Chipotle Mexican Grill(CMG) - 2025 Q1 - Quarterly Report

Part I - Financial Information Financial Statements (Unaudited) For the first quarter ended March 31, 2025, Chipotle reported total revenue of $2.88 billion, a 6.4% increase year-over-year, and net income of $386.6 million, up from $359.3 million in the prior-year period. Total assets decreased slightly to $9.04 billion. The financial statements also reflect a 50-for-1 stock split effected in June 2024, with all share and per-share data retroactively adjusted - On June 26, 2024, the company executed a 50-for-1 stock split. All share and per-share information in this report has been retroactively adjusted to reflect this split[17] Condensed Consolidated Balance Sheets Balance Sheet Summary (as of March 31, 2025 vs. December 31, 2024) | Balance Sheet Item | March 31, 2025 (in thousands) | December 31, 2024 (in thousands) | | :--- | :--- | :--- | | Total Current Assets | $1,661,648 | $1,780,587 | | Total Assets | $9,044,094 | $9,204,374 | | Total Current Liabilities | $1,091,538 | $1,168,768 | | Total Liabilities | $5,553,222 | $5,548,828 | | Total Shareholders' Equity | $3,490,872 | $3,655,546 | Condensed Consolidated Statements of Income Income Statement Summary (Three months ended March 31) | Metric | 2025 (in thousands) | 2024 (in thousands) | % Change | | :--- | :--- | :--- | :--- | | Total Revenue | $2,875,253 | $2,701,848 | +6.4% | | Income from Operations | $479,250 | $441,292 | +8.6% | | Net Income | $386,599 | $359,287 | +7.6% | | Diluted EPS | $0.28 | $0.26 | +7.7% | Condensed Consolidated Statements of Cash Flows Cash Flow Summary (Three months ended March 31) | Cash Flow Activity | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Net cash provided by operating activities | $557,075 | $569,234 | | Net cash provided by/(used in) investing activities | $6,079 | ($301,039) | | Net cash used in financing activities | ($585,174) | ($100,074) | - Cash used in financing activities increased significantly, driven by a large increase in common stock repurchases to $553.8 million in Q1 2025 from $27.0 million in Q1 2024[14] Notes to Condensed Consolidated Financial Statements - As of March 31, 2025, the company operated 3,781 restaurants, including 3,697 in the U.S. and 84 internationally, plus five licensed locations[16] - During Q1 2025, the company repurchased $553.7 million of its common stock. As of March 31, 2025, $874.7 million remained authorized for future repurchases, which includes a new $400 million authorization approved in March 2025[34] - The company is facing a shareholder class action lawsuit alleging that statements regarding portion sizes were materially false and misleading. The accrued legal liability for various matters was $21.2 million as of March 31, 2025[46][49] Management's Discussion and Analysis (MD&A) Management reported a 6.4% increase in total revenue to $2.9 billion, primarily driven by new restaurant openings. However, comparable restaurant sales decreased by 0.4% due to a 2.3% decline in transaction volume, which management attributes to a slowdown in consumer spending and inclement weather. Operating costs as a percentage of revenue rose due to inflation and wage increases, though G&A expenses declined. The company plans to open 315-345 new restaurants in 2025, with a strong focus on Chipotlane locations. Liquidity remains strong with $2.0 billion in cash and investments Operating Results and Sales Trends Q1 2025 Key Performance Metrics (vs. Q1 2024) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total Revenue | $2.9 billion (+6.4%) | $2.7 billion | | Comparable Restaurant Sales | -0.4% | +7.0% | | Transactions | -2.3% | +5.4% | | Average Check | +1.9% | +1.6% | | Diluted EPS | $0.28 (+7.7%) | $0.26 | - The decrease in comparable restaurant sales was attributed to a 2.3% decline in transactions, reflecting a slowdown in consumer spending and periods of inclement weather[60] - Digital sales represented 35.4% of total food and beverage revenue for the quarter[60] Restaurant Development - Opened 57 new restaurants in Q1 2025, of which 48 (84%) included a Chipotlane[61] - The company expects to open approximately 315 to 345 company-owned restaurants in 2025, with at least 80% featuring a Chipotlane[61] - Two licensed restaurants were opened in the Middle East during the quarter, bringing the total to five[61][64] Cost Analysis Operating Costs as a Percentage of Total Revenue (Q1 2025 vs Q1 2024) | Cost Category | Q1 2025 | Q1 2024 | Change (basis points) | | :--- | :--- | :--- | :--- | | Food, beverage and packaging | 29.2% | 28.8% | +40 bps | | Labor | 25.0% | 24.4% | +60 bps | | Occupancy | 5.2% | 5.0% | +20 bps | | General and administrative | 6.0% | 7.6% | -160 bps | - Food costs increased due to inflation and higher usage of avocados, dairy, and chicken[67] - Labor costs rose due to restaurant wage inflation, including minimum wage increases in California[69] - General and administrative expenses decreased by $31.8 million, primarily due to the absence of the biennial All Managers' Conference held in Q1 2024 and lower legal contingency costs[73] Liquidity and Capital Resources - As of March 31, 2025, the company had a cash and marketable investments balance of $2.0 billion[77] - Primary uses of cash flow are capital for new restaurant construction and share repurchases[77] - The company has a $500 million undrawn revolving credit facility[78] Market Risk Disclosures The company identifies its primary market risks as commodity price volatility, interest rate fluctuations, and foreign currency exchange. Commodity risks for ingredients and materials are managed through various supplier pricing agreements. Interest rate risk exists on its $2.1 billion of cash and investments. Foreign currency risk is considered not material due to the predominance of U.S. operations - The company is exposed to commodity price risks for food, packaging, and construction materials, which it attempts to mitigate through a mix of fixed and formula-based pricing protocols with suppliers[85] - Interest rate risk exposure comes from its $2.1 billion in cash, cash equivalents, and investments[86] Controls and Procedures Based on an evaluation conducted by management, including the CEO and CFO, the company's disclosure controls and procedures were deemed effective as of March 31, 2025. There were no material changes to internal controls over financial reporting during the quarter - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[89] - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[90] Part II - Other Information Legal Proceedings For information regarding legal proceedings, the company refers readers to Note 11, "Commitments and Contingencies," within the condensed consolidated financial statements - Information on legal proceedings is detailed in Note 11 of the financial statements[92] Stock Repurchases During the first quarter of 2025, Chipotle repurchased 10,224,763 shares of its common stock for a total of approximately $553.7 million, at an average price of $54.15 per share. The board approved an additional $400 million for repurchases in March 2025 Share Repurchases in Q1 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | | :--- | :--- | :--- | | January 2025 | 3,430,595 | $57.71 | | February 2025 | 3,019,040 | $55.10 | | March 2025 | 3,775,128 | $50.16 | | Total Q1 | 10,224,763 | $54.15 | - The total available for future repurchases as of March 31, 2025, was $874.7 million, which includes a new $400 million authorization approved by the Board on March 27, 2025[96]