Krause Fund Research Consumer Discretionary

Spring 2024
Analysts
Andrew Oltmanns | andrew-oltmanns@uiowa.edu
Chipotle Mexican Grill (NYSE: CMG)
Lucas Kroll | lucas-kroll@uiowa.edu
April 16, 2024 Stock Rating Hold
Company Overview

Chipotle Mexican Grill, Inc. engages in the business of developing and operating restaurants that serve a relevant menu of
burritos, burrito bowls, quesadillas, tacos, and salads made using fresh, high-quality ingredients. The company was
founded by Steve Ells in 1993 and is headquartered in Newport Beach, CA.
Source: 18 FactSet

Valuation Summary
DCF/EP $2,903.72
Investment Thesis
DDM $2,057.78
Relative PE $1,261.67 - $2,946.27 We recommend a HOLD for Chipotle because of its strong relative
positioning, overall positive industry outlook, and continued store growth
Price Data opportunities.
Current Price $2,957.60 Drivers of Thesis

52-week Low – High $1,694 - $3,024  Strong Positioning: Chipotle is dominant in the quick-service
Beta Value 1.09 restaurant space specializing in healthier food options. With no
WACC 9.01% direct competitors, other than Cava and Sweetgreen, who both
Current P/E $66.67 have market caps of less than $10B, Chipotle can retain a loyal
customer base.
Share Highlights  Industry Outlook: Technology is creating opportunities for
innovation within the restaurant space as AI can increase
Market Capitalization $81.101B efficiency within these companies. Additionally, over the next
Shares Outstanding 27.43 M
few years, we expect a continued push towards healthier food
EPS (FY23) $44.59 options, which benefits companies like Chipotle.
 Store Growth: Chipotle currently receives over 95% of its
Financial Metrics revenue domestically in the United States. Chipotle is planning
2023 Revenue $9,871.6M on adding 300+ restaurants worldwide over the next year which
2024E Revenue $11,586.M provides them the opportunity to expand into new customer
2023 Net Income $1,228.7M bases in places like Dubai and Kuwait.
2024E Net Income $1,279.6M Risks to Thesis
2023 Profit Margin 15.78%
2024E Profit Margin 14.03%  Low Relative Valuation: Chipotle is currently trading at a P/E
multiple of 67x which is, on average, almost double the
Financial Ratios respective P/E multiples of comparable companies. Even while
using the 75th percentile multiple, we still received a valuation
2023 ROE 40.13% that is significantly lower than Chipotle’s current stock price.
2023 ROA 15.27%
 Food Safety Concerns: Chipotle focuses on healthy food options
2023 EBITDA Margin 19.02%
produced without the addition of preservatives and processed
CMG Relative to S&P and Consumer ingredients, but in the past, Chipotle has had issues with the
180 Industry safety of these food options. Without the addition of some of
160 these preservatives, it can be harder to confirm the absolute
140 safety of these foods.
120
100
Earnings Estimates
80
4/13/2023 7/13/2023 10/13/2023 1/13/2024 2024 2025 2026 2027
CMG Equity S&P Index Consumer Index
$1.447 $1.796 $2.150 $2.518 1
 creating an environment for rGDP growth to moderate in
Executive Summary 2025, around 2.5%. In the short term, we expect the consumer
discretionary industry to face pressures from slowing
consumer spending. We then expect rGDP to arrive at a
Chipotle Mexican Grill (NYSE: CMG) is a Mexican steady-state growth rate equal to its historical average of 3%.
Restaurant in the consumer discretionary sector. Having the rGDP reach its steady state will be a positive sign
for Chipotle and will allow them to reach growth initiatives.
We recommend a HOLD rating as Chipotle is an
opportunistic company with a great growth profile. Its Inflation and Consumer Price Index (CPI)
ability to operate without debt, maintain tight The Consumer Price Index (CPI) is a measure of the average
operations at every location, expansion possibilities, change in prices paid by consumers over time for a market
and its integral use of quality ingredients will drive this basket of goods. Inflation erodes consumers’ purchasing
power, resulting in less discretionary income. Chipotle sells
growth.
non-essential products and is directly affected by a decline in
consumer discretionary income. The Fed has historically
targeted a long-run CPI growth rate of 2%8. Additionally,
Macroeconomic Analysis wage inflation is a crucial consideration for the quick-service
restaurant industry, as labor is a significant portion of
operating expenses. Nonfarm payroll earnings broadly track
Real GDP Growth (rGDP)
Real Gross Domestic Product is an inflation-corrected value of labor costs for jobs excluding farm workers and military.
all goods and services produced by the economy each year.
Personal consumption expenditures currently account for 67% 10.00% CPI and Wage Inflation
of GDP1, highlighting the strong relationship between 8.00%
consumer spending and GDP. rGDP has grown steadily2,
6.00%
implying that consumers are spending more money on
consumer discretionary products and services. 4.00%

rGDP increased at an annualized rate of 4.9% in Q3 2024, 2.00%

followed by a 3.4% increase in Q4. Both quarters grew more 0.00%

than the 50-year average of 2.7%3. An increase in consumer CPI Wage Inflation
-2.00%
spending was a contributing factor in rGDP growth. 03/14 03/15 03/16 03/17 03/18 03/19 03/20 03/21 03/22 03/23 03/24
Specifically, food services/accommodations and other
nondurable goods were the most significant contributors to CPI reached an unprecedented level of 9.1% in 2022 but has
consumer spending growth4. Consumer spending remaining since moderated to 3.5% in March 2024. We expect CPI to
strong in these categories has been a positive catalyst for the remain between 3-4% throughout 2024 due to persistent
quick-service restaurant industry. consumer spending, then slowly approach the Fed target of
2.0%. As CPI falls, purchasing power will increase, creating a
Real GDP Compound Annual Rate of Change positive environment for consumer spending. As CPI
8.00%
stabilizes and consumers spend extra money, companies must
6.00%
raise wages to attract and retain talent. We expect wage
4.00% inflation to remain at a growth rate between 4-5% in the near
term. Wages account for ~30% of Chipotle’s operating
2.00%
expenses, and rising wages could negatively impact margins.
0.00%
Avocado and meat prices are two volatile food-related input
-2.00%
costs. Increases in food costs can reduce margins significantly.
Chipotle could raise prices to combat rising costs, but this
Despite the recent positive sentiment, the historically rapid could be detrimental to sales volume and sales as fewer
increase in interest rates and difficulty containing persistent customers can afford the product.
inflation creates a negative short-term outlook. We believe
consumer spending has yet to reflect the recent monetary
policy, and rGDP growth will significantly slow in 2H 2024.
We believe the Fed will begin to cut rates in Q4 20245,

2
 and move in line with CPI in the long term. Input costs
150.00% Meat and Avocado Inflation
retreating to normal levels creates an opportunity for Chipotle
to capitalize on previous menu price hikes and expand
100.00%
margins.
50.00%
Consumer Confidence Index
0.00%
The Consumer Confidence Index is a survey that measures
-50.00% how consumers feel about their future expected financial
situation. The intuition is that if consumers are more
Avocadoes Meat
-100.00%
03/14 03/15 03/16 03/17 03/18 03/19 03/20 03/21 03/22 03/23 03/24
optimistic about their finances, they will spend more and
stimulate the economy. If consumers are pessimistic, they will
Meat experienced significant inflation during COVID-19, as spend less, which could lead to an economic slowdown.
meatpacking plants shut down and supply fell. Meat inflation
The CCI survey measures sentiment for future economic
persisted throughout 2021, driven by rising production costs conditions. An indicator above 100 represents a boost in
and supply-chain problems, which have since eased. Avocado consumers’ confidence in the economy, resulting in higher
prices are heavily tied to production output. Chipotle sources
spending and a growing economy. An indicator below 100
most avocados from Mexico, but also from California, Peru, indicates the opposite.
and Columbia in the fall. Mexico’s avocado production
volume waned in 2021 due to the natural production volatility
of avocado trees 7, explaining the higher prices in the
103.00 Consumer Confidence Index
102.00
subsequent year. Mexico’s avocado production in 2023 was at 101.00
an all-time high, implying lower future costs for avocados. 100.00

High production volume, coupled with an adaptable sourcing 99.00

98.00
strategy creates a positive sentiment for input costs.
97.00

Producer Price Index (PPI) 96.00

95.00
94.00 CCI
The Producer Price Index (PPI) measures the average change 11/00 11/02 11/04 11/06 11/08 11/10 11/12 11/14 11/16 11/18 11/20 11/22
that domestic producers pay for their inputs. PPI often moves
in tandem with CPI, as input costs are a significant influence Consumer confidence hit its lowest level since 2008 in June
on prices charged to consumers. To keep margins steady 2022. As inflation rose at a historic rate, consumer confidence
during periods of input cost inflation, companies may be plummeted. As inflation has eased, consumer confidence has
incentivized to raise prices. Higher prices can make it difficult elevated slightly. We expect consumer confidence to remain
for consumers to purchase goods, resulting in lower sales close to current levels in the short term as the Fed continues
volume. working to get CPI to its 2.0% target rate. As rates get cut in
the 2H 2024 through 2025, we expect CCI to rise.
20.00% PPI and Food Input Inflation Consumer confidence directly translates into consumer
15.00% spending. The CCI measures sentiment, and consumer
decisions are driven by sentiment. The consumer discretionary
10.00%
industry is affected heavily by changes in consumer
5.00% confidence, as the goods and services sold are not considered
essential. During periods of negative consumer sentiment,
0.00%
discretionary goods are expected to face significant demand
-5.00% contraction as consumers prioritize essential goods. Although
PPI Foods
Chipotle sells non-essential goods, they achieved record
-10.00%
03/14 03/15 03/16 03/17 03/18 03/19 03/20 03/21 03/22 03/23 03/24 revenue throughout the downturn in 2022. We believe
Chipotle’s strong customer loyalty and price point shield them
Input costs rose significantly from 2021-2023 due to supply from some of the negative impacts of broad consumer
chain disruptions, rising energy prices, and geopolitical spending habits.
uncertainty. PPI reached a high of 11.7% in March 2022.
Chipotle has raised prices consistently throughout this period Retail Sales: Retail Trade and Food Services
9
, but revenue has performed well to offset the rising costs. We
expect input costs to remain at current levels in the short term
3
Retail sales directly affect our industry because they reflect the generated through sales of products like food and beverages to
quantitative value of consumer discretionary spending. The customers at operating locations. Revenue can also come from
retail sales report uses data that is just a few weeks old, merchandising, digital ordering and mobile apps, partnerships,
showing a more representative picture of current spending drive-thru sales, and delivery sales. The differentiators in the
sentiment. quick-service industry consist of high-quality ingredients,
customer efficiency, drive-thru services, and pricing strategies.
As retail sales increase, we expect the valuation of consumer
discretionary companies to grow because they produce more Recent Industry Trends
cash flow. However, a decrease in retail sales can be the
earliest sign of consumer sentiment in the discretionary Recently, companies within the space have begun investing
industry. significant money into technological advancements such as
AI. YUM! Brands, Chipotle, and others are attempting to
create an industry powered by Artificial Intelligence, which
increases margins as companies become more efficient 6.
Artificial Intelligent dispensers can fill a bowl or salad without
the need for an employee.
Source: 22
Artificial intelligence also seems to be a promising way to
Generally, we predict retail sales to follow a similar growth increase operational efficiency in restaurants. AI has the
pattern to that of GDP. In the next 6 months, we expect retail potential to take orders and forecast inventory and staffing
sales to grow by 1.5%. An increased interest rate environment needs. The technology considers real-time food levels, traffic
makes spending difficult as borrowing becomes more patterns, weather, and local events that could impact demand.
expensive. Consumers also begin to reap the effects of higher
prices in retail stores. This affects retail sales as consumers are Food safety is an important consideration in restaurant
less willing to continue purchasing in high volumes at elevated companies. For example: In 2020, Chipotle was forced to pay
prices. However, in the long-term, as interest rates begin to a $25 million fine in response to 1,000+ cases of food illness.
decrease and CPI normalizes near the Fed’s target, we expect As Chipotle continues its attempt to grow, it is vital to
retail sales to grow at 3% in line with our predictions for real maintain proper training to decrease the likelihood of
GDP growth. Money will continue to be pumped into the additional issues.
economy and GDP will grow long-term, which will
Health-and-wellness has also seen an emphasis within the
continuously attract consumers to spend growing amounts at
quick-service restaurant space. There is growing consumer
retail and food services companies.
demand for nutritious food sourced by economically friendly
Industry Analysis companies. This provides an opportunity for companies like
Chipotle, Cava, and more to capitalize on their established
health-focused offerings.
Outlook for Quick-Service Restaurants: Positive
The biggest trends in the restaurant industry currently are
We have a positive outlook on the quick-service restaurant automation, food safety, and health-and-wellness. Automation
industry. The industry adapted through the pandemic with provides a strong opportunity for companies worldwide to
mobile ordering, and we see the sub-industry performing improve business practices and increase margins. We believe
extremely well with several growth opportunities. that companies that are agile enough to adapt to these
changing consumer preferences will benefit strongly from
these industry-wide trends.
Industry Overview
We will focus on the restaurant industry, which includes
quick-service restaurants, fast-casual restaurants, casual
dining, and fine dining restaurants. We will target our analysis
on the quick-service industry in the United States because
Chipotle is a quick-service restaurant. A few product lines in
this sub-vertical include food, beverages, and promotional
items. These products tend to be priced lower than the
alternative full-service restaurants. The business segments
include delivery, in-house dining, drive-thru, and curbside
Source: 10
delivery. Revenue streams in the industry are mainly
4
Quick-Service Restaurant Porter’s Five Forces face the risk of elevated fixed costs with low margins, forcing
management to be tight with their operations. Established
Bargaining Power of Buyers: Moderate/High chains in the industry can make it difficult for new entrants to
compete effectively, which is why we believe this is a low
The buyers have modest-to-high bargaining power in the
pressure for the industry.
quick-service restaurant industry regarding pricing decisions.
In this specific industry, it is important to create competitive Peer Comparisons
prices to retain customers11. Customers value quality and the
variability of the menu, but overpriced products will not bring Chipotle has many competitors in the quick-service sub-
in revenue. Pricing should be targeted for specific vertical. Those consist of McDonald’s (MCD), Yum Brands!
demographics and budgets, which is why we think buyer (YUM), Domino’s Pizza (DPZ), Wingstop (WING), Wendy’s
power has a moderate-to-high level of power in the quick- (WEN), Pappa John’s (PZZA), Darden Restaurants (DRI),
service restaurant industry. Restaurant Brands International (QSR), and Starbucks
(SBUX). Each of these companies operates in the fast-
Bargaining Power of Suppliers: Low casual/casual dining vertical of the consumer discretionary
sector. A few of the companies operate in countries outside of
The bargaining power of suppliers in the quick-service
the United States; however, they produce most of their
restaurant industry is low because there are many suppliers
revenue domestically.
available with minimal power. Another factor that is attributed
to supplier power is the size of the restaurant. Smaller From our peer analysis of Chipotle, we have included a graph
restaurants have less negotiating power because they with all the company’s market capitalizations. Chipotle’s
traditionally have smaller order sizes. This is an advantage to market capitalization is currently $81.101 billion, which is
large fast-food chains and is why we believe the power of third compared to its competitors. First is MCD, with a market
suppliers is low in the quick-service restaurant industry. capitalization of $192.8 billion, and second is SBUX, with a
market capitalization of $96.146 billion.
Competitive Rivalry Among Competitors: High
Comparable Companies Mkt Caps ($bn)
The quick-service restaurant industry has intense competition,
$250.0
with additional companies added to the sub-industry each
$192.8
$200.0
year. This increased competition forces companies to grow
their business, sustain profitability, and retain market share. $150.0
$96.1
The large number of companies in the market also forces $100.0 $81.66

companies to constantly provide competitive pricing. These $50.0

$38.8
$17.2 $18.3 $10.7
reasons force quick-service restaurants to have a low margin $3.8 $2.0
$-
of error, and why we believe there is a high level of
competitive rivalry in the industry.

Threat of Substitute Products: High

Source: Factset
The threat of substitutes is reasonably high within the quick- Many of Chipotle’s competitors are financed partially with
service restaurant industry because each chain risks having its debt. Companies like McDonalds and Starbucks have
product reformed at another restaurant. Naturally, numerous debt/total cap percentages of roughly 10-15%. Whereas
quick-service restaurants already provide a similar menu of Chipotle has no debt on its balance sheet. This allows Chipotle
food items to customers. Additionally, companies within the to have fewer expenses with no interest payments and no
industry run the risk of customers changing their preferences mandatory principal repayments.
and switching to a competitor. Due to the ease of substituting Debt-to-Total Capitalization
products, we believe this is a high pressure for the quick- 45%

service restaurant industry. 40%

35%
30%

Threat of New Entrants: Low 25%

20%
15%
To enter the quick-service industry, an initial investment is 10%
5%
required in equipment, real estate, marketing, and personnel. 0%

Existing quick-service restaurants benefit from economies of

scale, providing them with negotiating power with suppliers,
lower production costs, and competitive prices. New entrants
5
 positioned going forward as they continue to offer evolving
Debt Outstanding by Comparable food options and keep the maintenance of a loyal customer
Company ($bn) base as a priority. Numerous other firms in the space are also
well-positioned as fast casual food services continue to grow
$45,000 $39,345
$40,000 in popularity. However, it will be difficult for other restaurants
$35,000 to establish a dominant market share in the space with
$30,000
$25,000 Chipotle remaining so strong. Despite having higher prices
$20,000 $15,015 than competitors, Chipotle can maintain a loyal customer base
$15,000 $11,145 and record higher revenue per restaurant than many of its
$10,000 $4,902
$2,762 $757 $1,532 competitors as seen below.
$5,000 $712
$-

FY23 Revenue per Store ($mn)

$6.00 $5.29
$5.00
$4.00
$2.87
Source: Factset $3.00
Chipotle also owns and operates all its stores, allowing the $2.00
$0.95 $0.61 $0.30 $0.36
company to not pay rent expenses like many other $1.00 $0.12 $0.22 $0.21
competitors. Companies like McDonald’s and Starbucks have $-
a mix of owned and operated stores, as well as leased and
franchised stores. Chipotle’s complete focus on owned and
operated stores gives them continuity throughout all restaurant
locations. It can also provide customers peace of mind
knowing that every Chipotle throughout the world will contain
a similar menu with a simple ordering method. This allows Source: Factset
Chipotle to have strong earnings per store in comparison to Growth Catalysts:
other competitors, as seen in the chart below.
Technological Integration
FY23 Earnings per Store ($mn) Technology is a meaningful growth catalyst in the quick-
$0.60 service restaurant industry. Companies in the industry have
$0.50
$0.50 utilized AI to help with customer service and operations of the
$0.40 $0.36 business. Having this resource improves efficiency and
enhances the overall customer experience.
$0.30
$0.20
$0.20
$0.11
Self-serve kiosks in quick-service restaurants offer consumers
$0.10 $0.03 $0.03 $0.03 $0.01 $0.03 a lower-contact, engaging menu experience with self-service
$- electronic point of sale (EPOS). This technology not only
enhances operational efficiency but also boosts revenue, with
up to a 30% increase in 2021 in the average basket size along
with reduced wait times. As of 2021, 32% of consumers prefer
self-service options. Due to this increased demand, brands are
adopting kiosks to meet evolving customer preferences.
Additionally, the importance of drive-thrus is key in the
Source: Factset
As opposed to a lot of other industries, the fast-casual food industry, with 2021 reports stating that 50% of the sales in the
industry is not shaped entirely by price. It is mainly shaped by quick-service industry came through the drive-thru channel.
a loyal customer base and the quality of the product. Restaurant chains seeking market share must stay on top of
Consumers feel comfortable with spending money at places technological efficiencies to align with varying consumer
where they have received quality service and enjoyable food. preferences 12.
Chipotle has been a market leader in this industry. Chipotle
Delivery and Takeout Services
charges higher prices than several of its competitors, however,
they have grown a loyal customer base and have solidified The delivery and takeout sector of the quick-service restaurant
themselves as one of the industry leaders. Chipotle is well- industry became popular during the pandemic and has

6
continued to grow since. Consumers enjoy the ease of having
delicious food delivered right to their doorstep, even if there is Chipotle Analysis
a fee applied to the purchase. In 2023, it was estimated that
161 million people used a meal delivery service, and that
statistic is expected to exceed 173 million by 2028 13. Business Profile:
Chipotle Mexican Grill prides itself on serving high-quality,
Revenue of the Food Delivery Market U.S. ($bn) sustainably sourced ingredients prepared using classic cooking
120.00 techniques. They aim to provide customers with delicious,
100.00 customizable meats made from responsibly raised animals,
organic produce, and wholesome, unprocessed ingredients.
80.00
This distinct variable is what separates Chipotle in the quick-
60.00
service restaurant industry. There are currently 3,458 locations
40.00 globally, with just 57 locations outside the U.S. In 2023, they
20.00
added 271 new locations, which was a 14.8% increase from
202221.
0.00
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
SWOT Analysis:
Source: 13
We do not see third-party delivery services fading away any Strengths
time soon. However, we see this as a growth catalyst for the
industry by having restaurants provide their own delivery Chipotle is famous for providing customers with simple,
services to consumers. This will allow them to gain more regular menus that contain tasty food. Their simple menu
revenue per customer and consumers will receive food at a allows them to focus on quality within their products, ensuring
cheaper price as most third-party vendors have a 10% menu consumers are happy with the outcome. They provide their
price increase 14. Restaurants can revert to their own delivery product with fresh and clean ingredients of the highest quality
system through old-fashioned phone ordering or creating their for the consumers. They focus on using animals that are grown
own digital ordering system 15. This would require substantial with care, without the use of non-therapeutic antibiotics or
capital in the beginning, but in the long run, it would allow hormones. Also, providing vegetables that are organically and
restaurants to save money in fees. locally grown. Chipotle’s mission statement is “Food with
Creative Menus integrity,” and each restaurant location has walk-in
refrigerators stocked with fresh ingredients. This simple but
Quick-service restaurants have the flexibility of changing their successful food menu creates a loyal customer base that
menus as frequently as they like. With most quick-service consistently picks Chipotle as their meal of choice.
restaurants, the menu is standardized with the ingredients they
Chipotle’s customizable service model enables customers to
use, allowing them to diversify their ingredients for different
tailor their orders to one’s individual preferences. Their menu
products that are appealing to consumers 16. Having a diverse
offers a variety of options for those following dietary
menu that provides dietary options for people with allergies or
guidelines such as Gluten-free, vegetarian, and dairy-free.
other health concerns is a growth catalyst for the quick-
This mitigates the inability to access certain customers who
restaurant industry. The creative menu allows restaurants to
may not have been able to order items in line with their
cater to their diverse demographic with differing preferences
restrictions.
and is a growth catalyst for the industry.

Rewards Programs Weaknesses

One weakness of Chipotle is providing food with
Having a loyalty program can significantly increase sales for
contaminated substances, like Escherichia coli. Since Chipotle
restaurants, especially quick-service restaurants due to lower
uses organic produce, they run the risk of having the products
prices. This catalyst helps drive customer engagement, retain
infested. From 2015 to 2018, issues with contaminated food
customers, and boost earnings. This is an enticing feature for
caused illnesses in 1,100+ people nationally. Chipotle
loyal consumers who can reap the benefits. Nearly 77% of the
accepted responsibility and subsequently paid a $25 million
people who use a loyalty program are willing to pay a
criminal fine along with an undisclosed amount in out-of-court
premium on their purchases because they know they will
settlements. They developed a comprehensive food safety
receive rewards 17. This resource helps spread brand awareness
program in the wake of the outbreak with the intent of
and is a growth catalyst for the quick-service restaurant
minimizing this risk going forward.
industry.

7
Chipotle’s menu, while heavily customizable, relies on a few One threat to Chipotle’s business is that consumer preferences
key ingredients, such as chicken and avocados. Disruptions in are constantly changing. Currently, consumers prefer quality
the supply chain or price increases in select items can limit the food with healthier ingredients, which has made Chipotle
ability to offer a consistent menu to customers. Coupled with successful. However, consumers are unpredictable, and a
their commitment to high-quality ingredients, they have a preference change could drastically change Chipotle’s ability
limited ability to shift between suppliers in the event of a to be successful.
disruption or price increase. Inconsistency in availability and
With Chipotle’s ongoing plans to expand into places like
pricing may turn some customers away from the business.
Dubai and Kuwait, there is a risk that Chipotle will fail in
Opportunities foreign locations. Although Chipotle has had significant
success in the United States, countries across the globe have
Currently, Chipotle receives over 95% of its revenue different food preferences, and natives may have loyalty to
domestically within the United States. Although this provides established local restaurants. The uncertainty of international
a limited sample size for success outside of the United States, markets poses a threat to Chipotle as it continues its expansion
Chipotle has significant opportunities to expand into new plans.
geographies. They recently expanded worldwide into places
like Canada and the United Kingdom. Additionally, they are Revenue Analysis
planning to add 300+ Chipotle locations in 2024-expanding
Chipotle’s central source of revenue is from food and
into geographies such as Dubai and Kuwait. Given Chipotle’s
beverage sales, along with delivery. They offer burritos,
success within the United States, expanding into international
burrito bowls, quesadillas, tacos, and salads. Chipotle also
locations is a tremendous opportunity to further scale market
serves tortilla chips, fruit, and organic milk. Food and
share and gain a new customer base.
beverage made up roughly 99% of Chipotle’s total revenue in
2023. The delivery service revenue became increasingly
Chipotle Locations by popular in the height of COVID-19. We believe the delivery
Country service revenue will increase with the use of the Chipotle app.

Total revenue growth has remained steady over the last nine
years, with an increase in new store locations. We see store
growth expanding in the future, along with total revenue. Part
of the revenue growth has been attributable to inflation and
increasing menu prices. Since the pandemic, Chipotle, and
3401 34 15 6 2
other quick-service restaurants, have been forced to increase
United States Canada United Kingdom France Germany their prices. They have successfully increased menu prices
while food, beverage, labor, packaging, and occupancy costs
Source: 23
have increased. As of 2023, Chipotle has not taken consumer
Chipotle is also experimenting with innovative ideas such as
engagement losses regarding revenue, but we are concerned
AI. Chipotle is attempting to create an automated robot that
this could be a future risk if menu prices continue to increase.
can assemble bowls/burritos more quickly and efficiently than
a human employee. Not only would this allow for a quicker An additional driver of revenue production is same store
assembly line and increased production, but it would also traffic growth, which has been strong for Chipotle. In 2023,
increase margins as Chipotle can spend less on employee restaurant companies saw an average of -1% traffic growth
salaries/wages. industry wide. However, Chipotle saw an increase of 7% in
traffic growth. We expect Chipotle to maintain their customer
In 2023, 37.4% of Chipotle’s business came from digital base while continuing to entice more customers with their
orders, which includes delivery through partner platforms, in- healthy, and tasty food options. We projected 5% traffic
store pickup, and Chipotlanes- their drive-thru format for growth over the next 2 years, which then slowly decreases to a
pickup of digital orders. In addition to third-party delivery, long-term growth rate of 2%. We also expect menu prices to
Chipotle is one of the few QSRs to have their own delivery increase 5% over the next 2 years as inflation remains
service through their app. Continued investment into their elevated, but then to fall off to a modest long-term growth of
digital platforms could enable revenue growth moving 3%. These drivers, along with an increase in total number of
forward. stores annually, gives us confidence that Chipotle will be able
to continue growing their revenue at a high percentage of
Threats 15%.

8
Expense Analysis store by the projected number of new stores added annually.
We projected aggressive annual stores added based on a
The biggest expense category for Chipotle is food, beverage, management range. For example, we used 315 as our stores
and packaging, labor, and other operating costs. Operating added in 2024 based on the range of 285-315 to reflect the
expenses increased by nearly 11% YoY compared to 2022. By potential expedition of Chipotle’s long-term expansion plans
the end of 2023, Chipotle had a gross margin of 15.78%, a to reach 7,000 restaurants in North America.
2.34% increase from 2022 and nearly 10% higher than the
average profit margin for quick-service restaurants. Chipotle Capital Expenditures ($mn)
does a phenomenal job managing costs in a competitive 561
industry with historically lower margins. We expect Chipotle
479
to continue mitigating costs as they expand production and 442 455 451 447 442 438
increase efficiency. Although Chipotle plans to improve 373
334
margins over the next couple of years and diminish
operational costs as a percentage of sales, we used a 2-year
historical average when projecting out operating costs. We
believe this conservative projection reflects realistic
operational costs as Chipotle expands its business.
2019 2020 2021 2022 2023 2024 2025 2026 2027 2028
FY23 Operating Expenses 0.5% Source: Cash Flow Forecast
3.8% 0.4%
6.1%
7.6% 35.0% Total Number of Stores
17.2%
5348
5108
29.4% 4858
4598
Restaurant operating costs - food, beverage & packaging 4328
4048
Restaurant operating costs - labor
3758
3458
3187
Restaurant operating costs - other operating costs
2768 2966
General & administrative expenses
Restaurant operating costs - occupancy
Depreciation & amortization

Source: Income Statement

Labor costs are a large portion of Chipotle's annual operating 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E

expenses. Although we believe that technology will allow Source: Revenue Decomposition
companies like Chipotle to spend less on labor and be more WACC
efficient with employees, wage increases are likely to more Chipotle’s WACC was calculated using the market weights
than offset these improvements. Wage inflation was 4.7% last and current capital structure. This is an important assumption
year and is expected to be similar, if not worse, over the next used in valuation as it is the discount rate, and any change to it
year. California increased its fast-food employee minimum has a significant impact on the overall valuation. Chipotle’s
wage by 25%, and unfortunately for Chipotle, roughly 13% of cost of equity is calculated using a 4.50% risk-free rate from
its restaurants are in California. We believe this will cause the 10-year UST, a raw beta of 1.09 (2-year weekly average),
Chipotle to increase the amount spent on labor over the next and a 4.33% equity risk premium. This calculates to a 9.22%
few years as wage inflation continues to surge. cost of equity. Next, Chipotle has no debt, so we used a peer
Capital Expenditures to calculate the cost of debt. We used SBUX’s 2050
outstanding debt, which is trading at 5.58% YTM19, and
Chipotle opened 273 new restaurants in 2023, with 121
adjusted to an after-tax return using a 23% marginal tax rate.
coming in the fourth quarter. This was a 14.8% increase YoY
We used SBUX because we feel this is the closest peer to
from 2022, and management expects a 15% increase in 2024.
Chipotle in terms of market capitalization and consumer
We saw nearly $561 million in Capital Expenditures in 2023,
demographic. This calculates to a 4.30% cost of debt.
which has grown by 17% from 2022. Chipotle plans to add
Chipotle’s management has said they do not want to change
between 285 and 31520 new restaurants each year for the next
their current capital structure significantly, so we assume their
3-5 years. We projected capital expenditures using a historical
current capital structure stays constant. The weight of equity
average for gross PPE per new store over the past eight years.
was 95.77%, and the weight of debt (Operating Leases)
We felt historical averages considered rising prices of
was 4.23%. This equates to a WACC of 9.01%.
expenditures mixed with Chipotle’s expertise in creating new
store locations. We then multiplied our gross PPE per new

9
 Estimated Share Price: $2,057.78

The DDM we performed is the least reliable valuation method

CMG Valuation Models as Chipotle does not currently pay a dividend, with no plans of
distribution in the future. We do not predict the company to
pay a dividend, which is why the DDM is the least reliable
Discounted Cash Flow and Economic Profit valuation method. Currently, Chipotle returns a lot of capital
Model to shareholders through share repurchases.

Estimated Share Price: $2,903.72

CMG Sensitivity Analysis
Our DCF and EP model is the best projection of Chipotle’s
value. This specific model allows us to consider Chipotle’s
special brand and business model and how it separates itself Risk-Free Rate vs Beta
from competitors. The model is a 10-year projection before
Chipotle reaches a steady state. In projecting free cash flow
and economic profit, we were able to consider factors such as
growth, profitability, and risk. We are confident the DCF and
EP model is the best way to value Chipotle and that our
assumptions are based on the most up-to-date public
information.

Our model is highly volatile to changes in the company’s In this table, we tested the effects of changing CMG’s beta
long-term growth rate of 5.75% and changes to the WACC. and the risk-free rate on the stock price. Changing the risk-free
Therefore, any major changes to the company’s stability or rate has significantly more of an impact on the stock price than
growth prospects will significantly alter our valuation. the beta. Both variables affect our WACC, but the risk-free
However, we believe that Chipotle’s financial structure of no rate appears to have a greater impact. We expect these
debt gives us confidence in an accurately projected WACC. variables to change if interest rates are changed by the FOMC,
and if macroeconomic uncertainty either increases or
Relative Valuation to Peers decreases.
Estimated Share Price: $1,261.67 - $2,946.27 WACC vs. CV Growth Rate of NOPLAT
Model is based upon P/E (2024 & 2025), PEG (2024 & 2025),
a revenue multiple (2023), and an EBIT multiple (2023).

Comparable companies: YUM, SBUX, DPZ, MCD, QSR,

WEN, PZZA, DRI, and WING. We used the 75th percentile of
our group of comparables to derive our target valuation.

We have concluded that relative valuations are not an accurate

depiction of Chipotle’s relative value, as the company has In this table, we tested the effects of changing the WACC and
several operational and capital structure differences from peers the perpetuity growth of NOPLAT to the share price. The
in the industry. Also, many of our comparable companies are manipulation of the growth rate seems to have a greater
not accurately comparable due to differences in financials and impact on the share price than WACC. Some factors that
specific verticals within restaurants. Many of these could lead to these changes taking place are a change in the
comparable operate in the fast-food space, whereas Chipotle capital structure or long-term market growth of quick-service
prioritizes healthier food options. Across these different sub- restaurants.
verticals within the restaurant industry, companies have
significant differences in metrics like P/E and EPS, but also Labor Cost as a % of Sales vs. Food, Beverage,
large financial measures like market cap and enterprise value. and Packaging as a % of Sales
Due to the wide ranges in share prices and multiples, we
decided that we could not rely on this valuation method for
Chipotle.

Dividend Discount Model

10
 in 2024. Changes in the cost of debt can come from
fluctuations in interest rates as the Fed decides whether to
lower, pause, or raise the federal funds rate over the next few
months.

In this table, we tested the impact of changing the labor cost as

a percentage of sales along with the food, beverage, and
Important Disclaimer
packaging as a percentage of sales to the share price. With the
high inflation that the economy is currently experiencing, we This report was created by students enrolled in the Security
wanted to have food costs in the table. Additionally, labor Analysis (6F:112) class at the University of Iowa. The report
costs continue to rise, which is why we chose to do labor was originally created to offer an internal investment
costs. recommendation for the University of Iowa Krause Fund and
its advisory board. The report also provides potential
Other Operating Costs as a % of Sales vs. Equity employers and other interested parties an example of students’
Risk Premium skills, knowledge, and abilities. Members of the Krause Fund
are not registered investment advisors, brokers, or officially
licensed financial professionals. The investment advice
contained in this report does not represent an offer or
solicitation to buy or sell any of the securities mentioned.
Unless otherwise noted, facts and figures included in this
report are from publicly available sources. This report is not a
complete compilation of data, and its accuracy is not
guaranteed. From time to time, the University of Iowa, its
In this table, we tested the impact of changing other operating
faculty, staff, students, or the Krause Fund may hold a
costs as a percentage of sales along with the equity risk
financial interest in the companies mentioned in this report.
premium. Manipulating the equity risk premium changes the
share price much more than changing the other operating costs
as a percentage of sales. This change is attributable to
changing the discount rate used in the model. These changes
could occur from stock market performance, market outlook,
or tax policy changes through political differences that may
occur.

Marginal Tax Rate vs. Pre-tax Cost of Debt

In this table, we tested the impact of changing the marginal tax

rate as well as the pre-tax cost of debt. Changing the pre-tax
cost of debt marginally changes the overall valuation.
Similarly, changing the marginal tax rate does not have a
significant effect on the overall valuation, though it does have
a larger impact than changing the pre-tax cost of debt. Due to
Chipotle’s heavy equity-financed capital structure, these
variables have a limited impact on the valuation of Chipotle.
However, these changes in marginal tax rates could come
from changes in policies, possibly resulting from the election

11
 analysis/artificial-intelligence-ai-in-food-and-
beverages-market. Accessed 16 Apr. 2024.
11. Brown, Lisa. “Subway Five Forces Analysis &
Recommendations (Porter’s Model).” Panmore
Institute, 23 Dec. 2023, panmore.com/subway-five-
forces-analysis-recommendations-porters-case-
study#:~:text=In%20Michael%20Porter’s%20Five%
20Forces,threat%2C%20and%20new%20entry%20th
reat.
References 12. “Technology Drives Growth for Quick Serve
Restaurants.” Transforming Retail & Hospitality,
1. “Shares of Gross Domestic Product: Personal www.evoke-creative.com/blog/technology-drives-
Consumption Expenditures.” FRED, 28 Mar. 2024, growth-for-quick-serve-restaurants. Accessed 16 Apr.
2024.
fred.stlouisfed.org/series/DPCERE1Q156NBEA.
13. “Topic: Restaurant Delivery in the U.S.” Statista,
2. “Real Gross Domestic Product.” FRED, 28 Mar. www.statista.com/topics/1986/restaurant-delivery-in-
2024, fred.stlouisfed.org/series/GDPC1. the-us/#topicOverview. Accessed 16 Apr. 2024.
14. Doordash Merchant Support,
3. “Real Gross Domestic Product.” FRED, 28 Mar. help.doordash.com/merchants/s/article/How-to-
2024, fred.stlouisfed.org/series/GDPC1#0. Maximize-Visibility-and-Order-Volume-on-
DoorDash?language=en_US. Accessed 16 Apr. 2024.
4. “Gross Domestic Product, Fourth Quarter and Year 15. Gillespie, Bob. “Third-Party Delivery Isn’t Going
2023.” Gross Domestic Product, Fourth Quarter and Away. Here’s What Restaurants Should Know in
Year 2023 | U.S. Bureau of Economic Analysis 2023.” OpenTable Resources, 22 Feb. 2024,
(BEA), www.bea.gov/news/blog/2024-02-28/gross- restaurant.opentable.com/resources/third-party-
domestic-product-fourth-quarter-and-year- delivery/.
2023#:~:text=Within%20goods%2C%20the%20leadi 16. “Order One.” Revolution Ordering,
ng%20contributors,(led%20by%20financial%20servi www.revolutionordering.com/blog/fast-food-
ces). Accessed 14 Apr. 2024. industry. Accessed 16 Apr. 2024.
5. “CME FedWatch Tool.” CME Group, 17. “Pros and Cons of Reward Programs for
www.cmegroup.com/markets/interest-rates/cme- Restaurants.” Restolabs,
fedwatch-tool.html. Accessed 14 Apr. 2024. www.restolabs.com/blog/pros-and-cons-restaurant-
loyalty-
6. Arias, Pilar. “Taco Bell, Pizza Hut Going ‘ai-First’ programs#:~:text=Restaurant%20loyalty%20program
with Fast-Food Innovations.” Fox Business, Fox s%20are%20designed,rewards%20program%20for%
Business, 1 Apr. 2024, 20your%20restaurant. Accessed 16 Apr. 2024.
www.foxbusiness.com/lifestyle/taco-bell-pizza-hut- 18. Sign In, my.apps.factset.com/navigator/company-
going-ai-first-fast-food-innovations. security/snapshot/CMG-US. Accessed 16 Apr. 2024.
19. Sign In, Bloomberg. Accessed 16 Apr. 2024.
7. Vernon, Edward. “Mexican Avocado Sector Bounces 20. Transcripts, SA. “Chipotle Mexican Grill, Inc.
Back from a Tough Season.” Vision Magazine, 15 (CMG) Q4 2023 Earnings Call Transcript.” Seeking
Mar. 2023, www.visionmagazineus.com/mexican- Alpha, Seeking Alpha, 7 Feb. 2024,
avocado-sector-bounces-back-from-a-tough- seekingalpha.com/article/4668032-chipotle-mexican-
season/#:~:text=According%20to%20Vega%2C%20t grill-inc-cmg-q4-2023-earnings-call-transcript.
he%20fall,shortage%20of%20water%20also%20had. 21. Chipotle Accelerates International Expansion
8. “Why Does the Federal Reserve Aim for Inflation of through First-Ever Development Agreement with
2 Percent over the Longer Run?” Board of Governors Alshaya Group in Middle East - Jul 18, 2023,
of the Federal Reserve System, ir.chipotle.com/2023-07-18-CHIPOTLE-
www.federalreserve.gov/faqs/economy_14400.htm. ACCELERATES-INTERNATIONAL-
Accessed 16 Apr. 2024. EXPANSION-THROUGH-FIRST-EVER-
9. Walrath-Holdridge, Mary. “Chipotle Menu Prices DEVELOPMENT-AGREEMENT-WITH-
Are Going up Again, Marking the 4th Increase in 2 ALSHAYA-GROUP-IN-MIDDLE-EAST. Accessed
Years.” USA Today, Gannett Satellite Information 16 Apr. 2024.
Network, 12 Oct. 2023, 22. “Advance Retail Sales: Retail Trade and Food
www.usatoday.com/story/money/food/2023/10/12/ch Services.” FRED, 15 Apr. 2024,
ipotle-raises-menu-prices-fourth-time-two- fred.stlouisfed.org/series/RSAFS.
years/71153636007/. 23. Chipotle Accelerates International Expansion
10. Polaris Market Research, through First-Ever Development Agreement with
https://www.polarismarketresearch.com/. “Global Alshaya Group in Middle East - Jul 18, 2023,
Artificial Intelligence (AI) in Food & Beverages ir.chipotle.com/2023-07-18-CHIPOTLE-
Market Size Report, 2022 - 2029.” Polaris, ACCELERATES-INTERNATIONAL-
www.polarismarketresearch.com/industry- EXPANSION-THROUGH-FIRST-EVER-
12
 DEVELOPMENT-AGREEMENT-WITH-
ALSHAYA-GROUP-IN-MIDDLE-EAST. Accessed
16 Apr. 2024.
24. “Other.” SEC Emblem, 23 Mar. 2021,
www.sec.gov/os/accessing-edgar-data.

13
Chipotle Mexican Grill
Revenue Decomposition

Fiscal Years Ending Dec. 31 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E
(Numbers in Millions)
Food and Beverage Revenue 5,920.55 7,457.17 8,558.00 9,804.12 $ 12,365.73 $ 14,593.24 $ 17,031.36 $ 19,492.65 $ 21,994.26 $ 24,537.07 $ 27,206.85 $ 30,066.98 $ 33,129.02 $ 36,405.23
Food and Beverage as a % 98.93% 98.81% 99.11% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32%

Delivery Service Revenue 64.09 89.89 76.65 67.53 $ 85.17 $ 100.51 $ 117.30 $ 134.25 $ 151.48 $ 169.00 $ 187.38 $ 207.08 $ 228.17 $ 250.74
Delivery service as a % 1.07% 1.19% 0.89% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68%
Total revenue $ 5,984.63 $ 7,547.06 $ 8,634.65 $ 9,871.65 $ 12,450.90 $ 14,693.75 $ 17,148.66 $ 19,626.90 $ 22,145.75 $ 24,706.06 $ 27,394.24 $ 30,274.06 $ 33,357.20 $ 36,655.97
Total revenue growth % 7.13% 26.11% 14.41% 14.33% 26.13% 18.01% 16.71% 14.45% 12.83% 11.56% 10.88% 10.51% 10.18% 9.89%

New restaurants 146 198 221 271 315 312 309 306 303 300 297 294 291 288
Total number of stores 2,768 2,966 3,187 3,458 3,773 4,085 4,394 4,700 5,003 5,303 5,600 5,894 6,185 6,473
Restaurant growth 6.46% 7.15% 7.45% 8.50% 9.11% 8.27% 7.56% 6.96% 6.45% 6.00% 5.60% 5.25% 4.94% 4.66%

Average unit volume 8.00 2.60 2.80 3.00 3.30 3.60 3.90 4.18 4.43 4.66 4.89 5.14 5.39 5.66
Restaurant revenue per store 8.00 2.60 2.80 3.00 3.30 3.60 3.90 4.18 4.43 4.66 4.89 5.14 5.39 5.66

Food and beverage revenue per restaurant 7.91 2.57 2.78 2.98 3.28 3.57 3.88 4.15 4.40 4.63 4.86 5.10 5.36 5.62
Food and beverage revenue (% of revenue) 98.93% 98.81% 99.11% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32%
Delivery service revenue per restaurant 0.09 0.03 0.02 0.02 0.02 0.02 0.03 0.03 0.03 0.03 0.03 0.04 0.04 0.04
Delivery service (% of revenue) 1.07% 1.19% 0.89% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68%

Average Unit Volume

AUV (assumes full maturity) 8.0 2.6 2.8 3.0 3.3 3.6 3.9 4.2 4.4 4.7 4.9 5.1 5.4 5.7
Discount for Immaturity 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Traffic growth (%) 0.00% 0.00% 0.90% 5.00% 5% 4% 4% 3% 3% 2% 2% 2% 2% 2%
Average check impact (%) 0.00% 0.00% 7.10% 2.90% 5% 5% 5% 4% 4% 3% 3% 3% 3% 3%
Menu price increase % (Last 4Q) 0.00% 0.00% 12.00% 5.20% 5% 5% 5% 4% 4% 3% 3% 3% 3% 3%
Sales mix impact % 0.00% 0.00% -4.90% -2.30% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
% growth 0.00% 0.00% 8.00% 7.90% 10% 9% 9% 7% 6% 5% 5% 5% 5% 5%
Chipotle Mexican Grill
Income Statement

Fiscal Years Ending Dec. 31 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E
Food & beverage revenue - - - - 4,860.63 5,561.04 5,920.55 7,457.17 8,558.00 9,804.12 12,365.73 14,593.24 17,031.36 19,492.65 21,994.26 24,537.07 27,206.85 30,066.98 33,129.02 36,405.23
Delivery service revenue - - - - 4.36 25.33 64.09 89.89 76.65 67.53 85.17 100.51 117.30 134.25 151.48 169.00 187.38 207.08 228.17 250.74
Total revenue 4,108.27 4,501.22 3,904.38 4,476.41 4,864.99 5,586.37 5,984.63 7,547.06 8,634.65 9,871.65 12,450.90 14,693.75 17,148.66 19,626.90 22,145.75 24,706.06 27,394.24 30,274.06 33,357.20 36,655.97
Restaurant Operating Costs
Restaurant operating costs - food, beverage & packaging 1,420.99 1,503.84 1,365.58 1,535.43 1,600.76 1,847.92 1,932.77 2,308.63 2,602.25 2,912.56 3,744.87 4,419.46 5,157.82 5,903.21 6,660.80 7,430.87 8,239.40 9,105.57 10,032.88 11,025.06
Restaurant operating costs - labor 904.41 1,045.73 1,105.00 1,205.99 1,326.08 1,472.06 1,593.01 1,917.76 2,197.96 2,440.98 3,137.34 3,702.48 4,321.06 4,945.52 5,580.21 6,225.35 6,902.71 7,628.35 8,405.23 9,236.45
Restaurant operating costs - occupancy 230.87 262.41 293.64 327.13 347.12 363.07 387.76 416.61 460.43 503.26 649.34 766.31 894.33 1,023.58 1,154.94 1,288.47 1,428.66 1,578.85 1,739.64 1,911.68
Restaurant operating costs - other operating costs 434.24 514.96 641.95 651.64 680.03 760.83 1,030.01 1,197.05 1,311.91 1,428.75 1,889.55 2,179.58 2,543.72 2,911.33 3,284.96 3,664.74 4,063.49 4,490.66 4,947.99 5,437.31
General & administrative expenses 273.90 250.21 276.24 296.39 375.46 451.55 466.29 606.85 564.19 633.58 806.34 951.59 1,110.57 1,271.06 1,434.19 1,600.00 1,774.09 1,960.59 2,160.25 2,373.89
Depreciation & amortization 110.47 130.37 146.37 163.35 201.98 212.78 238.53 254.66 286.83 319.39 295.89 317.61 335.78 350.88 363.34 373.50 381.68 388.16 393.17 396.90
Pre-opening costs 15.61 16.92 17.16 12.34 8.55 11.11 15.52 21.26 29.56 36.93 42.93 42.52 42.11 41.70 41.29 40.88 40.47 40.07 39.66 39.25
Gain (loss) on disposal & impairment of assets 6.98 13.19 23.88 13.35 66.64 23.09 30.58 19.29 21.14 38.37 39.44 46.54 54.32 62.17 70.15 78.26 86.77 95.89 105.66 116.11
Total operating expenses 3,397.47 3,737.63 3,869.82 4,205.62 4,606.62 5,142.41 5,694.47 6,742.12 7,474.25 8,313.84 10,605.68 12,426.08 14,459.72 16,509.45 18,589.87 20,702.06 22,917.27 25,288.14 27,824.49 30,536.64
Income (loss) from operations 710.80 763.59 34.56 270.79 258.37 443.96 290.16 804.94 1,160.40 1,557.81 1,845.22 2,267.67 2,688.94 3,117.45 3,555.87 4,004.00 4,476.97 4,985.92 5,532.71 6,119.33
Interest & other income (expense), net 3.50 6.28 4.17 4.95 10.07 14.33 3.62 7.82 21.13 62.69 55.80 92.48 136.47 191.94 259.65 337.88 427.16 529.20 645.77 778.05
Income (loss) before income taxes 714.30 769.87 38.73 275.74 268.44 458.29 293.78 812.76 1,181.53 1,620.51 1,901.02 2,360.15 2,825.41 3,309.39 3,815.53 4,341.88 4,904.13 5,515.12 6,178.48 6,897.38
Total provision (benefit) for current income taxes 268.00 294.00 15.00 99.00 91.00 108.00 (61.99) 159.78 282.43 391.77 454.34 564.07 675.27 790.94 911.91 1,037.71 1,172.09 1,318.11 1,476.66 1,648.47
Net income (loss) 446.30 475.87 23.73 176.74 177.44 350.29 355.77 652.98 899.10 1,228.74 1,446.67 1,796.07 2,150.14 2,518.45 2,903.62 3,304.17 3,732.04 4,197.01 4,701.82 5,248.91
6.6% -95.0% 644.8% 0.4% 97.4% 1.6% 83.5% 37.7% 36.7% 17.7% 24.2% 19.7% 17.1% 15.3% 13.8% 12.9% 12.5% 12.0% 11.6%

Weighted average shares outstanding - basic 31.04 31.09 29.27 28.49 27.82 27.74 27.92 28.13 25.95 27.56 27.46 27.47 27.42 27.39 27.34 27.25 27.15 27.06 26.98 26.91
Year end shares outstanding 31.03 30.58 28.81 28.03 27.70 27.76 28.00 28.08 27.63 27.43 27.49 27.44 27.40 27.37 27.30 27.20 27.11 27.02 26.94 26.87
Net earnings (loss) per share - basic 14.35 15.30 0.78 6.19 6.35 12.62 12.74 23.21 32.28 44.59 52.69 65.39 78.41 91.96 106.22 121.26 137.45 155.08 174.26 195.07
Annual Dividend per Share - - - - - - - - - - - - - - - - - - - -

Restaurant-level profit 1,117.76 1,174.28 498.21 756.22 911.00 1,142.49 1,041.08 1,707.01 2,062.12 2,586.09 3,029.81 3,625.93 4,231.72 4,843.27 5,464.83 6,096.63 6,759.99 7,470.63 8,231.45 9,045.47
Restaurant-level margin (%) 27.21% 26.09% 12.76% 16.89% 18.73% 20.45% 17.40% 22.62% 23.88% 26.20% 24.33% 24.68% 24.68% 24.68% 24.68% 24.68% 24.68% 24.68% 24.68% 24.68%

Food, beverage & packaging margin (* commodity % / pricing %) 30.96% 30.41% 29.71% 29.42% 28.86% 28.31% 28.04% 27.91% 27.91% 27.91% 27.91% 27.91% 27.91%
Commodity inflation growth 6% 10% 4% 4% 3% 3% 3% 3% 3% 3% 3% 3% 3%
Pricing (%) 12.00% 5.20% 5.00% 5.00% 5.00% 4.00% 3.50% 3.00% 3.00% 3.00% 3.00% 3.00%

Total labor costs 2,895.23 3,632.07 4,223.21 4,881.25 5,536.35 6,207.78 6,885.27 7,610.23 8,386.40 9,216.88
Labor dollar value growth (labor hours + wage + store wks %) 18.61% 15.77% 14.06% 12.96% 11.95% 11.25% 10.60% 10.25% 9.94% 9.66%
Labor hours growth (%) 5.00% 4.00% 3.50% 3.00% 2.50% 2.25% 2.00% 2.00% 2.00% 2.00%
as a function of traffic growth (50% of traffic) 5.00% 4.00% 3.50% 3.00% 2.50% 2.25% 2.00% 2.00% 2.00% 2.00%
Wage inflation (%) 4.50% 3.50% 3% 3% 3% 3% 3% 3% 3% 3%
Store weeks growth (%) 9.11% 8.27% 7.56% 6.96% 6.45% 6.00% 5.60% 5.25% 4.94% 4.66%
Chipotle Mexican Grill
Balance Sheet

Fiscal Years Ending Dec. 31 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E
Assets
Cash & cash equivalents 419.47 248.01 87.88 184.57 249.95 480.63 607.99 815.37 384.00 560.61 1,724.76 3,130.18 4,915.22 7,105.67 9,643.49 12,546.63 15,871.73 19,677.94 24,004.10 28,891.73
Accounts receivable, net 36.04 39.46 40.71 40.45 62.31 80.55 104.50 99.60 106.88 115.54 172.22 201.52 222.73 257.41 296.89 341.73 378.91 418.74 461.39 507.01
Inventory 15.33 15.04 15.02 19.86 21.56 26.10 26.45 32.83 35.67 39.31 53.67 62.28 72.31 82.61 94.00 106.50 118.08 130.50 143.79 158.01
Current deffered tax asset 18.97 - - - - - - - - - - - - - - -
Prepaid expenses & other current assets 34.80 39.97 44.08 50.92 54.13 57.08 54.91 78.76 86.41 117.46 128.83 152.41 181.90 207.84 236.01 255.63 283.44 313.24 345.14 379.27
Income tax receivable 16.49 58.15 5.11 9.35 27.71 282.78 94.06 47.74 52.96 28.73 40.46 30.28 37.22 50.23 65.62 74.12 83.35 93.38 104.24
Investments 338.59 415.20 329.84 324.38 426.85 400.16 343.62 260.95 515.14 734.84 767.91 802.46 838.57 876.31 915.74 956.95 1,000.01 1,045.01 1,092.04 1,141.18
Total current assets 878.48 814.65 522.37 629.54 814.79 1,072.20 1,420.24 1,381.56 1,175.84 1,620.71 2,876.10 4,389.31 6,261.01 8,567.06 11,236.36 14,273.05 17,726.30 21,668.78 26,139.82 31,181.45
Leasehold improvements, property & equipment, gross 1,720.66 1,938.10 2,149.03 2,317.29 2,462.76 2,660.13 2,964.02 3,305.60 3,685.73 4,152.06 4,607.27 5,058.15 5,504.69 5,946.89 6,384.76 6,818.29 7,247.49 7,672.35 8,092.88 8,509.07
Less: accumulated depreciation 613.68 720.88 845.47 978.92 1,083.51 1,201.44 1,379.71 1,536.32 1,734.59 1,982.02 2,277.91 2,595.52 2,931.30 3,282.19 3,645.52 4,019.02 4,400.71 4,788.87 5,182.04 5,578.94
Leasehold improvements, property & equipment, net 1,106.98 1,217.22 1,303.56 1,338.37 1,379.25 1,458.69 1,584.31 1,769.28 1,951.15 2,170.04 2,329.36 2,462.62 2,573.38 2,664.70 2,739.23 2,799.27 2,846.78 2,883.48 2,910.84 2,930.14
Long term investments 496.11 622.94 125.06 - 102.33 274.31 388.06 564.49 589.89 616.44 644.17 673.16 703.45 735.11 768.19 802.76 838.88 876.63
Other assets 42.78 48.32 53.18 55.85 19.33 18.45 59.05 56.72 63.16 63.08 85.63 111.57 119.96 134.79 150.15 169.92 188.41 208.22 229.42 252.11
Restricted cash 30.20 27.86 27.85 30.86 24.97 25.55 26.70 27.91 29.16 30.47 31.84 33.28 34.78 36.34 37.98 39.68
Operating lease assets 2,505.47 2,767.19 3,118.29 3,302.40 3,578.55 3,822.46 4,117.43 4,402.24 4,676.87 4,941.33 5,195.62 5,439.73 5,673.68 5,897.45 6,111.05
Goodwill 21.94 21.94 21.94 21.94 21.94 21.94 21.94 21.94 21.94 21.94 21.94 21.94 21.94 21.94 21.94 21.94 21.94 21.94 21.94 21.94
Total assets 2,546.29 2,725.07 2,026.10 2,045.69 2,265.52 5,104.60 5,982.90 6,652.96 6,927.50 8,044.36 9,752.09 11,747.21 14,051.86 16,768.99 19,824.32 23,228.19 27,026.13 31,295.19 36,076.34 41,413.00
Liabilities
Accounts payable 69.61 85.71 78.36 82.03 113.07 115.82 121.99 163.16 184.57 197.65 259.31 306.29 358.98 407.75 457.65 514.54 570.52 630.50 694.71 763.41
Accrued payroll & benefits 73.89 64.96 76.30 82.54 113.47 126.60 203.05 162.41 170.46 227.54 301.07 359.76 386.43 452.72 530.48 597.40 662.40 732.03 806.58 886.35
Accrued liabilities 102.20 129.28 127.13 159.32 147.85 155.84 164.65 173.05 147.54 147.69 274.88 307.30 340.00 385.78 457.40 545.44 604.79 668.37 736.44 809.26
Unearned revenue 40.47 95.20 127.75 156.35 183.07 209.68 252.87 308.02 355.93 405.77 453.89 501.76 556.36 614.84 677.46 744.46
Current operating lease liabilities 173.14 204.76 218.71 236.25 248.07 264.98 285.43 305.17 324.21 342.55 360.17 377.10 393.31 408.83 423.63
Total current liabilities 245.71 279.94 281.79 323.89 449.99 666.59 822.20 873.68 921.88 1,030.63 1,353.10 1,566.80 1,746.51 1,976.23 2,241.96 2,519.31 2,771.16 3,039.06 3,324.01 3,627.11
Long-term operating lease liabilities 2,678.37 2,952.30 3,301.60 3,495.16 3,803.55 4,062.80 4,376.32 4,679.03 4,970.93 5,252.02 5,522.29 5,781.76 6,030.41 6,268.26 6,495.29
Deferred income tax liabilitiy 40.53 32.31 18.94 0.81 11.57 37.81 149.42 141.77 98.62 89.11 98.18 105.88 112.55 119.74 127.12 134.21 140.53 146.75 152.90 158.98
Other liabilities 28.26 32.88 33.95 40.04 31.64 38.80 38.84 38.54 43.82 58.87 73.66 82.33 92.28 106.70 121.75 132.95 147.42 162.92 179.51 197.26
Total liabilities 534.19 794.86 623.61 681.25 824.18 3,421.58 3,962.76 4,355.58 4,559.48 4,982.16 5,587.75 6,131.33 6,630.37 7,173.60 7,742.85 8,308.76 8,840.87 9,379.14 9,924.67 10,478.64
Stockholders equity
Common equity 1,039.91 1,173.34 1,239.59 1,305.81 1,374.87 1,436.06 1,550.28 1,729.68 1,829.68 1,956.54 2,078.21 2,199.88 2,321.56 2,443.23 2,491.90 2,491.90 2,491.90 2,491.90 2,491.90 2,491.90
Treasury stock, at cost 748.76 1,234.61 2,049.39 2,234.41 2,500.56 2,669.12 2,802.08 3,356.10 4,282.01 4,944.66 5,410.87 5,877.08 6,343.29 6,809.50 7,275.71 7,741.92 8,208.13 8,674.34 9,140.55 9,606.76
Accumulated other comprehensive income (loss) (0.43) (8.27) (8.16) (3.66) (6.24) (5.36) (4.23) (5.35) (7.89) (6.66) (6.66) (6.66) (6.66) (6.66) (6.66) (6.66) (6.66) (6.66) (6.66) (6.66)
Retained earnings (accumulated deficit) 1,722.27 2,197.87 2,220.81 2,397.06 2,573.62 2,921.45 3,276.16 3,929.15 4,828.25 6,056.99 7,503.66 9,299.73 11,449.87 13,968.31 16,871.93 20,176.10 23,908.14 28,105.15 32,806.97 38,055.88
Total shareholders' equity (deficit) 2,012.10 1,930.20 1,402.49 1,364.45 1,441.34 1,683.03 2,020.14 2,297.37 2,368.02 3,062.21 4,164.35 5,615.88 7,421.48 9,595.39 12,081.47 14,919.43 18,185.26 21,916.05 26,151.67 30,934.36
Chipotle Mexican Grill
Historical Cash Flow Statement

Fiscal Years Ending Dec. 31 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Operating Activities:
Net income (loss) 327,438.00 445,374.00 475,602.00 22,938.00 176,253.00 176,553.00 350,158.00 355,766.00 652,984.00 899,101.00 1,228,737.00
Depreciation & amortization 96,054.00 110,474.00 130,368.00 146,368.00 163,348.00 201,979.00 212,778.00 238,534.00 254,657.00 286,826.00 319,394.00
Amortization of operating lease assets - - - - - - 163,952.00 184,538.00 - - -
Deferred income tax provision (benefit) 2,103.00 (20,671.00) 11,666.00 (14,207.00) (18,026.00) 10,585.00 29,962.00 108,350.00 (12,357.00) (43,195.00) (9,505.00)
Loss on disposal of assets 6,751.00 6,976.00 13,194.00 - - - - - - - -
Loss on disposal & impairment of assets - - - 23,877.00 13,345.00 61,987.00 15,402.00 28,874.00 17,086.00 20,738.00 37,025.00
Provision for credit losses - - - - - - - 164.00 493.00 (760.00) -
Bad debt allowance 19.00 9.00 (23.00) (262.00) 214.00 125.00 33.00 - - - 1,570.00
Stock-based compensation expense 63,657.00 96,440.00 57,911.00 64,166.00 65,255.00 69,164.00 91,396.00 82,626.00 176,392.00 98,030.00 124,016.00
Excess tax benefit on stock-based compensation (38,379.00) (21,667.00) (74,442.00) (1,320.00) - - - - - - -
Other adjustments 507.00 104.00 582.00 (604.00) (218.00) (2,918.00) (10,592.00) 3,643.00 (4,599.00) (16,202.00) (13,080.00)
Changes in Operating Assets and Liabilities:
Accounts receivable (7,238.00) (10,966.00) (3,504.00) (1,923.00) (140.00) (8,298.00) (2,630.00) 3,010.00 (1,687.00) (14,026.00) (11,216.00)
Inventory (1,950.00) (2,307.00) 262.00 (91.00) (5,250.00) (1,722.00) (4,530.00) (394.00) (6,392.00) (3,011.00) (3,649.00)
Prepaid expenses & other current assets (6,806.00) (658.00) (5,259.00) (4,259.00) (6,710.00) (3,811.00) (23,066.00) (11,442.00) (26,826.00) (14,660.00) (39,211.00)
Operating lease assets - - - - - - - - 223,837.00 234,273.00 254,241.00
Other assets (1,354.00) 1,071.00 (5,619.00) (4,855.00) (2,587.00) (2,005.00) 2,818.00 (26,577.00) 3,993.00 (346.00) 4,204.00
Accounts payable 2,052.00 2,168.00 19,525.00 (6,734.00) 10,908.00 32,080.00 (973.00) (3,859.00) 21,440.00 18,208.00 5,313.00
Accrued payroll & benefits - - - - - 29,568.00 11,759.00 76,683.00 (44,555.00) 9,864.00 57,048.00
Accrued liabilities 12,020.00 35,019.00 (7,440.00) 33,491.00 38,574.00 14,831.00 36,543.00 5,596.00 10,997.00 (27,964.00) 3,188.00
Unearned revenue - - - - - 6,829.00 30,400.00 36,958.00 34,387.00 33,374.00 -
Income tax payable or receivable 44,334.00 8,831.00 32,756.00 54,340.00 (4,173.00) 14,439.00 (32,083.00) (255,251.00) 193,379.00 46,262.00 (5,237.00)
Deferred rent 25,715.00 27,025.00 32,911.00 37,030.00 29,996.00 21,297.00 - - - - 35,685.00
Operating lease liabilities - - - - - - (151,557.00) (165,154.00) (207,164.00) (207,186.00) (214,477.00)
Other long-term liabilities 3,857.00 4,845.00 4,826.00 1,287.00 6,316.00 869.00 1,862.00 1,782.00 (3,984.00) 3,853.00 9,431.00
Net cash flows from operating activities 528,780.00 682,067.00 683,316.00 349,242.00 467,105.00 621,552.00 721,632.00 663,847.00 1,282,081.00 1,323,179.00 1,783,477.00
Investing Activities:
Purchases of leasehold improvements, property & equipment (199,926.00) (252,590.00) (257,418.00) (258,842.00) (216,777.00) (287,390.00) (333,912.00) (373,352.00) (442,475.00) (479,164.00) (560,731.00)
Purchases of investments (387,639.00) (521,004.00) (559,372.00) - (199,801.00) (485,188.00) (448,754.00) (468,418.00) (429,350.00) (614,416.00) (1,115,131.00)
Maturities of investments 159,250.00 254,750.00 352,650.00 45,000.00 330,000.00 385,000.00 476,723.00 419,078.00 345,748.00 263,548.00 -
Proceeds from sale of equipment - - 540,648.00 - - 13,969.00 - 4,035.00 - 729,853.00
Acquisitions of equity method investments - - - - - - (10,025.00) - - -
Net cash flows from investing activities (428,315.00) (518,844.00) (464,140.00) 326,806.00 (86,578.00) (387,578.00) (291,974.00) (432,717.00) (522,042.00) (830,032.00) (946,009.00)
Financing Activities:
Acquisition of treasury stock (138,903.00) (88,338.00) (460,675.00) (837,655.00) (285,920.00) (160,937.00) (190,617.00) (54,401.00) (466,462.00) (830,140.00) (592,349.00)
Proceeds from employee stock plan transactions 316.00 - - - - - - - - - -
Tax witholding on stock-based compensation awards 38,379.00 21,667.00 74,442.00 1,320.00 - (5,411.00) (10,420.00) (48,555.00) (79,870.00) (98,970.00) 843.00
Stock plan transactions & other financing activities - (66.00) (207.00) 52.00 26.00 (187.00) (698.00) - - - -
Payments on deemed landlord financing - - - - - - - - - - -
Other financing payments (143.00) - - - - - - (1,895.00) (2,274.00) (294.00) (69,146.00)
Net cash flows from financing activities (100,351.00) (66,737.00) (386,440.00) (836,283.00) (285,894.00) (166,535.00) (201,735.00) (104,851.00) (548,606.00) (929,404.00) (660,652.00)
Effect of exchange rate changes on cash & cash equivalents 536.00 (224.00) (4,196.00) 110.00 2,056.00 - - - - - -
Effect of exchange rate changes on cash, cash equivalents & restricted cash - - - - - (1,457.00) 406.00 1,076.00 (1,039.00) (1,007.00) 381.00
Net change in cash, cash & cash equivalents for the period 646,406.00 838,930.00 496,010.00 175,760.00 369,138.00 560,304.00 1,016,962.00 1,271,672.00 1,692,460.00 817,932.00 1,172,326.00
Chipotle Mexican Grill
Forecasted Cash Flow Statement

Fiscal Years Ending Dec. 31 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E
Net income (loss) 1,446.67 1,796.07 2,150.14 2,518.45 2,903.62 3,304.17 3,732.04 4,197.01 4,701.82 5,248.91
OPERATING ACTIVITIES
Plus: depreciation and amortization 295.89 317.61 335.78 350.88 363.34 373.50 381.68 388.16 393.17 396.90
Accounts receivable (56.68) (29.30) (21.22) (34.68) (39.47) (44.84) (37.18) (39.83) (42.64) (45.63)
Operating lease assets (243.91) (294.97) (284.80) (274.63) (264.46) (254.29) (244.12) (233.95) (223.77) (213.60)
Restricted cash (1.15) (1.20) (1.26) (1.31) (1.37) (1.43) (1.50) (1.56) (1.64) (1.71)
Inventory (14.36) (8.61) (10.03) (10.30) (11.40) (12.49) (11.59) (12.41) (13.29) (14.22)
Prepaid expenses and other current assets (11.36) (23.59) (29.48) (25.94) (28.17) (19.62) (27.81) (29.80) (31.90) (34.13)
Income tax receivables 24.23 (11.73) 10.18 (6.94) (13.01) (15.39) (8.50) (9.23) (10.03) (10.87)
Operating lease liabilities 16.91 20.45 19.74 19.04 18.33 17.63 16.92 16.22 15.51 14.81
Accounts payable 61.66 46.99 52.69 48.77 49.90 56.89 55.98 59.98 64.21 68.70
Accrued payroll and benefits 73.53 58.69 26.67 66.29 77.76 66.92 65.00 69.63 74.55 79.77
Accrued liabilities 127.19 32.41 32.70 45.79 71.61 88.04 59.35 63.58 68.07 72.83
Unearned revenue 43.19 55.16 47.91 49.84 48.12 47.87 54.59 58.49 62.62 67.00
Deferred income tax liability 9.08 7.69 6.67 7.19 7.38 7.09 6.32 6.22 6.14 6.09
Other liabilities 14.79 8.67 9.95 14.42 15.05 11.20 14.47 15.50 16.59 17.75
Net cash provided by operating activities: 1,785.67 1,974.34 2,345.64 2,766.86 3,197.23 3,625.24 4,055.68 4,548.00 5,079.41 5,652.59
INVESTING ACTIVITIES
Long-term investments (25.40) (26.55) (27.74) (28.99) (30.29) (31.66) (33.08) (34.57) (36.12) (37.75)
Long-term lease liability 259.25 313.52 302.71 291.90 281.09 270.28 259.47 248.65 237.84 227.03
Short-term investments (33.07) (34.56) (36.11) (37.74) (39.43) (41.21) (43.06) (45.00) (47.03) (49.14)
Capital expenditures (455.21) (450.88) (446.54) (442.20) (437.87) (433.53) (429.20) (424.86) (420.53) (416.19)
Other assets (22.55) (25.93) (8.39) (14.83) (15.36) (19.77) (18.49) (19.81) (21.21) (22.69)
Net cash provided by investing activities: (276.98) (224.39) (216.07) (231.86) (241.87) (255.89) (264.36) (275.58) (287.04) (298.74)
FINANCING ACTIVITIES
Acquisition of Treasury Stock (466.21) (466.21) (466.21) (466.21) (466.21) (466.21) (466.21) (466.21) (466.21) (466.21)
Common Equity 121.67 121.67 121.67 121.67 48.67 - - - - -
Net cash provided by financing activities: (344.54) (344.54) (344.54) (344.54) (417.54) (466.21) (466.21) (466.21) (466.21) (466.21)

Net change in cash 1,164.15 1,405.42 1,785.04 2,190.46 2,537.82 2,903.14 3,325.10 3,806.20 4,326.16 4,887.64
Chipotle Mexican Grill
Common Size Income Statement

Fiscal Years Ending Dec. 31 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E
Food & beverage revenue 98.93% 98.81% 99.11% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32% 99.32%
Delivery service revenue 1.07% 1.19% 0.89% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68% 0.68%
Total revenue 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00% 100.00%
Restaurant Operating Costs
Restaurant operating costs - food, beverage & packaging 34.59% 33.41% 34.98% 34.30% 32.90% 33.08% 32.30% 30.59% 30.14% 29.50% 29.82% 29.82% 29.82% 29.82% 29.82% 29.82% 29.82% 29.82% 29.82% 29.82%
Restaurant operating costs - labor 22.01% 23.23% 28.30% 26.94% 27.26% 26.35% 26.62% 25.41% 25.46% 24.73% 25.09% 25.09% 25.09% 25.09% 25.09% 25.09% 25.09% 25.09% 25.09% 25.09%
Restaurant operating costs - occupancy 5.62% 5.83% 7.52% 7.31% 7.14% 6.50% 6.48% 5.52% 5.33% 5.10% 5.22% 5.22% 5.22% 5.22% 5.22% 5.22% 5.22% 5.22% 5.22% 5.22%
Restaurant operating costs - other operating costs 10.57% 11.44% 16.44% 14.56% 13.98% 13.62% 17.21% 15.86% 15.19% 14.47% 14.83% 14.83% 14.83% 14.83% 14.83% 14.83% 14.83% 14.83% 14.83% 14.83%
General & administrative expenses 6.67% 5.56% 7.08% 6.62% 7.72% 8.08% 7.79% 8.04% 6.53% 6.42% 6.48% 6.48% 6.48% 6.48% 6.48% 6.48% 6.48% 6.48% 6.48% 6.48%
Depreciation & amortization 2.69% 2.90% 3.75% 3.65% 4.15% 3.81% 3.99% 3.37% 3.32% 3.24% 3.28% 2.16% 1.96% 1.79% 1.64% 1.51% 1.39% 1.28% 1.18% 1.08%
Pre-opening costs 0.38% 0.38% 0.44% 0.28% 0.18% 0.20% 0.26% 0.28% 0.34% 0.37% 0.36% 0.36% 0.36% 0.36% 0.36% 0.36% 0.36% 0.36% 0.36% 0.36%
Gain (loss) on disposal & impairment of assets 0.17% 0.29% 0.61% 0.30% 1.37% 0.41% 0.51% 0.26% 0.24% 0.39% 0.32% 0.32% 0.32% 0.32% 0.32% 0.32% 0.32% 0.32% 0.32% 0.32%
Total operating expenses 82.70% 83.04% 99.11% 93.95% 94.69% 92.05% 95.15% 89.33% 86.56% 84.22% 86.70% 86.70% 86.70% 86.70% 86.70% 86.70% 86.70% 86.70% 86.70% 86.70%
Income (loss) from operations 17.30% 16.96% 0.89% 6.05% 5.31% 7.95% 4.85% 10.67% 13.44% 15.78% 13.30% 13.30% 13.30% 13.30% 13.30% 13.30% 13.30% 13.30% 13.30% 13.30%
Interest & other income (expense), net 0.09% 0.14% 0.11% 0.11% 0.21% 0.26% 0.06% 0.10% 0.24% 0.64% 0.44% 0.44% 0.44% 0.44% 0.44% 0.44% 0.44% 0.44% 0.44% 0.44%
Income (loss) before income taxes 17.39% 17.10% 0.99% 6.16% 5.52% 8.20% 4.91% 10.77% 13.68% 16.42% 13.62% 13.62% 13.62% 13.62% 13.62% 13.62% 13.62% 13.62% 13.62% 13.62%
Total provision (benefit) for current income taxes 6.52% 6.53% 0.38% 2.21% 1.87% 1.93% -1.04% 2.12% 3.27% 3.97% 3.12% 3.12% 3.12% 3.12% 3.12% 3.12% 3.12% 3.12% 3.12% 3.12%
Net income (loss) 10.86% 10.57% 0.61% 3.95% 3.65% 6.27% 5.94% 8.65% 10.41% 12.45% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50% 10.50%
Chipotle Mexican Grill
Common Size Balance Sheet

Fiscal Years Ending Dec. 31 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E
Assets
Cash & cash equivalents 8.60% 10.16% 10.80% 4.45% 5.68% 7.94% 7.94% 7.94% 7.94% 7.94% 7.94% 7.94% 7.94% 7.94% 7.94%
Accounts receivable, net 1.44% 1.75% 1.32% 1.24% 1.17% 1.38% 1.38% 1.38% 1.38% 1.38% 1.38% 1.38% 1.38% 1.38% 1.38%
Inventory 0.47% 0.44% 0.43% 0.41% 0.40% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43% 0.43%
Current deferred tax asset 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Prepaid expenses & other current assets 1.02% 0.92% 1.04% 1.00% 1.19% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03% 1.03%
Income tax receibable 0.50% 4.73% 1.25% 0.55% 0.54% 1.51% 1.51% 1.51% 1.51% 1.51% 1.51% 1.51% 1.51% 1.51% 1.51%
Investments 7.16% 5.74% 3.46% 5.97% 7.44% 5.95% 5.95% 5.95% 5.95% 5.95% 5.95% 5.95% 5.95% 5.95% 5.95%
Total current assets 19.19% 23.73% 18.31% 13.62% 16.42% 18.25% 18.25% 18.25% 18.25% 18.25% 18.25% 18.25% 18.25% 18.25% 18.25%
Leasehold improvements, property & equipment, net 26.11% 26.47% 23.44% 22.60% 21.98% 24.12% 24.12% 24.12% 24.12% 24.12% 24.12% 24.12% 24.12% 24.12% 24.12%
Long term investments 0.00% 1.71% 3.63% 4.49% 5.72% 3.11% 3.11% 3.11% 3.11% 3.11% 3.11% 3.11% 3.11% 3.11% 3.11%
Other assets 0.33% 0.99% 0.75% 0.73% 0.64% 0.69% 0.69% 0.69% 0.69% 0.69% 0.69% 0.69% 0.69% 0.69% 0.69%
Restricted cash 0.50% 0.47% 0.41% 0.29% 0.26% 0.38% 0.38% 0.38% 0.38% 0.38% 0.38% 0.38% 0.38% 0.38% 0.38%
Operating lease assets 44.85% 46.24% 41.32% 38.25% 36.25% 41.38% 41.38% 41.38% 41.38% 41.38% 41.38% 41.38% 41.38% 41.38% 41.38%
Goodwill 0.39% 0.37% 0.29% 0.25% 0.22% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31% 0.31%
Total assets 91.38% 99.97% 88.15% 80.23% 81.49% 83.29% 83.29% 83.29% 83.29% 83.29% 83.29% 83.29% 83.29% 83.29% 83.29%
Liabilities
Accounts payable 2.07% 2.04% 2.16% 2.14% 2.00% 2.08% 2.08% 2.08% 2.08% 2.08% 2.08% 2.08% 2.08% 2.08% 2.08%
Accrued payroll & benefits 2.27% 3.39% 2.15% 1.97% 2.30% 2.42% 2.42% 2.42% 2.42% 2.42% 2.42% 2.42% 2.42% 2.42% 2.42%
Accrued liabilities 2.79% 2.75% 2.29% 1.71% 1.50% 2.21% 2.21% 2.21% 2.21% 2.21% 2.21% 2.21% 2.21% 2.21% 2.21%
Unearned revenue 1.70% 2.13% 2.07% 2.12% 2.12% 2.03% 2.03% 2.03% 2.03% 2.03% 2.03% 2.03% 2.03% 2.03% 2.03%
Current operating lease liabilities 3.10% 3.42% 2.90% 2.74% 2.51% 2.93% 2.93% 2.93% 2.93% 2.93% 2.93% 2.93% 2.93% 2.93% 2.93%
Total current liabilities 11.93% 13.74% 11.58% 10.68% 10.44% 10.90% 10.90% 10.90% 10.90% 10.90% 10.90% 10.90% 10.90% 10.90% 10.90%
Long-term operating lease liabilities 47.94% 49.33% 43.75% 40.48% 38.53% 40.92% 40.92% 40.92% 40.92% 40.92% 40.92% 40.92% 40.92% 40.92% 40.92%
Deferred income tax liability 0.68% 2.50% 1.88% 1.14% 0.90% 1.31% 1.31% 1.31% 1.31% 1.31% 1.31% 1.31% 1.31% 1.31% 1.31%
Other liabilities 0.69% 0.65% 0.51% 0.51% 0.60% 0.54% 0.54% 0.54% 0.54% 0.54% 0.54% 0.54% 0.54% 0.54% 0.54%
Total liabilities 61.25% 66.22% 57.71% 52.80% 50.47% 53.66% 53.66% 53.66% 53.66% 53.66% 53.66% 53.66% 53.66% 53.66% 53.66%
Stockholders equity 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Common Equity 25.71% 25.90% 22.92% 21.19% 19.82% 21.31% 21.31% 21.31% 21.31% 21.31% 21.31% 21.31% 21.31% 21.31% 21.31%
Treasury stock, at cost 47.78% 46.82% 44.47% 49.59% 50.09% 48.05% 48.05% 48.05% 48.05% 48.05% 48.05% 48.05% 48.05% 48.05% 48.05%
Accumulated other comprehensive income (loss) -0.10% -0.07% -0.07% -0.09% -0.07% -0.08% -0.08% -0.08% -0.08% -0.08% -0.08% -0.08% -0.08% -0.08% -0.08%
Retained earnings (accumulated deficit) 52.30% 54.74% 52.06% 55.92% 61.36% 56.45% 56.45% 56.45% 56.45% 56.45% 56.45% 56.45% 56.45% 56.45% 56.45%
Total shareholders' equity (deficit) 30.13% 33.76% 30.44% 27.42% 31.02% 30.55% 30.55% 30.55% 30.55% 30.55% 30.55% 30.55% 30.55% 30.55% 30.55%
Total Liabilities and Equity 91.38% 99.97% 88.15% 80.23% 81.49% 83.29% 83.29% 83.29% 83.29% 83.29% 83.29% 83.29% 83.29% 83.29% 83.29%
Chipotle Mexican Grill
Value Driver Estimation

Fiscal Years Ending Dec. 31 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E

NOPLAT:
Food & Beverage Revenue 5,920.55 7,457.17 8,558.00 9,804.12 12,365.73 14,593.24 17,031.36 19,492.65 21,994.26 24,537.07 27,206.85 30,066.98 33,129.02 36,405.23
Delivery Service Revenue 64.09 89.89 76.65 67.53 85.17 100.51 117.30 134.25 151.48 169.00 187.38 207.08 228.17 250.74
Total Revenue 5,984.63 7,547.06 8,634.65 9,871.65 12,450.90 14,693.75 17,148.66 19,626.90 22,145.75 24,706.06 27,394.24 30,274.06 33,357.20 36,655.97
Less: Food, beverage & packaging 1,932.77 2,308.63 2,602.25 2,912.56 3,744.87 4,419.46 5,157.82 5,903.21 6,660.80 7,430.87 8,239.40 9,105.57 10,032.88 11,025.06
Less: Labor 1,593.01 1,917.76 2,197.96 2,440.98 3,137.34 3,702.48 4,321.06 4,945.52 5,580.21 6,225.35 6,902.71 7,628.35 8,405.23 9,236.45
Less: Occupancy 387.76 416.61 460.43 503.26 649.34 766.31 894.33 1,023.58 1,154.94 1,288.47 1,428.66 1,578.85 1,739.64 1,911.68
Less: Other operating costs 1,030.01 1,197.05 1,311.91 1,428.75 1,889.55 2,179.58 2,543.72 2,911.33 3,284.96 3,664.74 4,063.49 4,490.66 4,947.99 5,437.31
Less: General & administrative expenses 466.29 606.85 564.19 633.58 806.34 951.59 1,110.57 1,271.06 1,434.19 1,600.00 1,774.09 1,960.59 2,160.25 2,373.89
Less: Depreciation & amortization 238.53 254.66 286.83 319.39 295.89 317.61 335.78 350.88 363.34 373.50 381.68 388.16 393.17 396.90
Less: Pre-opening costs 15.52 21.26 29.56 36.93 42.93 42.52 42.11 41.70 41.29 40.88 40.47 40.07 39.66 39.25
Plus: Implied Interest on operating leases 129.86 167.36 184.39 199.41 199.65 213.26 229.71 245.60 260.92 275.68 289.86 303.48 316.53 329.02
EBITA 450.60 991.59 1,365.93 1,795.60 2,084.31 2,527.47 2,972.97 3,425.22 3,886.94 4,357.93 4,853.61 5,385.30 5,954.90 6,564.46
Less: Adjusted Taxes
Total income tax provision (benefit) (61.99) 159.78 282.43 391.77 454.34 564.07 675.27 790.94 911.91 1,037.71 1,172.09 1,318.11 1,476.66 1,648.47
Plus: Tax shield on operating lease interest 29.87 38.49 42.41 45.87 45.92 49.05 52.83 56.49 60.01 63.41 66.67 69.80 72.80 75.67
Less: Tax shield on interest and other expenses (income) 0.83 1.80 4.86 14.42 12.83 21.27 31.39 44.15 59.72 77.71 98.25 121.72 148.53 178.95
Adjusted taxes (32.95) 196.47 319.98 423.21 487.43 591.85 696.72 803.29 912.20 1,023.40 1,140.51 1,266.20 1,400.93 1,545.20
Plus: Change in deferred tax liability (111.61) 7.66 43.14 9.51 (9.08) (7.69) (6.67) (7.19) (7.38) (7.09) (6.32) (6.22) (6.14) (6.09)
NOPLAT 371.94 802.78 1,089.09 1,381.90 1,587.80 1,927.92 2,269.58 2,614.74 2,967.36 3,327.44 3,706.77 4,112.88 4,547.83 5,013.18

Invested Capital (IC):

Operating Current Assets:
Normal cash 111.73 119.69 150.94 172.69 197.43 249.02 293.87 342.97 392.54 442.91 494.12 547.88 605.48 667.14
Plus: Accounts receivable 104.50 99.60 106.88 115.54 172.22 201.52 222.73 257.41 296.89 341.73 378.91 418.74 461.39 507.01
Plus: Inventory 26.45 32.83 35.67 39.31 53.67 62.28 72.31 82.61 94.00 106.50 118.08 130.50 143.79 158.01
Plus: Prepaid expenses & other current assets 54.91 78.76 86.41 117.46 128.83 152.41 181.90 207.84 236.01 255.63 283.44 313.24 345.14 379.27
Plus: Income tax receivable 282.78 94.06 47.74 52.96 28.73 40.46 30.28 37.22 50.23 65.62 74.12 83.35 93.38 104.24
Operating Current Assets: 580.37 424.94 427.64 497.96 580.88 705.69 801.10 928.05 1,069.67 1,212.38 1,348.67 1,493.71 1,649.17 1,815.67

Operating Current Liabilities:

Less: Accounts Payable 121.99 163.16 184.57 197.65 259.31 306.29 358.98 407.75 457.65 514.54 570.52 630.50 694.71 763.41
Less: Accrued Payroll & benefits 203.05 162.41 170.46 227.54 301.07 359.76 386.43 452.72 530.48 597.40 662.40 732.03 806.58 886.35
Less: Accrued Liabilities 164.65 173.05 147.54 147.69 274.88 307.30 340.00 385.78 457.40 545.44 604.79 668.37 736.44 809.26
Less: Deferred revenue 127.75 156.35 183.07 209.68 252.87 308.02 355.93 405.77 453.89 501.76 556.36 614.84 677.46 744.46
Less: Income tax payable 7.00 8.00 9.00 10.00 11.00 12.00 13.00 14.00 15.00 16.00 17.00 18.00 19.00 20.00
Less: Non-interest bearing current liabilities 624.44 662.97 694.63 792.55 1,099.12 1,293.37 1,454.34 1,666.02 1,914.42 2,175.14 2,411.07 2,663.74 2,934.19 3,223.48
Total Operating Working Capital (44.08) (238.03) (266.99) (294.59) (518.25) (587.69) (653.24) (737.97) (844.75) (962.75) (1,062.39) (1,170.03) (1,285.02) (1,407.80)
Plus: Net PP&E 1,584.31 1,769.28 1,951.15 2,170.04 2,329.36 2,462.62 2,573.38 2,664.70 2,739.23 2,799.27 2,846.78 2,883.48 2,910.84 2,930.14
Plus: Operating lease assets 2,767.19 3,118.29 3,302.40 3,578.55 3,822.46 4,117.43 4,402.24 4,676.87 4,941.33 5,195.62 5,439.73 5,673.68 5,897.45 6,111.05
Less: Other operating liabilities 38.84 38.54 43.82 58.87 73.66 82.33 92.28 106.70 121.75 132.95 147.42 162.92 179.51 197.26
Total Invested Capital 4,268.58 4,611.01 4,942.74 5,395.12 5,559.92 5,910.04 6,230.09 6,496.90 6,714.06 6,899.18 7,076.70 7,224.22 7,343.77 7,436.13

Free Cash Flow (FCF):

NOPLAT 371.94 802.78 1,089.09 1,381.90 1,587.80 1,927.92 2,269.58 2,614.74 2,967.36 3,327.44 3,706.77 4,112.88 4,547.83 5,013.18
Less: Change in IC 162.95 342.43 331.73 452.38 164.79 350.12 320.05 266.81 217.16 185.12 177.52 147.51 119.56 92.36
FCF 208.99 460.34 757.36 929.51 1,423.01 1,577.80 1,949.53 2,347.94 2,750.20 3,142.32 3,529.25 3,965.36 4,428.27 4,920.82

Return on Invested Capital (ROIC):

NOPLAT 371.94 802.78 1,089.09 1,381.90 1,587.80 1,927.92 2,269.58 2,614.74 2,967.36 3,327.44 3,706.77 4,112.88 4,547.83 5,013.18
Beginning IC 1,026.83 4,268.58 4,611.01 4,942.74 5,395.12 5,559.92 5,910.04 6,230.09 6,496.90 6,714.06 6,899.18 7,076.70 7,224.22 7,343.77
ROIC 36.22% 18.81% 23.62% 27.96% 29.43% 34.68% 38.40% 41.97% 45.67% 49.56% 53.73% 58.12% 62.95% 68.26%

Economic Profit (EP):

Beginning IC 1,026.83 4,268.58 4,611.01 4,942.74 5,395.12 5,559.92 5,910.04 6,230.09 6,496.90 6,714.06 6,899.18 7,076.70 7,224.22 7,343.77
x (ROIC - WACC) 27.21% 9.80% 14.61% 18.95% 20.42% 25.67% 29.39% 32.96% 36.67% 40.55% 44.72% 49.11% 53.95% 59.26%
EP 279.45 418.28 673.75 936.68 1,101.84 1,427.11 1,737.23 2,053.57 2,382.15 2,722.67 3,085.33 3,475.44 3,897.11 4,351.69
Chipotle Mexican Grill
Weighted Average Cost of Capital (WACC) Estimation

Cost of Equity: ASSUMPTIONS:

Risk-Free Rate 4.50% 10 year Treasury Bond
Beta 1.09 2 year weekly average
Equity Risk Premium 4.33% Damodoran March 1st
Cost of Equity 9.22%

Cost of Debt:
Risk-Free Rate 4.50% 10 year Treasury Bond
Implied Default Premium 1.08%
Pre-Tax Cost of Debt 5.58% Bloomberg from peer S
Marginal Tax Rate 23%
After-Tax Cost of Debt 4.30%

Market Value of Common Equity: MV Weights

Total Shares Outstanding 27.43
Current Stock Price $2,957.60
MV of Equity 81,115.14 95.77%

Market Value of Debt:

PV of Operating Leases 3,578.55
MV of Total Debt 3,578.55 4.23%

Market Value of the Firm 84,693.69 100.00%

Estimated WACC 9.01%

Chipotle Mexican Grill
Discounted Cash Flow (DCF) and Economic Profit (EP) Valuation Models

Key Inputs:
CV Growth of NOPLAT 5.75%
CV Year ROIC 68.26%
WACC 9.01%
Cost of Equity 9.22%

Fiscal Years Ending Dec. 31 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E

DCF Model:
Free Cash Flow (FCF) 1423.0 1577.8 1949.5 2347.9 2750.2 3142.3 3529.2 3965.4 4428.3 4920.8
Continuing Value (CV) 140,933.33
PV of FCF 1305.4 1327.8 1505.1 1662.9 1786.8 1872.9 1929.7 1989.0 2037.6 64849.4

Value of Operating Assets: 80266.7

Non-Operating Adjustments
+ Excess Cash 387.9
+Investments-Available for Sale 734.8
+Long-term investments 564.5
+Restricted Cash 25.6
+Other Assets 63.1
-PV of Operating Leases 3578.5
-PV of Employee Stock Options 777.9
Value of Equity 77686.1
Shares Outstanding 27.4
Intrinsic Value of Last FYE $ 2,832.57
Implied Price as of Today $ 2,903.72

EP Model:
Economic Profit (EP) 1101.8 1427.1 1737.2 2053.6 2382.2 2722.7 3085.3 3475.4 3897.1 4351.7
Continuing Value (CV) 133589.6
PV of EP 1010.8 1201.0 1341.2 1454.4 1547.7 1622.8 1687.0 1743.2 1793.2 61470.2

Total PV of EP 74871.5
Invested Capital (last FYE) 5395.1
Value of Operating Assets: 80266.7
Non-Operating Adjustments
+ Excess Cash 387.9
+Investments-Available for Sale 734.8
+Long-term investments 564.5
+Restricted Cash 25.6
+Other Assets 63.1
-PV of Operating Leases 3578.5
-PV of Employee Stock Options 777.9
Value of Equity 77686.1
Shares Outstanding 27.4
Intrinsic Value of Last FYE $ 2,832.57
Implied Price as of Today $ 2,903.72
Chipotle Mexican Grill
Dividend Discount Model (DDM) or Fundamental P/E Valuation Model

Fiscal Years Ending 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E

EPS $ 52.62 $ 65.45 $ 78.47 $ 92.00 $ 106.36 $ 121.48 $ 137.68 $ 155.33 $ 174.51 $ 195.33

Key Assumptions
CV growth of EPS 6.50%
CV Year ROE 16.97%
Cost of Equity 9.22%

Future Cash Flows

P/E Multiple (CV Year) 22.72
EPS (CV Year) $ 195.33
Future Stock Price $ 4,437.91
Dividends Per Share - - - - - - - - -
Discounted Cash Flows $ 2,007.36

Intrinsic Value as of Last FYE $ 2,007.36

Implied Price as of Today $ 2,057.78
Chipotle Mexican Grill
Relative Valuation Models

EPS EPS Est. 5yr

Ticker Company Price 2024E 2025E P/E 24 P/E 25 EPS gr. PEG 24 PEG 25 Revenue Multiple EBIT Multiple
YUM Yum! Brands $138.65 $5.81 $6.56 23.86 21.14 14.0 1.71 1.51 6.90 20.60
SBUX Starbucks $91.39 $4.05 $4.71 22.57 19.40 14.6 1.55 1.33 3.50 21.70
DPZ Domino's Pizza $496.88 $15.79 $17.85 31.47 27.84 11.0 2.87 2.54 4.30 23.70
MCD McDonald's $281.95 $12.43 $13.55 22.68 20.81 9.8 2.32 2.13 10.40 22.30
QSR Restaurant Brands Int. $107.57 $4.62 $5.27 23.28 20.41 8.6 2.71 2.38 7.10 22.60
WEN Wendy's Company $18.85 $0.99 $1.10 19.04 17.14 9.7 1.97 1.77 3.50 19.80
PZZA Pappa John's Int. $63.22 $2.64 $3.14 23.95 20.13 9.5 2.51 2.11 1.60 22.10
DRI Darden Restaurants $155.90 $8.66 $9.60 18.00 16.24 12.7 1.42 1.28 2.40 20.80
WING Wingstop, Inc. $360.05 $2.99 $3.67 120.42 98.11 18.5 6.51 5.30 18.00 73.40
75th Percentile 23.95 21.14 2.71 2.38 6.41 27.44

CMG Chipotle Mexican Grill $2,957.60 $52.69 $65.39 56.1 45.2 19.0 3.0 2.4 6.7 41.9
Sales (2023) EBIT (2023)
9,871.65 1,557.81
Implied Relative Value:
P/E (EPS24) $ 1,261.67
P/E (EPS25) $ 1,382.15
PEG (EPS24) $ 2,707.69
PEG (EPS25) $ 2,946.27
Revenue Multiple (2023) $ 2,296.80
EBIT Multiple (2023) $ 1,551.56
Chipotle Mexican Grill
Key Management Ratios

Fiscal Years Ending Dec. 31 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024E 2025E 2026E 2027E 2028E 2029E 2030E 2031E 2032E 2033E

Liquidity Ratios:
Current Ratio (CA/CL) 3.58 2.91 1.85 1.94 1.81 1.61 1.73 1.58 1.28 1.57 2.13 2.80 3.58 4.34 5.01 5.67 6.40 7.13 7.86 8.60
Cash Ratio (Cash/CL) 1.71 0.89 0.31 0.57 0.56 0.72 0.74 0.93 0.42 0.54 1.27 2.00 2.81 3.60 4.30 4.98 5.73 6.48 7.22 7.97
SG&A to Sales (SGA/Sales) 0.79 0.79 0.94 0.90 0.89 0.88 0.90 0.85 0.83 0.80 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82 0.82

Asset-Management Ratios:
Inventory Turnover Ratio (Revenue/Inventory) 267.95 299.22 259.96 225.40 225.70 214.07 226.30 229.91 242.08 251.13 231.99 235.94 237.15 237.59 235.58 231.99 231.99 231.99 231.99 231.99
Total Asset Turnover (Sales/Total Assets) 1.61 1.65 1.93 2.19 2.15 1.09 1.00 1.13 1.25 1.23 1.28 1.25 1.22 1.17 1.12 1.06 1.01 0.97 0.92 0.89
Days Sales Inventory (365/Inv Turnover Ratio) 1.36 1.22 1.40 1.62 1.62 1.71 1.61 1.59 1.51 1.45 1.57 1.55 1.54 1.54 1.55 1.57 1.57 1.57 1.57 1.57
Accounts Recievable Turnover Ratio (Revenue/AR) 114.00 114.07 95.91 110.66 78.07 69.36 57.27 75.77 80.79 85.44 72.30 72.92 76.99 76.25 74.59 72.30 72.30 72.30 72.30 72.30
Average Collection Period (365/Receivable Turnover Ratio) 3.20 3.20 3.81 3.30 4.68 5.26 6.37 4.82 4.52 4.27 5.05 5.01 4.74 4.79 4.89 5.05 5.05 5.05 5.05 5.05

Financial Leverage Ratios:

Debt-to-Equity Ratio (Debt/Equity) 0.27 0.41 0.44 0.50 0.57 2.03 1.96 1.90 1.93 1.63 1.34 1.09 0.89 0.75 0.64 0.56 0.49 0.43 0.38 0.34
Debt-to-Asset Ratio (Debt/Assets) 0.21 0.29 0.31 0.33 0.36 0.67 0.66 0.65 0.66 0.62 0.57 0.52 0.47 0.43 0.39 0.36 0.33 0.30 0.28 0.25
Equity Ratio (Equity/Assets) 0.79 0.71 0.69 0.67 0.64 0.33 0.34 0.35 0.34 0.38 0.43 0.48 0.53 0.57 0.61 0.64 0.67 0.70 0.72 0.75

Profitability Ratios:
Return on Equity (NI/Equity) 22.18% 24.65% 1.69% 12.95% 12.31% 20.81% 17.61% 28.42% 37.97% 40.13% 34.74% 31.98% 28.97% 26.25% 24.03% 22.15% 20.52% 19.15% 17.98% 16.97%
Gross Margin (NI/Sales) 17.30% 16.96% 0.89% 6.05% 5.31% 7.95% 4.85% 10.67% 13.44% 15.78% 14.82% 15.43% 15.68% 15.88% 16.06% 16.21% 16.34% 16.47% 16.59% 16.69%
Return on Assets (NI/Assets) 17.53% 17.46% 1.17% 8.64% 7.83% 6.86% 5.95% 9.81% 12.98% 15.27% 14.83% 15.29% 15.30% 15.02% 14.65% 14.22% 13.81% 13.41% 13.03% 12.67%

Payout Policy Ratios:

Repurchase Ratio 167.77% 259.44% 8636.28% 1264.24% 1409.28% 761.98% 787.62% 513.96% 476.26% 402.42% 374.02% 327.22% 295.02% 270.39% 250.57% 234.31% 219.94% 206.68% 194.40% 183.02%
Chipotle Mexican Grill
Sensitivity Tables

Risk-Free Rate Other Operating Costs as a % of Sales

2,903.72 3.90% 4.10% 4.30% 4.50% 4.70% 4.90% 5.10% 2,903.72 13.68% 14.18% 14.68% 15.18% 15.68% 16.18% 16.68%
0.79 6,886.74 6,047.71 5,385.25 4,848.98 4,405.99 4,033.93 3,717.04 4.03% 3,242.68 3,241.06 3,239.45 3,237.84 3,236.23 3,234.62 3,233.00

Equity Risk Premium

0.89 5,289.43 4,770.47 4,340.51 3,978.49 3,669.51 3,402.73 3,170.06 4.13% 3,123.65 3,122.04 3,120.43 3,118.82 3,117.21 3,115.60 3,113.99
0.99 4,276.87 3,924.50 3,623.14 3,362.47 3,134.80 2,934.23 2,756.22 4.23% 3,012.53 3,010.92 3,009.31 3,007.70 3,006.09 3,004.48 3,002.87
Beta

1.09 3,577.87 3,323.12 3,100.28 2,903.72 2,729.06 2,572.84 2,432.30 4.33% 2,908.55 2,906.94 2,905.33 2,903.72 2,902.11 2,900.50 2,898.89
1.19 3,066.48 2,873.80 2,702.40 2,548.94 2,410.75 2,285.68 2,171.93 4.43% 2,811.04 2,809.43 2,807.82 2,806.22 2,804.61 2,803.00 2,801.39
1.29 2,676.23 2,525.46 2,389.57 2,266.47 2,154.45 2,052.07 1,958.16 4.53% 2,719.43 2,717.82 2,716.21 2,714.60 2,713.00 2,711.39 2,709.78
1.39 2,368.74 2,247.58 2,137.23 2,036.33 1,943.70 1,858.39 1,779.55 4.63% 2,633.19 2,631.58 2,629.98 2,628.37 2,626.76 2,625.15 2,623.55

WACC Maginal Tax Rate

2,903.72 8.41% 8.61% 8.81% 9.01% 9.21% 9.41% 9.61% 2,903.72 17% 19% 21% 23% 25% 27% 29%
4.0% 2,432.67 2,312.30 2,202.07 2,100.76 2,007.35 1,920.95 1,840.81 4.08% 2,875.14 2,884.60 2,894.09 2,903.59 2,913.12 2,922.67 2,932.25

Pre Tax Cost of Debt

CV Growth Rate of

4.5% 2,663.33 2,518.07 2,386.41 2,266.56 2,157.00 2,056.47 1,963.91 4.58% 2,875.36 2,884.76 2,894.18 2,903.63 2,913.11 2,922.61 2,932.14
5.0% 2,961.70 2,780.87 2,619.17 2,473.72 2,342.21 2,222.74 2,113.74 5.08% 2,875.58 2,884.92 2,894.28 2,903.67 2,913.10 2,922.54 2,932.02
NOPLAT

5.8% 3,619.75 3,347.53 3,111.05 2,903.72 2,720.48 2,557.39 2,411.30 5.58% 2,875.80 2,885.08 2,894.38 2,903.72 2,913.09 2,922.48 2,931.91
6.0% 3,930.21 3,608.85 3,333.41 3,094.71 2,885.88 2,701.67 2,537.98 6.08% 2,876.02 2,885.24 2,894.48 2,903.76 2,913.08 2,922.42 2,931.81
6.5% 4,795.27 4,317.50 3,922.67 3,590.94 3,308.32 3,064.68 2,852.49 6.58% 2,876.24 2,885.39 2,894.58 2,903.81 2,913.07 2,922.37 2,931.70
7.0% 6,274.94 5,466.98 4,837.94 4,334.36 3,922.12 3,578.47 3,287.62 7.08% 2,876.46 2,885.55 2,894.69 2,903.86 2,913.07 2,922.31 2,931.60

Labor Cost as a % of Sales

2,903.72 23.70% 24.20% 24.70% 25.20% 25.70% 26.20% 26.70%
28.58% 3,450.95 3,359.74 3,268.54 3,177.33 3,086.13 2,994.92 2,903.72
FBP costs as a % of

29.08% 3,359.74 3,268.54 3,177.33 3,086.13 2,994.92 2,903.72 2,812.51

29.58% 3,268.54 3,177.33 3,086.13 2,994.92 2,903.72 2,812.51 2,721.31
sales

30.08% 3,177.33 3,086.13 2,994.92 2,903.72 2,812.51 2,721.31 2,630.10

30.58% 3,086.13 2,994.92 2,903.72 2,812.51 2,721.31 2,630.10 2,538.90
31.08% 2,994.92 2,903.72 2,812.51 2,721.31 2,630.10 2,538.90 2,447.69
31.58% 2,903.72 2,812.51 2,721.31 2,630.10 2,538.90 2,447.69 2,356.49
Chipotle Mexican Grill
Valuation of Options Granted under ESOP

Current Stock Price $2,957.60

Risk Free Rate 4.50%
Current Dividend Yield 0.00%
Annualized St. Dev. of Stock Returns 21.92%

Average Average B-S Value

Range of Number Exercise Remaining Option of Options
Outstanding Options of Shares Price Life (yrs) Price Granted
Stock Options 0.4 $ 1,302.60 4.40 $ 1,892.74 $ 777.92
Total 0 $ 1,302.60 4.40 $ 1,892.74 $ 777.92