Chipotle First Quarter Revenues Down By 23%

Chipotle Mexican Grill's reporting of financial results for its first quarter ended March 31, 2016, shows the impact of the foodborne illness issues and social media battering of 2015 into ealy 2016. Compared to the first quarter of 2015, in the first quarter of 2016:

• Revenue decreased 23.4% to $834.5 million.
• Comparable restaurant sales decreased 29.7%.
• Comparable restaurant transactions decreased 21.1%.
• Restaurant level operating margin was 6.8%, a decrease from 27.5%.
• Net loss was $26.4 million, a decrease from net income of $122.6 million.
• Diluted loss per share was $0.88, a decrease from diluted earnings per share of $3.88.
• Opened 58 new restaurants.

"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," said Steve Ells , founder, chairman and co-CEO of Chipotle.

Revenue for the quarter was $834.5 million, down 23.4% from the first quarter of 2015. The decrease in revenue was driven by a 29.7% 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 our 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% 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, and 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% in the quarter, a decrease from 27.5% 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, and food testing and waste costs.

General and administrative expenses were 7.4% 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. 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," said Monty Moran , co-CEO

For 2016, Chipotle is projecting 220 - 235 new restaurant openings and an effective full year tax rate of approximately 38.4%.