“We’re pleased that we continued to drive excellent results in the second quarter, including one of our strongest sales comps as a public company. These extraordinary results are made possible by our special food culture, innovative people culture, and strong business model that are not only creating significant shareholder value, but also helping us realize our vision to change the way people think about and eat fast food,” said Steve Ells, Founder, Chairman and co-CEO of Chipotle.
Monty Moran, co-CEO, continued, “Empowered teams of top performers can accomplish amazing things. Our Restaurateurs form the foundation of Chipotle’s culture, setting a standard for everyone else to follow. We are deeply committed to these leaders and the unique people culture they are building in their restaurants, which not only helps provide our guests with an exceptional dining experience, but also enables us to deliver great results to our shareholders.”
Revenue for the quarter was $1.05 billion, up 28.6% from the second quarter of 2013. The growth in revenue was driven by a 17.3% increase in comparable restaurant sales and from new restaurants not in the comparable base. Comparable restaurant sales growth was driven primarily by increased traffic and to a lesser extent from an increase in average check, which includes the benefit of the nationwide menu price increases that were fully rolled out by the end of the quarter.
We opened 45 new restaurants during the quarter, bringing the total restaurant count to 1,681.
Food costs were 34.6% of revenue, an increase of 150 basis points, driven by increased prices for beef, avocados, and dairy, partially offset by the menu price increase and lower tomatillo prices.
Restaurant level operating margin was 27.3% in the quarter, a decrease of 30 basis points from the second quarter of 2013. The decrease was primarily driven by higher food and marketing costs, partially offset by favorable sales leverage in labor and occupancy costs.
G & A costs were 7.1% of revenue, an increase of 90 basis points due to higher stock compensation and bonus expenses, partially offset by favorable sales leverage.
Net income for the second quarter of 2014 was $110.3 million, or $3.50 per diluted share, compared to $87.9 million, or $2.82 per diluted share, in the second quarter of 2013.
Revenue for the first six months of 2014 was $1.95 billion, up 26.6% from the prior year period. The growth in revenue was the result of a 15.5% increase in comparable restaurant sales and from new restaurants not in the comparable base. Comparable restaurant sales growth was primarily driven by increased traffic and to a lesser extent from an increase in our average check.
During the first six months of the year, we opened 89 new restaurants, bringing the total restaurant count to 1,681.
Restaurant level operating margin was 26.7% for the first six months, a decrease of 30 basis points from the prior year period. The decrease was primarily from higher food costs, primarily beef, avocados, and dairy, and higher marketing costs partially offset by favorable sales leverage in labor and occupancy costs.
G & A costs for the first six months were 7.3% of revenue, or an increase of 110 basis points from the prior year period. The increase was from higher stock based compensation expense and higher bonus costs.
Net income for the first six months of 2014 was $193.3 million, or $6.14 per diluted share, compared to $164.4 million, or $5.27 per diluted share, in the first six months of 2013.
Net cash generated from operating activities was $360.4 million, an increase of 34.6% from last year.
For 2014, management expects the following:
The following definitions apply to these terms as used throughout this release:
Chipotle will host a conference call to discuss the second quarter 2014 financial results on Monday, July 21, 2014 at 4:30 PM Eastern time.
The conference call can be accessed live over the phone by dialing 1-877-857-6161 or for international callers by dialing 1-719-325-4758. A replay will be available one hour after the call and can be accessed by dialing 1-877-870-5176 or 1-858-384-5517 for international callers; the password is 3291530. The replay will be available until July 28, 2014. The call will be webcast live from the company’s website at chipotle.com under the investor relations section. An archived webcast will be available one hour after the end of the call.
Steve Ells, founder, chairman and co-CEO, started Chipotle with the idea that food served fast did not have to be a typical fast food experience. Today, Chipotle continues to offer a focused menu of burritos, tacos, burrito bowls (a burrito without the tortilla) and salads made from fresh, high-quality raw ingredients, prepared using classic cooking methods and served in a distinctive atmosphere. Through our vision of Food With Integrity, Chipotle is seeking better food from using ingredients that are not only fresh, but that-where possible-are sustainably grown and raised responsibly with respect for the animals, the land, and the farmers who produce the food. In order toachievethis vision, we focus on building a special people culturethat is centered on creatingteams of top performers empowered to achieve high standards. This people culture not only leads to a better dining experience for our customers, it also allows us to develop future leaders from within. Chipotle opened with a single restaurant in 1993 and operates more than 1,600 restaurants, including 17 Chipotle restaurants outside the US, and seven ShopHouse Southeast Asian Kitchen restaurants, and is an investor in an entity that owns and operates one Pizzeria Locale. For more information, visit Chipotle.com.