identify forward-looking statements. The forward-looking statements in this press release are based on information available to us as of the date any such statements are made and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: the uncertainty of our ability to achieve targeted levels of comparable restaurant sales increases; changes in the availability and costs of food; changes in consumer preferences, general economic conditions or consumer discretionary spending; factors that could affect our ability to achieve and manage our planned expansion, such as the availability of a sufficient number of suitable new restaurant sites and the availability of qualified employees; risks relating to our expansion into new markets; the risk of food-borne illnesses and other health concerns about our food products; the impact of federal, state or local government regulations relating to our employees and the sale of food or alcoholic beverages; the impact of litigation; our ability to protect our name and logo and other proprietary information; the potential effects of inclement weather; the effect of competition in the restaurant industry; risks related to having two classes of publicly-traded common stock; and other risk factors described from time to time in our SEC reports, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q all of which are available on the Investor Relations page of our Web site at www.chipotle.com.