Chipotle Mexican Grill reported financial results for its third quarter ended September 30, 2017.
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Revenue for the quarter was $1.13 billion, up 8.8% from the third quarter of 2016.
The increase in revenue was driven by new restaurant openings and to a lesser extent from an increase in comparable restaurant sales, including a 1.1% benefit from comparing against 2016 revenue, which was lower because of the revenue deferral for outstanding rewards under our limited-time Chiptopia Summer Rewards program.
Chipotle opened 38 new restaurants during the quarter, closed two restaurants, and relocated one restaurant, bringing the total restaurant count to 2,374.
Food costs were 35.0% of revenue, a decrease of 10 basis points as compared to the third quarter of 2016.
The benefit of the menu price increases taken in select restaurants during the second quarter of 2017 and decreased paper cost and usage were offset by higher avocado and beef prices, as well as steak making up a higher portion of our product mix compared to the third quarter of 2016.
Restaurant level operating margin was 16.1% in the third quarter of 2017, an improvement from 14.1% in the third quarter of 2016. The improvement was driven primarily by decreased marketing and promotion expense and labor efficiencies.
General and administrative expenses were 8.8% of revenue for the third quarter of 2017, an increase of 120 basis points over the third quarter of 2016 primarily due to recording a liability of $30.0 million ($18.2 million after tax and $0.64 on basic and diluted earnings per share) during the third quarter of 2017, which represents an estimate of potential claims and assessments by payment card networks related to the data security incident that was announced in April 2017.
This increase was partially offset by a decrease in meeting costs because of the biennial All Managers Conference that was held in September 2016.
Net income for the third quarter of 2017 was $19.6 million, or $0.69 per diluted share, compared to net income of $7.8 million, or $0.27 per diluted share in the third quarter of 2016. ■