Chipotle Mexican Grill reported financial results for its first quarter ended March 31, 2017.
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Revenue for the quarter was $1.07 billion, up 28.1% from the first quarter of 2016.
The increase in revenue was driven by comparable restaurant sales increases and to a lesser extent by new restaurant openings.
Comparable restaurant sales increased due to improved customer traffic, reduced promotional activity, and increased average check.
Comparable restaurant sales increased 17.8%, which included a benefit of 0.6% due to previously deferred revenue related to Chiptopia recognized during the quarter.
The company opened 57 new restaurants during the quarter and closed 15 ShopHouse Southeast Asian Kitchen restaurants and one Chipotle restaurant. Our total restaurant count as of the end of the quarter was 2,291.
Food costs were 33.8% of revenue, a decrease of 150 basis points compared to the first quarter of 2016.
The decrease was primarily driven by lower food waste and testing costs, and bringing the preparation of lettuce and bell peppers back to our restaurants. This decrease was partially offset by higher avocado prices.
Restaurant level operating margin was 17.7% in the quarter, an increase from 6.8% in the first quarter of 2016.
The increase was primarily driven by sales leverage, lower marketing and promotional spend, efficiencies in labor, and lower food costs.
The restaurant level operating margin also benefited by 0.15% from sales leverage related to recognizing revenue previously deferred from Chiptopia, slightly offset by free catering discounts for Chiptopia.
General and administrative expenses were 6.5% of revenue for the first quarter of 2017, a decrease of 90 basis points from the first quarter of 2016.
In dollar terms, general and administrative expenses increased $7.4 million compared to the first quarter of 2016 due to increased non-cash stock based compensation and bonus expense, partially offset by lower legal and travel costs.
Excluding stock based compensation, general and administrative expenses during the quarter were flat in dollar terms compared to last year.
Stock compensation expense was higher during the first quarter of 2017 because the first quarter of 2016 included a reduction in expense for performance awards that were no longer expected to vest against performance criteria.
Without this reduction, stock compensation expense was consistent in both years.
Net income for the first quarter of 2017 was $46.1 million, or $1.60 per diluted share, compared to net loss of $26.4 million, or a loss of $0.88 per diluted share, in the first quarter of 2016. ■