Understanding Chipotle's Financials (CMG)

Chipotle Mexican Grill, Inc. (CMG) is a well-known developer and operator of restaurants with a menu that focuses on burritos, tacos, burrito bowls, and salads. The company was founded in 1993. It has been reporting some industry-leading revenue growth that has garnered attention from investors. As of Dec. 31, 2020, the company had a total of 2,768 Chipotle restaurants. 

Chipotle has a simple menu and organic product offerings that can be customized to consumers' tastes. It is also integrating technology through e-commerce. Overall, its shrewd marketing campaigns and alternative menu have created a very positive brand with high appeal among consumers.

Key Takeaways

  • Chipotle is a well-known, global food-service restaurant providing a menu that consists of burritos, tacos, burrito bowls, and salads.
  • The company has 2,768 restaurants.
  • The company has gained high appeal among its consumers due to its quality products, organic offerings, and marketing.
  • The company has also been a favorite of investors due to its positive growth and solid financial numbers.

Chipotle's Revenues

On the top line of Chipotle's income statement, the company posted some impressive revenue growth. In 2020, Chipotle had a year-to-year revenue growth rate of 7.1% with $5.9 billion in total revenue versus $5.6 billion in 2019. The revenue growth included delivery service revenue, which more than doubled to $64 million from $25 million in 2019. In addition, digital ordering increased by 174.1%.

The impact of the 2020 crisis on the economy most likely accounted for the increase in delivery service revenue but even if we remove that $39 million year-to-year increase, the overall revenue growth of $360 million since 2019 was still impressive.

Chipotle Inc. Income Statement (Consolidated & Condensed) Ending FY 2020
Revenue 2020 2019 Change
Food and beverage revenue $5,920,545  $5,561,036 6.46%
Delivery service revenue $64,809 $25,333 155.8%
Total Revenue  $5,984,634 $5,586,369 7.1%
Revenue Change 2020 vs. 2019 (in thousands)

Not many restaurants have achieved such high growth rates, which is a result of Chipotle's market share demand, strong brand equity, and ability to generate consistent repeat sales.

Operating Expenses

Along with increased revenue, expenses rose as well, which can be expected because if a company sells more products, it must be purchasing more raw materials and hiring more workers if it's opening more stores. The table below shows some of the major operating expenses for Chipotle.

Operating Expenses (in thousands) 2020 2019 Change
Food, beverage, and packaging $1,932,766 $1,847,916 4.6%
Labor $1,593,013 $1,472,060 8.2%
Occupancy $387,762 $363,072 6.8%
Other operating costs $1,030,012 $760,831 35.4%
General & admin. expenses $466,291 $451,552 3.2%
Total operating expenses $5,409,844 $4,895,431 10.5%

Net Income

While reporting the lowest margins across the industry, the company is also reporting some of the highest net income growth, which means it has room for improvement that could potentially lead to further upside potential.

For 2020, CMG has an operating income of $290 million, which reflected a reduction from the previous year. Its net income was $355.8 million reflecting a growth of 1.6% since 2019. Earnings per share were $12.74, an increase of 1% from the previous year.


Margins can be an important differential in the restaurant business with established companies reporting high margins and exemplary business efficiency. While Chipotle has been booming, its margins have lagged when compared to competitors and are a key area of focus for industry analysts.

With a gross margin of 17.40%, an operating margin of 5.36%, and a net margin of 5.94%, it is last among some of its largest competitors. Some factors affecting this include its restaurant expansion and integrations of new technologies in its existing restaurants, such as digital pick up.

Valuation Metrics

The management of capital with the integration of new capital projects is always a concern for senior management. New technologies and restaurant expansions are factors that will affect margins as well as investor returns in the near term. This can be seen in some of the valuation metrics for Chipotle.

Chipotle has a five-year annualized return on assets of 7.08% and a five-year annualized return on equity of 13.46%, which are lower than most of its competitors. Chipotle has a price to earnings of 165.9 and a price to sales of 6.8. CMG has been a top-stock performer. For a one-year period, it leads the sector average of 13.9% with a gain of 63.7%.

Chipotle's Management

Chipotle has a skillful management team with a lot of industry experience. In March 2018, it appointed Brian Niccol as its CEO. In 2020, he assumed the role of executive board chair from founder Steve Ells. Other members of senior management include Chris Brandt, Curt Garner, John Hartung, Laurie Schalow, Marissa Andrada, Scott Boatwright, Roger Theodoredis, and Tabassum Zalotrawala.

The Bottom Line

Chipotle has managed to exceed industry growth in revenue with a few key characteristics. It offers an alternative to many of the traditional names in the restaurant industry.

Chipotle has also taken some large strides in implementing digital technology that allows customers to order online and pick up at the store which is an important growth factor as e-commerce sales increase across retail overall.

Its capital initiatives have been successful and its outlook is generally positive helping its PE to remain high. It has faced some challenges in food quality and its margins remain low, which will be factors to watch as it continues to expand.

Article Sources
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  1. Chipotle. "Chipotle Announces Fourth Quarter and Full Year 2020 Results."

  2. Morningstar. "Chipotle Mexican Grill Inc. (CMG): Operating Performance."

  3. Morningstar. "Chipotle Mexican Grill Inc. (CMG): Valuation."

  4. Morningstar. "Chipotle Mexican Grill Inc. (CMG): Trailing Returns."

  5. Chipotle. "Management."

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