NEWPORT BEACH, Calif- Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for its first quarter ended March 31, 2022.
First quarter highlights, year over year:
Total revenue increased 16.0% to $2.0 billion
Comparable restaurant sales increased 9.0%
In-restaurant sales increased 33.1%, while digital sales1 represented 41.9% of food and beverage revenue
Operating margin was 9.4%, an increase from 9.3%
Restaurant level operating margin was 20.7% 2, a decrease of 160 basis points
Diluted earnings per share was $5.59, a 25.6% increase from $4.45. Adjusted diluted earnings per share, which excluded an $0.11 after-tax impact from expenses related to the 2018 performance share COVID-19 related modification, corporate restructuring costs, restaurant asset impairment and closure costs, and certain legal proceedings, was $5.70, a 6.3% increase from $5.36 2
Opened 51 new restaurants with 42 locations including a Chipotlane
'Chipotle's performance in the first quarter was strong, despite challenges from the Omicron variant and on-going inflation,' said Brian Niccol, Chairman and CEO, Chipotle. 'Our investments in our people, coupled with our digital system and commitment to culinary driven by Food With Integrity resulted in serving more guests at our restaurants with excellence.'
Results for the three months ended March 31, 2022:
Total revenue in the first quarter was $2.0 billion, an increase of 16.0% compared to the first quarter of 2021. The increase in total revenue was driven by a 9.0% increase in comparable restaurant sales and new restaurant openings. Our in-restaurant sales increased 33.1% in the three months ended March 31, 2022, as compared to the three months ended March 31, 2021, while digital sales represented 41.9% of total food and beverage revenue.
We opened 51 new restaurants during the first quarter with 42 locations including a Chipotlane. These formats continue to perform very well and are helping enhance guest access and convenience, as well as increase new restaurant sales, margins, and returns.
Food, beverage and packaging costs in the first quarter were 31.0% of total revenue, an increase of 100 basis points compared to the first quarter of 2021. The increase was due to inflation across the menu, primarily due to beef, avocados, and paper, partially offset by leverage from menu price increases.
Restaurant level operating margin was 20.7%, a decrease from 22.3% in the first quarter of 2021. The decrease was primarily due to increases in hourly wages and higher food costs, partially offset by leverage from menu price increases and lower delivery expenses.
General and administrative expenses for the first quarter were $147.4 million on a GAAP basis, or $144.5 million2 on a non-GAAP basis, excluding $2.8 million for a COVID-19 related modification to our 2018 performance shares made in December 2020, $1.2 million related to transformation expenses and restaurant closure costs, and a $1.0 million reduction in certain legal proceedings. GAAP and non-GAAP general and administrative expenses for the first quarter of 2022 also include $101.4 million of underlying general and administrative expenses, $20.1 million of non-cash stock compensation, $16.7 million related to the All-Managers' Conference held in March, and $6.3 million related to higher bonus accruals as well as payroll taxes on equity vesting and stock option exercises.
The GAAP and non-GAAP effective income tax rate was 16.7%2 for the first quarter of 2022, which is lower than the first quarter of 2021 and our expected effective income tax rate for the full year 2022, due to elevated excess tax benefits related to option exercises and equity vesting.
Net income for the first quarter was $158.3 million, or $5.59 per diluted share, an increase from $127.1 million, or $4.45 per diluted share, in the first quarter of 2021. Excluding the after-tax impact of modification expenses related to our 2018 performance shares, corporate restructuring, restaurant asset impairment and closure costs, and certain legal proceedings, adjusted net income was $161.4 million2 and adjusted diluted earnings per share was $5.70.
During the quarter, our Board of Directors approved the investment of up to an additional $300 million, exclusive of commissions, to repurchase shares of our common stock, subject to market conditions. Including this repurchase authorization, $280.8 million was available as of March 31, 2022. The repurchase authorization may be modified, suspended, or discontinued at any time. We repurchased $260.1 million of stock at an average price per share of $1,490 during the first quarter.
More information will be available in our Quarterly Report on Form 10-Q, which will be filed with the SEC by the end of April.
Outlook
For 2022, management is anticipating the following:
Second quarter comparable restaurant sales growth, assuming current sales trends continue, in the 10% to 12% range
Between 235 to 250 new restaurant openings (including 5 to 10 relocations to add a Chipotlane), which assumes construction and permit delays don't worsen
An estimated underlying effective full year tax rate between 25% and 27% before discrete items
Definitions
The following definitions apply to these terms as used throughout this release:
Comparable restaurant sales, or sales comps, and comparable restaurant transactions, represent the change in period-over-period total revenue or transactions for restaurants in operation for at least 13 full calendar months.
Average restaurant sales refer to the average trailing 12-month food and beverage revenue for restaurants in operation for at least 12 full calendar months.
Restaurant level operating margin represents total revenue less direct restaurant operating costs, expressed as a percent of total revenue.
Digital sales represent food and beverage revenue generated through the Chipotle website, Chipotle app or third-party delivery aggregators. Digital sales includes revenue deferrals associated with Chipotle Rewards.
In-restaurant sales represent food and beverage revenue generated on-premise. In-restaurant sales includes revenue deferrals associated with Chipotle Rewards.
Conference Call Details
Chipotle will host a conference call on Tuesday, April 26, 2022, at 4:30 PM Eastern time to discuss first quarter 2022 financial results as well as provide a business update for the second quarter 2022.
The conference call can be accessed live over the phone by dialing 1-888-317-6003, or for international callers by dialing 1-412-317-6061, and use code: 5128212. The call will be webcast live from the company's website on the investor relations page at ir.chipotle.com/events. An archived webcast will be available approximately one hour after the end of the call.
About Chipotle
Chipotle Mexican Grill, Inc. (NYSE: CMG) is cultivating a better world by serving responsibly sourced, classically-cooked, real food with wholesome ingredients without artificial colors, flavors or preservatives. Chipotle had over 3,000 restaurants as of March 31, 2022, in the United States, Canada, the United Kingdom, France and Germany and is the only restaurant company of its size that owns and operates all its restaurants. Chipotle is ranked on the Fortune 500 and is recognized on the 2022 list for Fortune's Most Admired Companies. With over 100,000 employees passionate about providing a great guest experience, Chipotle is a longtime leader and innovator in the food industry. Chipotle is committed to making its food more accessible to everyone while continuing to be a brand with a demonstrated purpose as it leads the way in digital, technology and sustainable business practices. For more information or to place an order online, visit WWW.CHIPOTLE.COM.
Forward-Looking Statements
Certain statements in this press release are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements about our goals for number of Chipotle restaurants, restaurants with Chipotlanes and rate of expansion, comparable restaurant sales, estimated tax rates, future cash flow, and future long-term prospects. We use words such as 'anticipate', 'believe', 'could', 'should', 'may', 'approximately', 'estimate', 'expect', 'potential', 'intend', 'project', 'encouraged', 'target', and similar terms and phrases, including references to assumptions, to identify forward-looking statements. The forward-looking statements in this press release are based on currently available operating, financial and competitive information available to us as of the date of this release and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements, including but not limited to: uncertainty regarding the duration and severity of the ongoing COVID-19 pandemic and its ultimate impact on our business, including supply chain disruptions and difficulties in acquiring restaurant equipment, impact on guest traffic, restaurant sales and operating costs and the ability of our third-party suppliers and business partners to fulfill their responsibilities and commitments; increasing wage inflation and the increasingly competitive labor market, which impacts our ability to attract and retain qualified employees and has resulted in occasional staffing shortages; increasing supply costs (including beef, avocados and paper); risks associated with our reliance on certain information technology systems and potential failures or interruptions; privacy and cyber security risks related to our acceptance of electronic payments or electronic processing of confidential customer or employee information, including through our digital app; the impact of competition, including from sources outside the restaurant industry; the financial impact of increasing our national average hourly wage; the impact of federal, state or local government regulations relating to our employees, employment practices, restaurant design and construction, and the sale of food or alcoholic beverages; our ability to achieve our planned growth, such as the availability of suitable new restaurant sites and the availability of construction materials and contractors; increases in ingredient and other operating costs due to our Food With Integrity philosophy, tariffs or trade restrictions and supply shortages; the uncertainty of our ability to achieve expected levels of comparable restaurant sales due to factors such as changes in consumers' perceptions of our brand, including as a result of actual or rumored food safety concerns or other negative publicity, decreased overall consumer spending (including but not limited to the increase in inflation and higher gas prices), or the inability to increase menu prices or realize the benefits of menu price increases; risks associated with our increased focus on our digital business, including risks arising from our reliance on third party delivery services; risks relating to litigation, including possible governmental actions related to food safety incidents and potential class action litigation regarding employment laws, advertising claims or other matters; and other risk factors described from time to time in our SEC reports, including our annual report on Form 10-K and quarterly reports on Form 10-Q, all of which are available on the investor relations page of our website at ir.Chipotle.com.
1
Refer to definition of digital sales below. We updated the definition of digital sales in the first quarter of 2022 to include revenue deferrals related to Chipotle Rewards. We made this change to allow for a reconciliation to total food and beverage revenue as we now present In-restaurant sales.
2
Restaurant level operating margin, adjusted diluted earnings per share, adjusted net income, non-GAAP general and administrative expenses, and non-GAAP effective income tax rate are non-GAAP financial measures. Reconciliations to GAAP measures and further information are set forth in the table at the end of this press release.
CHIPOTLE MEXICAN GRILL, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME: see full results at:
https://newsroom.chipotle.com/2022-04-26-CHIPOTLE-ANNOUNCES-FIRST-QUARTER-2022-RESULTS
SOURCE Chipotle Mexican Grill, Inc.
For further information: PR Contact: Laurie Schalow, (949) 524-4035, MediaRelations@chipotle.com
CHIPOTLE MEXICAN GRILL, INC. 
