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Chipotle reports improved 3Q sales, margin

Increased traffic and improved margins drove 3Q increase

Chipotle Mexican Grill Inc. cited traffic-driven sales growth and improved restaurant-level margins for its third quarter profit jump of 40 percent.

For the quarter ended Sept. 30, the Denver-based company earned $48.2 million, or $1.52 per share, compared with $34.5 million, or $1.08 per share, in the same quarter a year ago.

Chipotle, which ended the quarter with 1,023 restaurants, said revenue rose 23 percent to $476.9 million. That growth, it said, was driven by a 11.4-percent rise in same-store sales, as well as sales from the 112 units the chain opened since the end of the third quarter in 2009.

The company noted that same-store sales growth was “primarily driven by increased traffic in the quarter."

Revising slightly upward earlier 2010 guidance of same-store sales growth in the mid- to high-single digit range, the company said it now expected no less than a “high single-digit” growth in that metric.

A 220 basis points, or 2.2 percent, improvement in restaurant-level margins during the quarter resulted mainly from the leveraging effect of higher same-store sales, Chipotle also said.

The company opened 22 restaurants during the quarter, for a total of 67 so far this year. That means the chain will need to open nearly as many restaurants in the fourth quarter as it has brought on line in the first three, if management is to deliver on its continued guidance that the company will open between 120 and 130 new restaurants in 2010.

For the nine months ended Sept. 30, Chipotle said net income increased 39 percent to $132.5 million, or $4.18 per share, versus $95.2 million, or $2.96 a share, for the first three quarters of 2009. Revenue for the nine months climbed 19.7 percent, to $1.35 billion, as a result of additional sales from new restaurants and same-store sales growth of 8.3 percent.

Offering 2011 guidance, Chipotle management said the company plans to open between 135 and 145 new restaurants and achieve “low single-digit” same-store sales growth.

Contact Alan J. Liddle at [email protected].

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