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Chipolte Mexican Grill(CMG)

123Jump Rating: - Short-Term Growth   Underwriters: Morgan Stanley
      SG Cowen
Status: Priced  
Address: 1543 Wazee St., Ste. 200
FiledDate: 2005-10-25 00:00:00
  CO 80202
Filed Price Range ($): $18.00-20.00
Telephone: 303-595-4000 Filed Offer Amount ($ Million): $100.00
Fax: 303-222-2500 Shares Offered (Millions): 8
Websites: Shares Outstanding (Millions): 7.87
Management: Steven Ells, Chair./CEO
IPO Date: 01/26/2006
  Montgomery Moran, Pres.COO
  John Hartung, CEO
Final Offer Price ($): $22.00
Industry: Food Final Offer Size (Millions of Shares): 7.87
Employees: 13,000 Final Offer Amount ($ Million): $173.14
Competitors: Del Taco
S-1 Forms: 2006 S1-Form  download
  Fresh Enterprises
- Avoid        - Value Gap        - Short-Term Growth        - Long-Term Growth        - Long-Term Value

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Investor Relations Corporate / History Profile Executives Products Services
Quarterly Performance   

Qtr Ended

Revenues Net Income EPS
03 / 2003 64,712 -3,932 -0.08
06 / 2003 77,281 -539 -0.01
09 / 2003 85,391 256 NULL
12 / 2003 88,136 -3,499 -0.07
03 / 2004 101,442 515 0.01
06 / 2004 117,248 5,034 0.05
09 / 2004 124,563 4,293 0.05
12 / 2004 127,468 -3,716 -0.05
Business Environment

Studies show that, over the past 50 years, people in the United States have relatively steadily shifted toward purchasing food away from home, instead of preparing and eating food at home. And the restaurant industry has grown to accommodate that trend. The National Restaurant Association estimates that the U.S. industry\'s sales in 2005 will reach $476 billion (about 4.0% of the U.S. gross domestic product) at 900,000 locations nationwide.

It is believed that there are many reasons that the industry is expanding and eating out is becoming increasingly popular. A growing population means more customers for restaurants to draw from, higher income levels (particularly among dual-income families, \"Gen-Xers\" and \"baby boomers\") mean more discretionary income to spend eating out, and busier lifestyles mean people have less time to prepare food at home. As a result, more people are willing to pay for the convenience of quality food made by others. As the restaurant industry adapts to consumer trends, restaurants (including fast-casual restaurants in particular) have increasingly made available the higher-quality food that people want, as illustrated by the proliferation of premium coffee shops, beers, specialty supermarkets and the like.

In 2004, the fast-casual segment generated about $7.2 billion in sales (representing 2.3% of the industry), according to Technomic, Inc., a national consulting and research firm, and, based on the data prepared by Technomic, is the fastest growing segment of the restaurant industry. Indeed, in 2004, sales in the fast-casual segment grew 12.8%, compared to 7.2% for the industry as a whole, and Technomic has forecast such sales to grow at a compound annual growth rate of between 10.8% and 12.5% from 2004 to 2009, compared to 5.6% for the industry generally.

Company Strategy
The Company is an operator of approximately 450 quick-service Mexican eateries in more than 20 states.

Product/Services Portfolio
At August 31, 2005, The Company and its franchisees operated 454 stores. Starting from 177 stores on January 1, 2002, the Company expanded its store base substantially since that time. The Company opened 57 stores in 2002, 76 stores in 2003 and 104 stores in 2004. The Company plans to open at least 75 new stores in 2005, of those, 45 was already open and 29 were under construction on August 31, 2005.

The design of each Company store reflects the idea behind its food: a limited number of basic materials—concrete, corrugated barn metal, plywood, steel and utilitarian light fixtures—used in imaginative ways to create something special. The Company designs each store individually to suit the space, and no two stores look exactly the same. This approach, which is critical to its brand identity, allows the Company to build stores that are unmistakable, while respecting the character of the neighborhoods where it operates.

The Company serves only a few things: burritos, burrito bols (a burrito without the tortilla), tacos and salads, so it concentrates on doing them very well. And because customers can choose from four different meats, two types of beans and a variety of extras such as salsas, guacamole, cheese and lettuce, there\'s enough variety to extend the Company’s menu to provide more than 65,000 choices.

Ingredients the Company uses include marinated chicken, carnitas (seasoned free-range pork), barbacoa (spicy shredded beef), marinated steak and pinto and vegetarian black beans. The Company adds its distinct rice, which is flavored with cilantro and lime, as well as freshly shredded cheese, sour cream, lettuce, tomatoes, peppers and onions, depending on each customer\'s specifications. The Company uses various herbs, spices and seasonings to prepare it meats and vegetables. The Company also provides a variety of extras such as guacamole and salsas. To complement its main menu items, the Company also serves tortilla chips seasoned with lime and salt. In addition to sodas and other soft drinks, most of the Company’s stores also offer a selection of beer and margaritas.

The Company has designed its food safety and quality assurance programs to maintain high standards for the food and food preparation procedures. The Company’s quality assurance manager performs comprehensive store and supplier audits based upon the potential food safety risk of each food. The Company regularly inspects its suppliers to ensure that the ingredients it buys conform to its quality standards and that the prices the Company pays are competitive.

Investment Analysis
Restaurant sales increased by $70.8 million, or 32.5%, to $288.6 million for the six months ended June 30, 2005 from $217.8 million for the six months ended June 30, 2004.

Food, beverage and packaging costs increased by $23.2 million, or 32.9%, to $93.5 million for the six months ended June 30, 2005 from $70.3 million for the six months ended June 30, 2004.

Depreciation and amortization expenses for the six months ended June 30, 2005 were $13.2 million, an increase of $3.0 million, or 29.6%, compared to $10.2 million for the six months ended June 30, 2004.

Net interest expenses for the six months ended June 30, 2005 were $0.4 million, an increase of $0.3 million, compared to $0.1 million for the six months ended June 30, 2004.

Income Data (Thousand $ Except EPS)
Year Revenues Costs Oper Income Taxes Net Income EPS
2002 204,645 222,277 -17,632 0.00 -17,289 -0.44
2003 315,520 323,455 -7,935 0.00 -7,714 -0.17
2004 470,721 464,615 6,106 0.00 6,126 0.08
2005 289,712 275,952 13,760 0.00 28,351 0.35
*As of period Ended June 30, 2005

Balance Sheet Data (Thousand $)


Cash Acct Recv. Inventory Total Cur Assets Total Cur Liability PPE Total Assets LT Debt SH Equity
2003 0.00 2,605 1,466 7,833 38,266 211,877 249,014 0.00 191,508
2004 0.00 2,490 2,256 10,332 38,663 289,873 329,653 0.00 262,566
2005 6,157 1,994 2,623 18,005 46,027 310,555 370,767 0.00 291,963
*As of period Ended June 30, 2005

Cash Flow Summary (Thousand $)


Net Cash-Ops Net Cash-Inv Net Cash-Fin Net Change
2002 2,350 -48,601 46,251 0.00
2003 21,878 -86,107 64,229 0.00
2004 41,553 -95,615 54,062 0.00
2005 26,908 -38,532 17,781 6,157
*As of period Ended June 30, 2005


Sources: Data collected by and from company press releases, filings and corporate websites.
Market data: BATS Exchange. Inc.

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