Chipotle: Announces Third Quarter 2021 Results

Newport Beach / CA. (cmg) Chipotle Mexican Grill Inc. reported financial results for its third quarter ended September 30, 2021.

Third quarter highlights, year over year

  • Total revenue increased 21.9 percent to USD 2.0 billion
  • Comparable restaurant sales increased 15.1 percent
  • Digital sales grew 8.6 percent and accounted for 42.8 percent of sales
  • Operating margin was 12.3 percent, an increase from 6.7 percent
  • Restaurant level operating margin was 23.5 percent [1], an increase of 400 basis points
  • Diluted earnings per share was USD 7.18, a 154.6 percent increase from USD 2.82. Excluding a USD 0.16 after-tax net impact resulting from a tax benefit, which was partially offset by certain stock compensation expenses, corporate restructuring costs, restaurant asset impairment and closure costs, and certain other expenses, adjusted diluted earnings per share was USD 7.02, an 86.7 percent increase from USD 3.76 [1]
  • Opened 41 new restaurants including 2 relocations

[1] Restaurant level operating margin, adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures.

«Chipotle’s third quarter results demonstrate strong momentum in our business fuelled by a multi-pronged strategy and a passionate team that’s delighted to welcome more guests back into our restaurants,» said Brian Niccol, Chairman and CEO, Chipotle. «Our team has proven their ability to be resilient and successfully execute against macro complexities. As a result, I believe we are better positioned to drive sustainable long-term growth than ever before, which makes me excited about what we can accomplish in the years ahead.»

Covid-19 and Liquidity Update

The health and well-being of our employees and guests continues to be our top priority. Beyond the investments made in our people, restaurants, and supply chain, we are closely following the recommendations of the CDC and local health departments. We have implemented and enhanced numerous protocols that give our employees and guests confidence that Chipotle remains steadfast in our commitment to keep them safe as in-restaurant ordering and dining increases.

As of September 30, 2021, Chipotle continues to maintain a strong financial position with USD 1.2 billion in cash, investments and restricted cash, and no debt. We also have access to a USD 500 million untapped credit facility. Our financial strength gives us the opportunity to make on-going strategic investments in our people, business, and communities, which we believe will benefit us for years to come.

Results for the three months ended September 30, 2021

Revenue in the third quarter was USD 2.0 billion, an increase of 21.9 percent compared to the third quarter of 2020 and includes a 15.1 percent increase in comparable restaurant sales. We believe on-going strength in digital sales, the strong recovery of in-restaurant sales, and positive customer reception to our new menu items contributed to the strong revenue growth. For Q4, while uncertainty remains on several fronts including the potential impact of Covid-19 as well as inflationary and staffing pressures, we’re encouraged by our strong underlying business momentum and if this trend continues, we expect our comparable restaurant sales to be in the low to mid double-digits range. This assumes about 200 basis points less pricing contribution during the fourth quarter versus the third quarter as we lap some of our delivery menu price increases, and our brisket limited time offer will be for a partial quarter this year as compared to the full quarter of carne asada last year.

Digital sales grew 8.6 percent year over year to USD 840.4 million and represented 42.8 percent of sales. A little more than half of the digital sales were from order ahead transactions as guests increasingly appreciate both the convenience and value offered by this channel, as well as the added convenience of more Chipotlanes.

We opened 41 new restaurants during the third quarter including two relocations, bringing the total restaurant count to 2,892. During the quarter, 36 of the 41 new restaurants included 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 third quarter were 30.3 percent of revenue, a decrease of 200 basis points compared to the third quarter of 2020. The decrease was due primarily to leverage from menu price increases, partially offset by higher costs, most notably beef and freight.

Restaurant level operating margin was 23.5 percent, an increase from 19.5 percent in the third quarter of 2020. The improvement was driven primarily by leverage from comparable restaurant sales including menu price increases, partially offset by wage inflation and higher costs associated with beef and freight.

General and administrative expenses for the third quarter were USD 146.0 million on a GAAP basis, or USD 136.8 million on a non-GAAP basis, excluding USD 7.6 million for a Covid-19 related modification made in December 2020 to our 2018 performance shares, USD 1.5 million of transformation expenses, and USD 0.1 million of certain other expenses. GAAP and non-GAAP general and administrative expenses for the third quarter of 2021 also include USD 99.8 million of underlying general and administrative expenses, USD 27.8 million of non-cash stock compensation, USD 8.5 million related to higher bonus accruals as well as payroll taxes on equity vesting and stock option exercises, and USD 0.6 million related to our upcoming all-manager conference.

The GAAP effective income tax rate for the third quarter was 14.7 percent, which is lower than our expected effective income tax rate for the full year 2021, due to elevated excess tax benefits related to option exercises and equity vesting and a return to provision tax benefit from a net operating loss generated on our 2020 federal income tax return and carried back to prior years that was recorded in the third quarter. On a non-GAAP basis, the 2021 third quarter effective tax rate was 19.7 percent.

Net income for the third quarter was USD 204.4 million, or USD 7.18 per diluted share, an increase from USD 80.2 million, or USD 2.82 per diluted share, in the third quarter of 2020. Excluding the impact of a tax benefit, PSU modification expenses, corporate restructuring expenses, and restaurant asset impairment and closure costs, adjusted net income was USD 199.8 million and adjusted diluted earnings per share was USD 7.02.

During the quarter, our Board of Directors approved the investment of up to an additional USD 100 million, exclusive of commissions, to repurchase shares of our common stock, subject to market conditions. Including this repurchase authorization, USD 209.8 million was available as of September 30, 2021. The repurchase authorization may be modified, suspended, or discontinued at any time. We repurchased USD 98.7 million of stock at an average price per share of USD 1,813 during the third quarter.


For 2021, management is anticipating the following:

  • Fourth quarter comparable restaurant sales growth in the low to mid double-digits range
  • At or slightly above 200 new restaurant openings
  • An estimated underlying effective fourth quarter tax rate between 25 percent and 27 percent before discrete items


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 exclude revenue deferrals associated with Chipotle Rewards.
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