Document_and_Entity_Informatio
Document and Entity Information | 3 Months Ended | |
Mar. 31, 2015 | Apr. 17, 2015 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | FALSE | |
Document Period End Date | 31-Mar-15 | |
Document Fiscal Year Focus | 2015 | |
Document Fiscal Period Focus | Q1 | |
Entity Registrant Name | CHIPOTLE MEXICAN GRILL INC | |
Entity Central Index Key | 1058090 | |
Current Fiscal Year End Date | -19 | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 31,046,847 |
Condensed_Consolidated_Balance
Condensed Consolidated Balance Sheet (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, unless otherwise specified | ||
Current assets: | ||
Cash and cash equivalents | $542,957 | $419,465 |
Accounts receivable, net of allowance for doubtful accounts of $1,172 and $1,199 as of March 31, 2015 and December 31, 2014, respectively | 21,480 | 34,839 |
Inventory | 16,052 | 15,332 |
Current deferred tax asset | 19,377 | 18,968 |
Prepaid expenses and other current assets | 37,252 | 34,795 |
Income tax receivable | 16,488 | |
Investments | 347,577 | 338,592 |
Total current assets | 984,695 | 878,479 |
Leasehold improvements, property and equipment, net | 1,119,469 | 1,106,984 |
Long term investments | 531,082 | 496,106 |
Other assets | 46,534 | 42,777 |
Goodwill | 21,939 | 21,939 |
Total assets | 2,703,719 | 2,546,285 |
Current liabilities: | ||
Accounts payable | 76,066 | 69,613 |
Accrued payroll and benefits | 67,212 | 73,894 |
Accrued liabilities | 85,850 | 102,203 |
Income tax payable | 47,993 | |
Total current liabilities | 277,121 | 245,710 |
Deferred rent | 225,897 | 219,414 |
Deferred income tax liability | 35,399 | 40,529 |
Other liabilities | 30,968 | 28,263 |
Total liabilities | 569,385 | 533,916 |
Shareholders' equity: | ||
Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of March 31, 2015 and December 31, 2014, respectively | ||
Common stock $0.01 par value, 230,000 shares authorized, and 35,453 and 35,394 shares issued as of March 31, 2015 and December 31, 2014, respectively | 355 | 354 |
Additional paid-in capital | 1,066,216 | 1,038,932 |
Treasury stock, at cost, 4,401 and 4,367 common shares at March 31, 2015 and December 31, 2014, respectively | -772,008 | -748,759 |
Accumulated other comprehensive income (loss) | -5,141 | -429 |
Retained earnings | 1,844,912 | 1,722,271 |
Total shareholders' equity | 2,134,334 | 2,012,369 |
Total liabilities and shareholders' equity | $2,703,719 | $2,546,285 |
Condensed_Consolidated_Balance1
Condensed Consolidated Balance Sheet (Parenthetical) (USD $) | Mar. 31, 2015 | Dec. 31, 2014 |
In Thousands, except Share data, unless otherwise specified | ||
Condensed Consolidated Balance Sheet [Abstract] | ||
Allowance for doubtful accounts, Accounts receivable | $1,172 | $1,199 |
Preferred stock, par value | $0.01 | $0.01 |
Preferred stock, shares authorized | 600,000,000 | 600,000,000 |
Preferred stock, shares issued | 0 | 0 |
Common stock, par value | $0.01 | $0.01 |
Common stock, shares authorized | 230,000,000 | 230,000,000 |
Common stock, shares issued | 35,453,000 | 35,394,000 |
Treasury stock, shares at cost | 4,401,000 | 4,367,000 |
Condensed_Consolidated_Stateme
Condensed Consolidated Statement of Income and Comprehensive Income (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Condensed Consolidated Statement of Income and Comprehensive Income [Abstract] | ||
Revenue | $1,089,043 | $904,163 |
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): | ||
Food, beverage and packaging | 369,026 | 311,792 |
Labor | 244,151 | 208,208 |
Occupancy | 63,185 | 54,846 |
Other operating costs | 113,541 | 95,137 |
General and administrative expenses | 63,061 | 66,917 |
Depreciation and amortization | 30,643 | 25,754 |
Pre-opening costs | 3,435 | 4,300 |
Loss on disposal of assets | 4,200 | 1,559 |
Total operating expenses | 891,242 | 768,513 |
Income from operations | 197,801 | 135,650 |
Interest and other income (expense), net | 1,223 | 689 |
Income before income taxes | 199,024 | 136,339 |
Provision for income taxes | -76,383 | -53,270 |
Net income | 122,641 | 83,069 |
Earnings per share: | ||
Basic | $3.95 | $2.67 |
Diluted | $3.88 | $2.64 |
Weighted average common shares outstanding: | ||
Basic | 31,036 | 31,061 |
Diluted | 31,592 | 31,486 |
Comprehensive income | $117,929 | $82,938 |
Condensed_Consolidated_Stateme1
Condensed Consolidated Statement of Cash Flows (USD $) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Operating activities | ||
Net income | $122,641 | $83,069 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 30,643 | 25,754 |
Deferred income tax (benefit) provision | -5,551 | 1,551 |
Loss on disposal of assets | 4,200 | 1,559 |
Bad debt allowance | -27 | -20 |
Stock-based compensation expense | 16,986 | 27,359 |
Excess tax benefit on stock-based compensation | -10,827 | -8,955 |
Other | 119 | 64 |
Changes in operating assets and liabilities: | ||
Accounts receivable | 13,300 | 7,439 |
Inventory | -737 | -2,160 |
Prepaid expenses and other current assets | -2,516 | -4,014 |
Other assets | -3,825 | -2,365 |
Accounts payable | 14,831 | 8,006 |
Accrued liabilities | -21,367 | -15,159 |
Income tax payable/receivable | 75,314 | 48,088 |
Deferred rent | 6,780 | 6,764 |
Other long-term liabilities | 2,755 | 2,798 |
Net cash provided by operating activities | 242,719 | 179,778 |
Investing activities | ||
Purchases of leasehold improvements, property and equipment | -59,363 | -47,230 |
Purchases of investments | -139,114 | -89,782 |
Maturities of investments | 95,000 | 49,500 |
Net cash used in investing activities | -103,477 | -87,512 |
Financing activities | ||
Acquisition of treasury stock | -23,249 | -12,736 |
Excess tax benefit on stock-based compensation | 10,827 | 8,955 |
Stock plan transactions and other financing activities | -119 | -56 |
Net cash used in financing activities | -12,541 | -3,837 |
Effect of exchange rate changes on cash and cash equivalents | -3,209 | -40 |
Net change in cash and cash equivalents | 123,492 | 88,389 |
Cash and cash equivalents at beginning of year | 419,465 | 323,203 |
Cash and cash equivalents at end of period | 542,957 | 411,592 |
Supplemental disclosures of cash flow information | ||
Increase (decrease) in purchases of leasehold improvements, property and equipment accrued in accounts payable and accrued liabilities | ($9,946) | ($290) |
Basis_of_Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2015 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | 1. Basis of Presentation |
Chipotle Mexican Grill, Inc., a Delaware corporation, together with its subsidiaries (collectively the “Company”), develops and operates fast-casual, fresh Mexican food restaurants. As of March 31, 2015, the Company operated 1,800 Chipotle restaurants throughout the United States. The Company also had nine Chipotle restaurants in Canada, six in England, three in France, and one in Germany. Further, the Company operated ten ShopHouse Southeast Asian Kitchen restaurants, serving fast-casual, Asian inspired cuisine, as well as is an investor in a consolidated entity that owned and operated two Pizzeria Locale restaurants, a fast-casual pizza concept. The Company operated eight regions during the first quarter 2015 and has aggregated its operations to one reportable segment. | |
The accompanying unaudited condensed consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of its financial position and results of operations. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The financial statements and related notes do not include all information and footnotes required by U.S. generally accepted accounting principles for annual reports. This quarterly report should be read in conjunction with the consolidated financial statements included in the Company’s annual report on Form 10-K for the year ended December 31, 2014. | |
Recently_Issued_Accounting_Sta
Recently Issued Accounting Standards | 3 Months Ended |
Mar. 31, 2015 | |
Recently Issued Accounting Standards [Abstract] | |
Recently Issued Accounting Standards | 2. Recently Issued Accounting Standards |
In April 2014, the Financial Accounting Standards Board ("FASB") issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360).” The pronouncement was issued to clarify the reporting for discontinued operations and disclosures for disposals of components of an entity. The pronouncement is effective for reporting periods beginning after December 15, 2014. The adoption of ASU 2014-08 did not have a significant impact on the Company’s consolidated financial position or results of operations. | |
In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The pronouncement was issued to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements for U.S. GAAP and IFRS. The pronouncement is effective for reporting periods beginning after December 15, 2016. The expected adoption method of ASU 2014-09 is being evaluated by the Company and the adoption is not expected to have a significant impact on the Company’s consolidated financial position or results of operations. | |
In June 2014, the FASB issued ASU No. 2014-12, “Compensation – Stock Compensation (Topic 718).” The pronouncement was issued to clarify the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period. The pronouncement is effective for reporting periods beginning after December 15, 2015. The adoption of ASU 2014-12 is not expected to have a significant impact on the Company’s consolidated financial position or results of operations. | |
Fair_Value_of_Financial_Instru
Fair Value of Financial Instruments | 3 Months Ended |
Mar. 31, 2015 | |
Fair Value of Financial Instruments [Abstract] | |
Fair Value of Financial Instruments | 3. Fair Value of Financial Instruments |
The carrying value of the Company’s cash and cash equivalents, accounts receivable and accounts payable approximate fair value because of their short-term nature. Investments, all of which are classified as held-to-maturity, are carried at amortized cost, which approximates fair value. Investments consist of U.S. treasury notes and CDARS, certificates of deposit placed through an account registry service, with maturities up to approximately two years. Fair market value of U.S. treasury notes is measured using level 1 inputs (quoted prices for identical assets in active markets) and fair market value of CDARS is measured based on level 2 inputs (quoted prices for identical assets in markets that are not active). | |
The Company also maintains a rabbi trust to fund obligations under a deferred compensation plan. Amounts in the rabbi trust are invested in mutual funds, which are designated as trading securities and carried at fair value, and are included in other assets in the consolidated balance sheet. Fair market value of mutual funds is measured using level 1 inputs (quoted prices for identical assets in active markets). The fair value of the investments in the rabbi trust was $18,211 and $16,147 as of March 31, 2015 and December 31, 2014, respectively. The Company records trading gains and losses in general and administrative expenses in the consolidated statement of income, along with the offsetting amount related to the increase or decrease in deferred compensation to reflect its exposure to liabilities for payment under the deferred plan. For the three months ended March 31, 2015, and 2014, the Company recorded $139 and $144, respectively, of unrealized gains on investments held in the rabbi trust. | |
Shareholders_Equity
Shareholders' Equity | 3 Months Ended |
Mar. 31, 2015 | |
Shareholdersb Equity [Abstract] | |
Shareholder's Equity | 4. Shareholders’ Equity |
The Company has announced authorizations by its Board of Directors of repurchases of shares of common stock, which in the aggregate authorized expenditures of up to $900,000. Under the remaining repurchase authorization, shares may be purchased from time to time in open market transactions, subject to market conditions. | |
During the three months ended March 31, 2015, the Company repurchased 34 shares of common stock under authorized programs, for a total cost of $23,249. The cumulative shares repurchased under authorized programs as of March 31, 2015 are 4,247 for a total cost of $721,335. As of March 31, 2015, $178,963 was available to repurchase shares under the current repurchase authorizations. The shares are being held in treasury stock until such time as they are reissued or retired at the discretion of the Board of Directors. | |
StockBased_Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2015 | |
Stock-Based Compensation [Abstract] | |
Stock-Based Compensation | 5. Stock-based Compensation |
During the three months ended March 31, 2015, the Company granted stock only stock appreciation rights (“SOSARs”) on 322 shares of its common stock to eligible employees. The weighted average grant date fair value of the SOSARs was $158.19 per share with a weighted average exercise price of $667.93 per share based on the closing price of common stock on the date of grant. The SOSARs vest in two equal installments on the second and third anniversary of the grant date. During the three months ended March 31, 2015, 119 SOSARs were exercised, and 9 SOSARs were forfeited. | |
During the three months ended March 31, 2015, the Company awarded performance shares that were subject to service, performance, and market vesting conditions. The quantity of shares that will ultimately vest is determined based on Chipotle’s relative performance versus a restaurant industry peer group, in average revenue growth, net income growth, and total shareholder return, with each performance measure to be weighted equally. Performance will be calculated over a three year period beginning January 1, 2015 through December 31, 2017. If minimum targets are not met, then no shares will vest. | |
Total stock-based compensation expense was $16,561 ($10,213 net of tax) for the three months ended March 31, 2015, and was $27,657 ($17,012 net of tax) for the three months ended March 31, 2014. A portion of stock-based compensation totaling $425 for the three months ended March 31, 2015, and $298 for the three months ended March 31, 2014, respectively, was recognized as capitalized development and is included in leasehold improvements, property and equipment in the consolidated balance sheet. | |
Earnings_Per_Share
Earnings Per Share | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
Earnings Per Share [Abstract] | |||||||
Earnings Per Share | 6. Earnings Per Share | ||||||
Basic earnings per share is calculated by dividing income available to common shareholders by the weighted-average number of shares of common stock outstanding during each period. Diluted earnings per share (“diluted EPS”) is calculated using income available to common shareholders divided by diluted weighted-average shares of common stock outstanding during each period. Potentially dilutive securities include common shares related to SOSARs and non-vested stock awards (collectively “stock awards”). For the three months ended March 31, 2015 and 2014, 131 and 326 stock awards, respectively, were excluded from the calculation of diluted EPS because they were anti-dilutive. In addition, 304 and 394 stock awards for the three months ended March 31, 2015 and 2014, respectively, were excluded from the calculation of diluted EPS because they were subject to performance conditions. | |||||||
The following table sets forth the computations of basic and diluted earnings per share: | |||||||
Three months ended March 31 | |||||||
2015 | 2014 | ||||||
Net income | $ | 122,641 | $ | 83,069 | |||
Shares: | |||||||
Weighted average number of common shares outstanding | 31,036 | 31,061 | |||||
Dilutive stock awards | 556 | 425 | |||||
Diluted weighted average number of common shares outstanding | 31,592 | 31,486 | |||||
Basic earnings per share | $ | 3.95 | $ | 2.67 | |||
Diluted earnings per share | $ | 3.88 | $ | 2.64 | |||
Commitments_and_Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2015 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | 7. Commitments and Contingencies |
Notices of Inspection of Work Authorization Documents and Related Civil and Criminal Investigations | |
Following an inspection during 2010 by the U.S. Department of Homeland Security, or DHS, of the work authorization documents of the Company’s restaurant employees in Minnesota, the Immigration and Customs Enforcement arm of DHS, or ICE, issued to the Company a Notice of Suspect Documents identifying a large number of employees who, according to ICE and notwithstanding the Company’s review of work authorization documents for each employee at the time they were hired, appeared not to be authorized to work in the U.S. The Company approached each of the named employees to explain ICE’s determination and afforded each employee an opportunity to confirm the validity of their original work eligibility documents, or provide valid work eligibility documents. Employees who were unable to provide valid work eligibility documents were terminated in accordance with the law. In December 2010, the Company was also requested by DHS to provide the work authorization documents of restaurant employees in the District of Columbia and Virginia, and the Company provided the requested documents in January 2011. The Company subsequently received requests from the office of the U.S. Attorney for the District of Columbia for work authorization documents covering all of the Company’s employees since 2007, plus employee lists and other documents concerning work authorization. The Company believes its practices with regard to the work authorization of its employees, including the review and retention of work authorization documents, are in compliance with applicable law. However, the termination of large numbers of employees in a short period of time does disrupt restaurant operations and results in a temporary increase in labor costs as new employees are trained. | |
In May 2012, the U.S. Securities and Exchange Commission notified the Company that it is conducting a civil investigation of the Company’s compliance with employee work authorization verification requirements and its related disclosures and statements, and the office of the U.S. Attorney for the District of Columbia advised the Company that its investigation has broadened to include a parallel criminal and civil investigation of the Company’s compliance with federal securities laws. The Company intends to continue to fully cooperate in the government’s investigations. It is not possible at this time to determine whether the Company will incur, or to reasonably estimate the amount of, any fines, penalties or further liabilities in connection with these matters. | |
Miscellaneous | |
The Company is involved in various other claims and legal actions that arise in the ordinary course of business. The Company does not believe that the ultimate resolution of these actions will have a material adverse effect on the Company’s financial position, results of operations, liquidity or capital resources. However, a significant increase in the number of these claims, or one or more successful claims under which the Company incurs greater liabilities than the Company currently anticipates, could materially and adversely affect the Company’s business, financial condition, results of operations and cash flows. | |
Earnings_Per_Share_Tables
Earnings Per Share (Tables) | 3 Months Ended | ||||||
Mar. 31, 2015 | |||||||
Earnings Per Share [Abstract] | |||||||
Earnings Per Share | |||||||
Three months ended March 31 | |||||||
2015 | 2014 | ||||||
Net income | $ | 122,641 | $ | 83,069 | |||
Shares: | |||||||
Weighted average number of common shares outstanding | 31,036 | 31,061 | |||||
Dilutive stock awards | 556 | 425 | |||||
Diluted weighted average number of common shares outstanding | 31,592 | 31,486 | |||||
Basic earnings per share | $ | 3.95 | $ | 2.67 | |||
Diluted earnings per share | $ | 3.88 | $ | 2.64 | |||
Basis_of_Presentation_Narrativ
Basis of Presentation (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2015 | |
segment | |
Product Information [Line Items] | |
Number of regions | 8 |
Number of reportable segments | 1 |
ShopHouse Southeast Asian Kitchen [Member] | |
Product Information [Line Items] | |
Number of restaurants | 10 |
Pizzeria Locale [Member] | |
Product Information [Line Items] | |
Number of restaurants | 2 |
United States [Member] | |
Product Information [Line Items] | |
Number of restaurants | 1,800 |
Canada [Member] | |
Product Information [Line Items] | |
Number of restaurants | 9 |
England [Member] | |
Product Information [Line Items] | |
Number of restaurants | 6 |
France [Member] | |
Product Information [Line Items] | |
Number of restaurants | 3 |
Germany [Member] | |
Product Information [Line Items] | |
Number of restaurants | 1 |
Fair_Value_of_Financial_Instru1
Fair Value of Financial Instruments (Narrative) (Details) (USD $) | 3 Months Ended | ||
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2014 |
Fair Value of Financial Instruments [Abstract] | |||
Fair value of investments in rabbi trust | $18,211 | $16,147 | |
Investment maturity term | 2 years | ||
Unrealized gains (losses) on investments held in rabbi trust | $139 | $144 |
Shareholders_Equity_Narrative_
Shareholders' Equity (Narrative) (Details) (USD $) | 3 Months Ended | 78 Months Ended |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2015 |
Shareholdersb Equity [Abstract] | ||
Stock repurchase program, authorized amount | $900,000 | $900,000 |
Acquisition of treasury stock (shares) | 34 | 4,247 |
Acquisition of treasury stock (value), total | 23,249 | 721,335 |
Value of common shares remaining to be repurchased | $178,963 | $178,963 |
StockBased_Compensation_Narrat
Stock-Based Compensation (Narrative) (Details) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock only stock appreciation rights (SOSARs) granted | 322 | |
Weighted-average grant date fair value | $158.19 | |
Granted, Weighted-Average Exercise Price | $667.93 | |
SOSARs exercised | 119 | |
SOSARs forfeited | 9 | |
Stock-based compensation expense | $16,561 | $27,657 |
Stock-based compensation expense, net of tax | 10,213 | 17,012 |
Stock Options And SOSARs [Member] | First Half Vested [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period for SOSARs | 2 years | |
Stock Options And SOSARs [Member] | Second Half Vested [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Vesting period for SOSARs | 3 years | |
Leasehold Improvements [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation recognized as capitalized development | $425 | $298 |
Earnings_Per_Share_Narrative_D
Earnings Per Share (Narrative) (Details) | 3 Months Ended | |
In Thousands, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Earnings Per Share [Abstract] | ||
Stock awards excluded, anti-dilutive | 131 | 326 |
Stock awards excluded, performance conditions | 304 | 394 |
Earnings_Per_Share_Basic_and_D
Earnings Per Share (Basic and Diluted Earnings) (Details) (USD $) | 3 Months Ended | |
In Thousands, except Per Share data, unless otherwise specified | Mar. 31, 2015 | Mar. 31, 2014 |
Earnings Per Share [Abstract] | ||
Net income | $122,641 | $83,069 |
Weighted average number of common shares outstanding | 31,036 | 31,061 |
Dilutive stock awards | 556 | 425 |
Diluted weighted average number of common shares outstanding | 31,592 | 31,486 |
Basic earnings per share | $3.95 | $2.67 |
Diluted earnings per share | $3.88 | $2.64 |