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SEC Filings

CHIPOTLE MEXICAN GRILL INC filed this Form S-1/A on 12/23/2005
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        Net Interest Expense.    The increase in interest expense (net of interest income) was due to higher average borrowings from McDonald's in the first nine months of 2005 than in the comparable 2004 period, as McDonald's did not make any equity contributions in the first nine months of 2005.

        Benefit for Income Taxes.    During the first nine months of 2005, we determined that it was more likely than not that we would realize our deferred tax assets and we reversed our valuation allowance. The benefit from the reduction of the valuation allowance, excluding the allowance on SRLY losses, was partially offset by our current tax expense, which resulted in the realization of a net tax benefit of $10.8 million. The reduction of the valuation allowance for the SRLY losses during the first nine months of 2005 reduced goodwill recorded in conjunction with McDonald's acquisition of us.

    Year Ended December 31, 2004 Compared to Year Ended December 31, 2003

        The table below presents our operating results for the years ended December 31, 2003 and 2004 and the related year-to-year changes:

  Year Ended December 31,

  % Increase/

  (in millions, except percentages)

Restaurant sales   $ 314.0   $ 468.6   $ 154.6   49.2 %
Food, beverage and packaging costs     104.9     154.1     49.2   46.9  
Labor costs     94.0     139.5     45.5   48.4  
Occupancy costs     25.6     36.2     10.6   41.5  
Other operating costs     43.5     64.3     20.8   47.7  
General and administrative expenses     34.2     44.8     10.6   31.1  
Depreciation and amortization.     15.1     21.8     6.7   44.5  
Pre-opening costs     1.6     2.2     0.6   34.4  
Loss on disposal of assets     4.5     1.7     (2.8 ) (62.7 )
Net interest income     0.2         (0.2 ) n/a  

        Restaurant Sales.    Of the $154.6 million year-to-year increase in restaurant sales, $62.8 million resulted from sales by 103 company-operated stores opened in 2004, $50.3 million resulted from additional sales in 2004 by 74 company-operated stores opened in 2003 and $41.5 million was due to comp store sales increases. A substantial majority of the comp store sales growth was due to an increase in the number of transactions. Average store sales for 2004 increased 6.8% to $1,361,000 from $1,274,000 for 2003, driven primarily by comp store sales growth of 13.3% that reflected increasing nationwide awareness of our brand, which also enabled new stores to open with higher average store sales.

        Food, Beverage and Packaging Costs.    Food, beverage and packaging costs increased because we used more ingredients and packaging as a result of comp store sales increases, increasing sales at 74 stores opened in 2003 that were not in operation for 12 full months in the first six months of 2004 and sales at new stores opened in 2004. As a percentage of total revenue, food, beverage and packaging costs decreased to 32.7% in 2004 from 33.3% in 2003. This decrease was largely driven by a menu price increase that was partially offset by higher chicken, beef, cheese and tomato costs.

        Labor Costs.    The year-to-year increase in labor costs was due to the growth in our store base, as our average number of hourly employees increased to about 8,100 in 2004 from about 5,100 in 2003. The effect was particularly significant in 2004, when we opened a large number of stores and experienced the full-year impact of staff hired for stores opened throughout 2003. As a percentage of total revenue, labor costs decreased slightly to 29.6% in 2004 from 29.8% in 2003, largely due to improved employee efficiency resulting from an increase in the number of transactions, which did not require a corresponding increase in staff.


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