Chipotle Mexican Grill, Inc. — FY2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. Chipotle operates company-owned fast-casual restaurants and reports one segment. At year-end it operated 2,962 Chipotle restaurants and four Pizzeria Locale restaurants.
Financial performance
| Metric | 2021 | 2020 | Change / context |
|---|---|---|---|
| Total revenue | $7.547 billion | $5.985 billion | Up 26.1% |
| Comparable restaurant sales | +19.3% | +1.8% | 2021 growth reflected transactions up 10.3% and menu pricing up 8.5% |
| Operating income | $804.9 million | $290.2 million | Operating margin approximately 10.7%, versus 4.8% |
| Net income | $653.0 million | $355.8 million | Net margin approximately 8.7%, versus 5.9% |
| Diluted EPS | $22.90 | $12.52 | Up 82.9% |
| Operating cash flow | $1.282 billion | $663.8 million | More than doubled |
| Capital expenditures | $442.5 million | $373.4 million | Invested in restaurant development and existing locations |
Restaurant operating costs fell to 77.4% of revenue from 82.6%, primarily on sales leverage. Food, beverage and packaging costs were 30.6% of revenue versus 32.3%; labor was 25.4% versus 26.6%; occupancy was 5.5% versus 6.5%; and other operating costs were 15.9% versus 17.2%. General and administrative expense increased to $606.9 million from $466.3 million, including higher stock-based compensation.
Liquidity, debt and capital allocation
- Cash and marketable investments were approximately $1.3 billion at year-end, excluding restricted cash and non-marketable investments. The balance sheet reported $815.4 million cash and equivalents, $260.9 million current investments, and $274.3 million long-term investments.
- No borrowings were outstanding under the $500 million revolving credit facility; the company reported $500 million of available capacity and compliance with its covenants.
- Operating lease liabilities totaled $3.520 billion on the balance sheet. Disclosed undiscounted operating lease commitments were approximately $5.066 billion; total lease and purchase obligations were $6.811 billion.
- Share repurchases totaled $466.5 million in cash-flow reporting for 2021. The company paid no cash dividends and said it did not anticipate paying them in the foreseeable future.
Changes, outlook and notable items
- Digital sales were $3.4 billion, or 45.6% of revenue, compared with 46.2% in 2020. Delivery orders represented approximately 21.5% of 2021 revenue.
- Chipotle opened 215 restaurants in 2021, including 174 with Chipotlanes. Management expected to open approximately 235–250 restaurants in 2022, including five to 10 relocations, and targeted Chipotlanes at 80% of openings.
- Management forecast approximately $450 million of 2022 capital expenditures, including about $260 million for new restaurants and $150 million for existing restaurant investments. It expected wage increases and supply-chain inflation to pressure 2022 restaurant costs, partly offset by pricing, revenue growth and supply-chain initiatives.
- Late-2021 inflation in freight, beef, tortillas and packaging increased materially and rapidly; temporary equipment and other supply shortages were also reported. COVID-19, staffing constraints and supply disruptions remained risks.
- The 2021 effective tax rate was 19.7%; the 2020 result included a tax benefit and an unusual negative effective rate, principally reflecting carryback of a federal net operating loss to higher-rate prior years.
- Stock-based compensation expense rose to $178.7 million from $84.5 million. A 2020 modification of performance awards contributed to compensation expense recognized in 2021.
- The company accrued $48.1 million for legal matters, including an ongoing New York City Fair Work Week and sick-time case; mediation was ongoing. Chipotle also remained subject to a three-year Deferred Prosecution Agreement requiring a comprehensive food-safety compliance program.
Important facts for investors to verify
- Whether 2022 sales growth and pricing can offset inflation in wages, ingredients, freight and delivery costs without weakening traffic or margins.
- Whether staffing, equipment availability and construction costs affect the restaurant-opening plan and capital-spending outlook.
- The resolution and potential financial impact of the New York City employment-law matter, and continued compliance with the Deferred Prosecution Agreement.
- Lease and purchase commitments, including the scale and timing of future cash requirements.
- The filing reports 2,962 Chipotle restaurants plus four non-Chipotle restaurants at year-end; verify unit-count definitions when comparing disclosures.