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Chipotle Shares Sizzle after Firm Posts Record Profitability in Q2

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Chipotle Mexican Grill shares traded 12.5% higher, setting a new 52-week high price, after the company reported that in Q2/21 comparable restaurant sales grew by 31.2% aided by a 10.5% increase in digital sales as more customers ordered ahead for convenience and utilized "Chipotlanes" in greater numbers.

After U.S. markets closed for trading yesterday afternoon, fast casual restaurant company Chipotle Mexican Grill Inc. (CMG:NYSE) announced financial results for the second quarter of 2021 ended June 30, 2021.

Chipotle Mexican Grill reported that in Q2/21 revenue increased by 38.7% to $1.893 billion, compared to $1.365 billion in Q2/20. The company stated that over the same period, comparable restaurant sales increased 31.2% and that digital sales, which totaled $916.5 million, accounted for 48.5% of sales and grew by 10.5%. The company pointed out that a little over half of the digital sales were from order ahead transactions.

In addition, the firm indicated that operating margin in Q2/21 increased to 13.0%, versus -0.40% in Q2/20. The company noted that at the restaurant level operating margin was 24.5%.

Chipotle posted net income of $188.0 million in Q2/21, compared to $8.2 million in Q2/20. The firm advised that in Q2/21 diluted earnings per share were $6.60, which represents a 2,175.9% increase from the $0.29 per share recorded in Q2/20.

The company noted that during Q2/21 it opened 55 new restaurants, relocated one restaurant to a new location and closed five others. The firm listed that it had a total of 2,853 restaurants as of June 30, 2021.

The company's Chairman and CEO Brian Niccol commented, "Chipotle's second quarter results highlight the strength of our brand and our people, as we demonstrated growing momentum in the business…We remain confident in our key growth strategies and believe they will help us achieve our next goal of $3 million average unit volumes with industry leading returns on invested capital that improve as we continue to add Chipotlanes. Strong restaurant level economics combined with significant restaurant growth should allow us to optimize earnings power for many years to come."

Chipotle stated it holds around $1.2 billion in cash, investments and restricted cash on its balance sheet and that it has no outstanding debt, but if needed it has access to an untapped $500 million credit line.

The company said that though some operating and financial uncertainty remains for Q3/21 due to the lingering effects of COVID-19 and the rate of economic recovery, if current trends continue, it anticipates that in Q3/21 comparable restaurant sales will increase in the low to mid double-digits range. The company added that it expects to open approximately 200 new restaurants in Q3/21.

Chipotle Mexican Grill is headquartered in Newport Beach, Calif., and owns and operates more than 2,850 restaurants in the U.S, Canada, France, Germany and the U.K. The firm cited that it is the only restaurant company of its stature that owns and operates all its restaurants rather than employing a franchising model. The company stated that it prides itself on "serving responsibly sourced, classically-cooked, real food with wholesome ingredients without artificial colors, flavors or preservatives."

Chipotle started the day with a market capitalization of around $44.3 billion with approximately 28.15 million shares outstanding and a short interest of about 2.8%. CMG shares opened more than 5% higher today at $1,656.845 (+$82.495, +5.2%) over yesterday's $1,574.35 closing price and reached a new 52-week high price this morning of $1,778.29. The stock has traded today between $1,656.85 and $1,778.29 per share and is currently trading at $1,773.63 (+$199.28, +12.66%).


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