Source: Chipotle Mexican Grill
July 27, 2022

Chipotle Mexican Grill, Inc. today reported financial results for its second quarter ended June 30, 2022.

Second quarter highlights, year over year:

- Total revenue increased 17.0% to $2.2 billion
- Comparable restaurant sales increased 10.1%
- In-restaurant sales increased 35.9%, while digital sales1 represented 39.0% of food and beverage revenue
- Operating margin was 15.3%, an increase from 13.0%
- Restaurant level operating margin was 25.2% 2, an increase of 70 basis points
- Diluted earnings per share was $9.25, a 40.2% increase from $6.60. Adjusted diluted earnings per share, which excluded a $0.05 after-tax impact from expenses related to certain legal proceedings, expenses related to the 2018 performance share COVID-19 related modification, corporate restructuring costs, restaurant asset impairment and closure costs, offset by an unrealized gain on investments was $9.30, a 24.7% increase from $7.46 2
- Opened 42 new restaurants with 32 locations including a Chipotlane

"We are pleased with our second quarter performance during a period of inflation and consumer uncertainty," said Brian Niccol, Chairman and CEO, Chipotle. "Our pricing power and value proposition remain strong as our culinary and food with integrity commitment continues to be a key point of differentiation."

Results for the three months ended June 30, 2022:

Total revenue in the second quarter was $2.2 billion, an increase of 17.0% compared to the second quarter of 2021. The increase in total revenue was driven by a 10.1% increase in comparable restaurant sales and new restaurant openings. Our in-restaurant sales increased 35.9% in the three months ended June 30, 2022, as compared to the three months ended June 30, 2021, while digital sales represented 39.0% of total food and beverage revenue.

We opened 42 new restaurants during the second quarter with 32 locations including a Chipotlane. These formats continue to perform very well and are helping enhance guest access and convenience, as well as increase new restaurant sales, margins, and returns.

Food, beverage and packaging costs in the second quarter remained flat at 30.4% of total revenue compared to the second quarter of 2021. In the second quarter of 2022 the benefit of menu price increases was offset by inflation across the menu primarily due to higher costs for avocados, packaging, dairy, beef and chicken.

Restaurant level operating margin was 25.2%, an increase from 24.5% in the second quarter of 2021. The increase was primarily due to the benefit of menu price increases and, to a lesser extent, lower delivery fees associated with a lower volume of delivery transactions, partially offset by higher food costs and increases in hourly wages.

General and administrative expenses for the second quarter were $140.8 million on a GAAP basis, or $130.4 million2 on a non-GAAP basis, excluding $6.8 million of certain legal proceedings, $2.8 million for a COVID-19 related modification to our 2018 performance shares made in December 2020, and $0.9 million related to transformation expenses. GAAP and non-GAAP general and administrative expenses for the second quarter of 2022 also include $105.8 million of underlying general and administrative expenses, and $25.0 million of non-cash stock compensation.

The GAAP effective income tax rate was 25.3% for the second quarter, which increased from 23.7% in the second quarter of 2021, primarily due to a decrease in tax benefits related to option exercises and equity vesting.

Net income for the second quarter was $259.9 million, or $9.25 per diluted share, an increase from $188.0 million, or $6.60 per diluted share, in the second quarter of 2021. Excluding the after-tax impact of expenses related to certain legal proceedings, modification expenses related to our 2018 performance shares, corporate restructuring, restaurant asset impairment and closure costs, offset by an unrealized gain on investments, adjusted net income was $261.2 million2 and adjusted diluted earnings per share was $9.302.

During the second quarter, our Board of Directors approved the investment of up to an additional $300 million, exclusive of commissions, to repurchase shares of our common stock, subject to market conditions. Including this repurchase authorization, $319.7 million was available as of June 30, 2022. The repurchase authorization may be modified, suspended, or discontinued at any time. We repurchased $261.1 million of stock at an average price per share of $1,350 during the second quarter.

More information will be available in our Quarterly Report on Form 10-Q, which will be filed with the SEC by the end of July.

Outlook

For 2022, management is anticipating the following:

- Third quarter comparable restaurant sales growth, including planned price increases in August, in the mid to high-single digits.
- Between 235 to 250 new restaurant openings (including 10 to 15 relocations to add a Chipotlane), which assumes construction, permit and material supply delays don't worsen
- An estimated underlying effective full year tax rate between 25% and 27% before discrete items

Definitions

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

- Comparable restaurant sales, or sales comps, and comparable restaurant transactions, represent the change in period-over-period total revenue or transactions for restaurants in operation for at least 13 full calendar months.
- Average restaurant sales refer to the average trailing 12-month food and beverage revenue for restaurants in operation for at least 12 full calendar months.
- Restaurant level operating margin represents total revenue less direct restaurant operating costs, expressed as a percent of total revenue.
- Digital sales represent food and beverage revenue generated through the Chipotle website, Chipotle app or third-party delivery aggregators. Digital sales includes revenue deferrals associated with Chipotle Rewards.
- In-restaurant sales represent food and beverage revenue generated on-premise. In-restaurant sales includes revenue deferrals associated with Chipotle Rewards.

Conference Call Details

Chipotle will host a conference call on Tuesday, July 26, 2022, at 4:30 PM Eastern time to discuss second quarter 2022 financial results as well as provide a business update for the third quarter 2022.

The conference call can be accessed live over the phone by dialing 1-888-317-6003, or for international callers by dialing 1-412-317-6061, and use code: 8631266. The call will be webcast live from the company's website on the investor relations page at ir.chipotle.com/events. An archived webcast will be available approximately one hour after the end of the call.