Chipotle Mexican Grill reported financial results for its first quarter ended March 31, including comparable restaurant sales that decreased 29.7 percent over the first quarter of 2015.
The chain’s first-ever quarterly loss comes after norovirus and E. coli outbreaks hit several stores across the country and significantly affected customer traffic.
“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,” says Steve Ells, founder, chairman, and co-CEO of Chipotle.
Revenue for the quarter was $834.5 million, down 23.4 percent from the first quarter of 2015. The decrease in revenue was driven by a 29.7 percent 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 restaurants, and to a lesser extent by a decline in average check, including an impact from sales promotions.
The company opened 58 new restaurants during the quarter, bringing the total restaurant count to 2,066.
Food costs were 35.3 percent 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, as well as 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 percent in the quarter, a decrease from 27.5 percent 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, as well as food testing and waste costs.
General and administrative expenses were 7.4 percent 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,” says Monty Moran, co-CEO. “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.”
For 2016, management expects 220–235 new restaurant openings.
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