This is a summary of the fourth quarter fiscal 2008 earnings call as presented by Chipotle Mexican Grill, Inc on February 11, 2009
Management
Founder Chairman and Co-CEO: Steve Ells
Co-CEO: Monty Moran
CFO: Jack Hartung
IR: Kate Giha
Key Investors Issues
- Comparable Restaurant Sales Increased 5.8% for the Full Year.
- 136 New Restaurants Opened for the Full Year.
- Diluted EPS were $2.36 for the Full Year.
Full Year Highlights
Revenue increased 22.7% to $1.3 billion.
- Comparable restaurant sales increased 5.8%
- Restaurant level operating margin was 21.5%, a decrease of 80 basis points
- Net income was $78.2 million, an increase of 10.8%
- Diluted earnings per share was $2.36, an increase of 10.8%
Fourth Quarter Highlights
Revenue increased 19.5% to $345.3 million.
- Comparable restaurant sales increased 3.5%
- Restaurant level operating margin was 21.1%, a decrease of 100 basis points
- Net income was $17.0 million, a decrease of 3.2%
- Diluted earnings per share was $0.52, a decrease of 1.9%
Last month,the firm announced a hiring of a new advertising agency Butler, Shine, Stern & Partners.
- This decision came after a very thorough review that started with 27 agencies, and was narrowed to three finalists who were each hired to do a project for the firm.
- Through this very methodical approach, the opportunity arose not only to see what each of the finalist agencies was capable of in terms of work product, but also to see what it would be like to work with them on a day-to-day basis.
- Butler Shine has emerged the right partner, and will help to elevate marketing, both creatively and strategically.
While the firm held out better than many other restaurant companies in this environment, its comps have slowed and the margins have declined.
- That has caused the firm to critically analyze the restaurant staffing model, reviewing the way it prepares food, sources ingredients as well as the business terms with all the key suppliers.
- Chipotle is looking at the current situation as an opportunity to look at everything to make sure that it is as disciplined and as efficient as possible without compromising on the taste or quality of the food or the quality of the customers dining experience.
- Each member of the staff team knows that they have a bright potential future ahead of them.
Restaurant managers are the most important people in the company and importance is placed rewarding top performers.
- The firm now has 112 restauranteurs, and the impact of these restauranteurs can be felt across all of the restaurants.
- All of the general manager's inspire the restauranteurs and in striding towards this elite position, they are working to create excellent restaurant experiences, while developing their crews to be the future leaders.
- The firm is also making improvements and becoming more efficient in the field management structure. Today, each of the area managers are responsible for nearly twice what they did five years ago.
G&A as a percentage of sales in 2008 G&A at 6.7%, which is was lowest level ever.
- The firm is taking a disciplined approach to reviewing all of its practices, starting with the selection of sites and continuing through the way it sources ingredients, prepares food and interacts with customers.
- This approach should make Chipotle a stronger company, allowing it to continue to increase the quality of the dining experience on offer, which should increase shareholder value, over the long-term.
The firms' strong economic model has allowed it to continue to open restaurants, deliver restaurant level margins, higher than most competitors and opportunistically pursue the $100 million buyback.
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