Exhibit 99.1



Chipotle ANNOUNCES third QUARTER 2018 RESULTS

EPS NEARLY DOUBLES, AS sales comp accelerateS, and

RESTAURANT marginS EXPAND TO  18.7% Versus Q3-2017



NEWPORT BEACH, Calf. – October 25, 2018 – Chipotle Mexican Grill, Inc. (NYSE: CMG) today reported financial results for its third quarter ended September 30, 2018.

Overview for the three months ended September 30, 2018 as compared to the three months ended September 30, 2017:

Overview for the nine months ended September 30, 2018 as compared to the nine months ended September 30, 2017:

1 Adjusted net income and adjusted diluted earnings per share are non-GAAP financial measures. Reconciliations to GAAP measures and further information are set forth in the table at the end of this press release.

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“Chipotle’s strategy to win today and cultivate a better future is taking hold and I’m pleased to report our third quarter results with strong sales growth and restaurant margin expansion over last year,” said Brian Niccol, chief executive officer. “We made important progress during the quarter with the introduction of our ‘For Real’ marketing strategy and I’m encouraged by the progress we are making in building a pipeline of customer focused innovation, driving digital sales, elevating our restaurant operations and effectively executing our reorganization.”

Results for the three months ended September 30, 2018

Revenue for the quarter was $1.2 billion, an increase of 8.6% from the third quarter of 2017. The increase in revenue was driven by new restaurant openings and a 4.4% increase in comparable restaurant sales. Comparable restaurant sales improved primarily as a result of an increase in average check, including a 3.8% effective menu price increase, partially offset by 1.1% fewer comparable restaurant transactions.

We opened 28 new restaurants during the quarter and closed or relocated 32,  bringing the total restaurant count to 2,463.

Food, beverage and packaging costs were 33.4% of revenue, a decrease of 160 basis points compared to the third quarter of 2017. The decrease was primarily due to the benefit of menu price increases taken in almost all restaurants within the last 12 months and relief in avocado prices, partially offset by elevated prices of beef, paper and packaging items.

Restaurant level operating margin was 18.7% in the quarter, an improvement from 16.1% in the third quarter of 2017.  The improvement was driven primarily by comparable restaurant sales increases and lower marketing and promotional cost, partially offset by increased repairs and maintenance.

General and administrative expenses were 8.9% of revenue for the third quarter of 2018, an increase of 10 basis points over the third quarter of 2017. In dollar terms, general and administrative expenses increased compared to the third quarter of 2017 due to $15.8 million in expense related to corporate restructuring, including stock compensation modification expense, severance, relocation, and outside services helping us through the transition, $10.6 million in expense associated with the biennial All Managers’ Conference that was held in September 2018, $7.2 million related to increased headcount and higher bonus expense, and $4.4 million in outside service expense related to company initiatives to support restaurant growth, including digitizing our restaurant experience and operational leadership changes. These increases were partially offset by the benefit of comparing against a nonrecurring charge of $30.0 million recorded in the third quarter of 2017 related to the data security incident that occurred in the first six months of 2017.  

The effective tax rate was 36.8% in the third quarter of 2018, compared to 39% in the third quarter of 2017.  The decrease was primarily due to the impact of the 2017 Tax Cuts and Jobs Act (the “TCJA”), which lowered the U.S. corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017.  This was partially offset by an increase in the effective state tax rate resulting from state tax deductions at the lower federal tax rate and certain non-deductible items that were added or expanded by the TCJA,  including impacts of executive stock-based compensation and non-deductible meals.  The tax rate was further impacted during the three months ended September 30, 2018 due to a one-time tax expense on expired vested options, offset by favorable federal tax credits.

Net income for the third quarter of 2018 was $38.2 million, or $1.36 per diluted share, compared to net income of $19.6 million, or $0.69 per diluted share, in the third quarter of 2017. Excluding the impact of restaurant asset impairment, corporate restructuring, and certain other costs, adjusted net income was $60.7 million and adjusted diluted earnings per share was $2.16.

Results for the nine months ended September 30, 2018

Revenue for the first nine months of 2018 was $3.6 billion, up 8.1% from the first nine months of 2017. The increase in revenue was driven by new restaurant openings and a 3.3% increase in comparable restaurant sales, which includes 20 basis points of deferred revenue. Comparable restaurant sales improved primarily as a result of an increase in average check, including a 4.3% benefit from menu price increases that have been implemented in all our restaurants, partially offset by 2.1% fewer comparable restaurant transactions.

We opened 97 new restaurants during the year and closed or relocated 42 (including the closure of five Pizzeria Locale restaurants), bringing the total restaurant count to 2,463.

Food beverage and packaging costs were 32.8% of revenue, a decrease of 150 basis points compared to the first nine months of 2017. The decrease was driven by the benefit of the menu price increases and relief in avocado prices, partially offset by elevated beef prices during the first nine months of 2018 compared to the first nine months of 2017.

Restaurant level operating margin was 19.3% for the nine months ended September 30, 2018, an improvement from 17.6% in the

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first nine months of 2017. The improvement was driven by comparable restaurant sales increases, combined with lower marketing and promotional expenses, partially offset by wage inflation at the crew level.

General and administrative expenses were 7.5% of revenue for the first nine months of 2018, an increase of  40 basis points over the first nine months of 2017. In dollar terms, general and administrative expenses increased compared to the first nine months of 2017 due to $21.8 million related to increased headcount and higher bonus expense combined with $13.3 million in expense related to corporate restructuring, $12.0 million in expense associated with the biennial All Managers’ Conference that was held in September 2018, $9.3 million in outside service expense related to company initiatives to support restaurant growth, including digitizing our restaurant experience and operational leadership changes, and increased litigation expense of $4.6 million. These increases were partially offset by the benefit of comparing against the non-recurring charge of $30.0 million recorded in the third quarter of 2017 related to the data security incident.

Impairment, closure costs, and asset disposals increased  $46.6 million compared to the first nine months of 2017 primarily due to the planned closures of underperforming restaurants and the write down of a large portion of the associated long-lived asset values, as well as lease termination costs and impairment related to office closures.

The effective tax rate was 35.8% in the third quarter of 2018, compared to 38.2% in the third quarter of 2017.  The decrease was primarily due to the impact of the TCJA, which lowered the U.S. corporate income tax rate from 35% to 21% for tax years beginning after December 31, 2017.  This was partially offset by an increase in the effective state tax rate resulting from state tax deductions at the lower federal tax rate and certain non-deductible items that were added or expanded by the TCJA, including impacts of executive stock-based compensation and non-deductible meals.  The tax rate was further impacted during the nine months ended September 30, 2018 due to a one-time tax expense on expired vested options, offset by favorable federal tax credits.

Net income for the first nine months of 2018 was $144.5 million, or $5.17 per diluted share, compared to net income of $132.5 million, or $4.62 per diluted share, for the nine months ended September 30, 2017. Excluding the impact of restaurant asset impairment, corporate restructuring, and certain other costs, adjusted net income was  $205.4 million and adjusted diluted earnings per share was  $7.34.

Outlook

For 2018, management is anticipating the following:

For 2019, management is anticipating the following:

Definitions

The following definitions apply to these terms as used throughout this release:

Comparable restaurant sales, or sales comps, and comparable restaurant transactions,  represent the change in period-over-period sales or transactions for restaurants in operation for at least 13 full calendar months.

Average restaurant sales refers to the average trailing 12-month sales for restaurants in operation for at least 12 full calendar months.

Restaurant level operating margin represents total revenue less restaurant operating costs, expressed as a percent of total revenue.

Conference Call

Chipotle will host a conference call to discuss the third quarter 2018 financial results on Thursday, October  25, 2018 at 4:30 PM Eastern time. 

The conference call can be accessed live over the phone by dialing 1-888-317-6003 or for international callers by dialing 1-412-317-6061. The call will be webcast live from the company's website on the investor relations page at ir.chipotle.com/events. An archived webcast will be available approximately one hour after the end of the call.

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About Chipotle

Chipotle Mexican Grill, Inc. (NYSE: CMG) is cultivating a better world by serving responsibly sourced, classically-cooked, real food with wholesome ingredients without added colors, flavors or other additives. Chipotle had more than 2,450 restaurants as of September 30, 2018 in the United States, Canada, the United Kingdom, France and Germany and is the only restaurant company of its size that owns and operates all its restaurants. With more than 70,000 employees passionate about providing a great guest experience, Chipotle is a longtime leader and innovator in the food industry. Chipotle is committed to making its food more accessible to everyone while continuing to be a brand with a demonstrated purpose as it leads the way in digital, technology and sustainable business practices. Steve Ells, founder and executive chairman, first opened Chipotle starting with a single restaurant in Denver, Colorado in 1993. For more information or to place an order online, visit WWW.CHIPOTLE.COM.

Forward-Looking Statements

Certain statements in this press release, including statements under the heading “Outlook” of our expected comparable restaurant sales in 2018, as well as our estimated number of new restaurant openings in 2018 and 2019, are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We use words such as “anticipate”, “believe”, “could”, “should”, “estimate”, “expect”, “intend”, “may”, “predict”, “project”, “target”, and similar terms and phrases, including references to assumptions, to identify forward-looking statements. The forward-looking statements in this press release are based on information available to us as of the date any such statements are made and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, the following: the uncertainty of our ability to achieve expected levels of comparable restaurant sales due to factors such as changes in consumers’ perceptions of our brand,  including as a result of actual or rumored food-borne illness incidents or other negative publicity, the impact of competition, including from sources outside the restaurant industry, decreased overall consumer spending, or our possible inability to increase menu prices or realize the benefits of menu price increases; the risk of food-borne illnesses and other health concerns about our food or dining out generally; factors that could affect our ability to achieve and manage our planned expansion, such as the availability of a sufficient number of suitable new restaurant sites and the availability of qualified employees; risks related to recently-announced restructuring activities, including increased expenses and substantial turnover in the ranks of our corporate support teams; the performance of new restaurants and their impact on existing restaurant sales; the potential for increased labor costs or difficulty training and retaining qualified employees, including as a result of market pressures, enhanced food safety procedures in our restaurants, or new regulatory requirements; increases in the cost of food ingredients and other key supplies or higher food costs due to changes in supply chain protocols; risks related to our marketing and advertising strategies, which may not be successful and may expose us to liabilities;  supply chain risks; risks relating to our expansion into new markets, including outside the U.S., or non-traditional restaurant sites; the impact of federal, state or local government regulations relating to our employees, our restaurant design, or the sale of food or alcoholic beverages; risks associated with our Food With Integrity philosophy, including supply shortages and potential liabilities from advertising claims and other marketing activities related to Food With Integrity; security risks associated with the acceptance of electronic payment cards or electronic storage and processing of confidential customer or employee information; risks relating to litigation, including possible governmental actions related to food-borne illness incidents, as well as class action litigation regarding employment laws, advertising claims or other matters; risks relating to our insurance coverage and self-insurance; risks regarding our ability to protect our brand and reputation; risks associated with our reliance on certain information technology systems; risks related to our ability to effectively manage our growth; risks associated with our pending leadership change and our dependence on key personnel; and other risk factors described from time to time in our SEC reports, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q, all of which are available on the investor relations page of our website at ir.Chipotle.com.

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 Chipotle Mexican Grill, Inc.

Condensed Consolidated Statement of Income

(unaudited)

(in thousands, except per share data)







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Chipotle Mexican Grill, Inc.

Condensed Consolidated Statement of Income

(unaudited)

(in thousands, except per share data)













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Chipotle Mexican Grill, Inc.

Condensed Consolidated Balance Sheet

(in thousands, except per share data)





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Chipotle Mexican Grill, Inc.

Condensed Consolidated Statement of Cash Flows

(unaudited)

(in thousands)









(1) Balances were adjusted due to the adoption of Financial Accounting Standards Board Accounting Standards Update No. 2016-18, “Statement of Cash Flows (Topic 230): Restricted Cash” as discussed in further detail in Item 1. “Financial Statements,” in our Form 10-Q.

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Chipotle Mexican Grill, Inc.

Supplemental Financial and Other Data

(dollars in thousands)





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Chipotle Mexican Grill, Inc.

Reconciliation of Non-GAAP Financial Measures

(in thousands, except per share amounts)



The following provides a reconciliation of non-GAAP financial measures presented in the text above to the most directly comparable financial measures calculated and presented in accordance with GAAP.



Adjusted net income is net income excluding restaurant asset impairment, corporate restructuring, and certain other costs. Adjusted diluted earnings per share is adjusted net income divided by diluted weighted-average common shares outstanding. We believe that these measures enhance investors’ ability to compare the past financial performance of our underlying business with our current business performance and reflect the performance of our underlying restaurants separate from asset impairment, corporate restructuring and certain other costs at the corporate level. Management uses these non-GAAP measures for similar purposes. Our adjusted net income and adjusted diluted earnings per share measure may not be comparable to other companies’ adjusted income measures.





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