Chipotle Mexican Grill, Inc. (NYSE:CMG) reported financial results for its first quarter ended March 31, 2016.
Highlights for the first quarter of 2016 as compared to the first quarter of 2015 include: Revenue decreased 23.4% to $834.5 million Comparable restaurant sales decreased 29.7% Comparable restaurant transactions decreased 21.1% Restaurant level operating margin was 6.8%, a decrease from 27.5% Net loss was $26.4 million, a decrease from net income of $122.6 million.
As our sales are on a gradual path to recovery, we remain focused on our mission of changing the way people think about and eat fast food. The best approach to re-building our business is to proudly serve safe and delicious food in our high-quality restaurants every single day, which is exactly what we will continue to do,” said Steve Ells, founder, chairman and co-CEO of Chipotle.
First quarter 2016 results
Revenue for the quarter was $834.5 million, down 23.4% from the first quarter of 2015. The decrease in revenue was driven by a 29.7% decrease in comparable restaurant sales, partially offset by sales from new restaurant openings. Comparable restaurant sales declined primarily as a result of a decrease in the number of transactions in our restaurants, and to a lesser extent by a decline in average check, including an impact from sales promotions.
We opened 58 new restaurants during the quarter, bringing the total restaurant count to 2,066.
Food costs were 35.3% of revenue, an increase of 140 basis points as compared to the first quarter of 2015. The increase was driven by food testing and waste costs, and increased costs for pre-cut produce items. Increases in food costs were partially offset by relief in beef prices.
Restaurant level operating margin was 6.8% in the quarter, a decrease from 27.5% in the first quarter of 2015. The decrease was primarily driven by unfavorable sales leverage, and to a lesser extent by higher than usual marketing and promotional costs, and food testing and waste costs.
General and administrative expenses were 7.4% of revenue for the first quarter of 2016, an increase of 160 basis points over the first quarter of 2015 due to sales deleverage, partially offset by lower non-cash stock based compensation expense.
Net loss for the first quarter of 2016 was $26.4 million, or $0.88 per diluted share, compared to net income of $122.6 million, or $3.88 per diluted share, in the first quarter of 2015.
“Our restaurants and leadership teams have worked hard to overcome the challenges of the first quarter. What is most important is that we continue to build teams of top performers in our restaurants, and among our field leadership, which will allow us to continue to improve on our already high standards and exceptional customer experience. We have some of the best employees in the industry, which continues to serve as a competitive advantage, and we will continue to invest in our people culture to help expedite the next stage of growth for Chipotle,” said Monty Moran, co-CEO
For 2016, management expects the following:
- 220 – 235 new restaurant openings
- An effective full year tax rate of approximately 38.4% (Original Source)
Shares of Chipotle are down nearly 2% to $438 in after-hours trading. CMG has a 1-year high of $758.61 and a 1-year low of $399.14. The stock’s 50-day moving average is $471.18 and its 200-day moving average is $525.92.
On the ratings front, Chipotle has been the subject of a number of recent research reports. In a report released yesterday, Wells Fargo analyst Jeff Farmer reiterated a Buy rating on CMG, with a price target of $590, which represents a potential upside of 32.3% from where the stock is currently trading. Separately, on April 18, Credit Suisse’s Jason West reiterated a Buy rating on the stock and has a price target of $550.
According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Jeff Farmer and Jason West have a total average return of 15.5% and 11.3% respectively. Farmer has a success rate of 74.1% and is ranked #412 out of 3829 analysts, while West has a success rate of 65% and is ranked #227.
Overall, 6 research analysts have rated the stock with a Sell rating, 9 research analysts have assigned a Hold rating and 10 research analysts have given a Buy rating to the stock. When considering if perhaps the stock is under or overvalued, the average price target is $462.33 which is 3.7% above where the stock opened today.
Chipotle Mexican Grill, Inc. develops and operates fast-casual, fresh Mexican food restaurants throughout the U.S., which serve a focused menu of burritos, tacos, burrito bowls and salads. The company also has restaurants in Canada, England, France and Germany. The company was founded by Steve Ells in 1993 and is headquartered in Denver, CO.