This summary is based on the third quarter fiscal 2007 earnings call conducted by Chipotle Mexican Grill Inc. (CMG: chart) on October 30, 2007.

Founder, Chairman, and CEO: Steve Ells
President and COO: Montgomery F. Moran
Chief Finance and Development Officer: John H. Hartung
Manager, Investor Relations: Sandra Curlander

Key Investors Issues

-Earnings per share rose to 62 cents from 36 cents in the prior year.
- Quarterly revenue rose to $286.4 million, up 35.6% from last year.
- In the first three quarters of fiscal 2007, earnings were $53 million, on revenue of $796.9 million.
- For fiscal 2007, the same restaurant sales are projected to increase in the low double digit range.

Third Quarter Fiscal 2007 Financial Highlights

Total revenues increased by 35.6% to $286.4 million in the third quarter.

This was due to opening of 28 new restaurants in the quarter along with the 12.4% increase in same store sales.

These results are evidence that customers appreciate better tasting food. As a result of investment in these higher quality ingredients, but also mean that our empowered managers and crew are providing a special dining experience for customers while effectively managing the business. As a result, the same store sales increased 12.4% for the quarter on top of the 11.6% last year. This 12.4% same store sales was mostly driven by increased customer visits as menu price increases related to the roll of naturally raised meat contributed about 2.6%. While the firm expects to finish 2007 with a full year same store sales in a low double-digit range for 10th consecutive year of double-digit same store sales, the firm does see a slight fall off of the same store sales starting in mid September, continuing into October. The same store sales have remained in double-digits. The management remains confident that full year comps will be 10% or greater, although, fourth quarter same store sales may slip into the high single-digit range.

The firm’s new economic model continues to strengthen with average restaurant volumes now over 1.7 million to the 540 restaurants that have been open at least 12 months.

This is up from under 1.6 million at this time last year and over 1.4 million two years ago. With 28 new restaurants opened during the quarter and 88 year-to-date, the total restaurants count at the end of September now total 668, all company operated restaurants. The company has opened restaurants in three new markets through September including Salt Lake City, Birmingham and Iowa City and it opened its first restaurants in Philadelphia this month with first week sales of $46,000.
The firm expects opening for the full year to be at the high-end of the guidance range of a 110 to 120 new restaurant openings. As a result of a very disciplined and effective approach to build inventory, the firm now expects to open between 130 and 140 new restaurants next year.

Restaurant operating margins improved by 150 basis points to 23% compared to 21.5% last year, despite an increase in food costs to 110 basis points.

The restaurant level margins benefited from labor efficiencies and menu price increases associated with the introduction of naturally raised meat in certain markets.

Food beverage and packaging expenses were 32.1% of restaurant sales or 110 basis points higher than last year and 20 basis points worse than last quarter.

This is due to continued cost pressures associated with avocado, as a result of a freeze in California earlier this year and recent freezes in Chile. Also contributing to increased food cost are elevated levels of demand for corn, which impacts the cost of chicken and beef. The firm continues to seek mighty pressure on these items, as it is looking at the fourth quarter and into 2008 and it will begin to experience pressure on cheese when its pricing protocol with its supplier ends December 31st.

Labor improved a190 basis points to 26.3% versus 28.2% last year.

The company continues to benefit from its national labor metric along with higher average restaurant sales, which strolled about 150 basis points of improvement but the balance is driven by lower than expected insurance cost to now being self insured. The company implemented the labor metric about this time last year and expects to see diminishing leverage on the labor line as it moves into the fourth quarter and into 2008.

Occupancy cost were 6.9% of sales or 20 basis points better than last year.

This was due to efficiencies from higher sales and other operating cost decreased 60 basis points, to 11.6% as a result of inefficiencies from higher sales along with lower promotional marketing cost for the quarter.

SG&A as a percent of total revenue was 6.7% for the quarter compared to 7.4% last year, primarily due to efficiencies from higher sales.

The year-to-date SG&A is at 6.8% of sales and the firm expects fourth quarter SG&A will be right around at 6.8% to 7% level due to the effect of seasonality. The firm expects G&A as percent of revenue to be slightly higher in 2008 in the low 7% range. The 2008 G&A will be impacted by higher stock based compensation expense as the non cash accounting charge for each share or option granted will be much higher in 2008 based on a higher stock price. Excluding the effect of stock based compensation, the firm does expects to see modest G&A leverage next year. To a lesser extent, 2008 G&A will also be impacted as the firm begins to invest in sub coding its development of the Chipotle brand outside of the U.S., which ramps the targeted as their first international market.