Chipotle Announces Fourth Quarter and Full Year 2023 Results

NEWPORT BEACH, Calif. — Chipotle Mexican Grill reported financial results for its fourth quarter and fiscal year ended Dec. 31, 2023.

In the fourth quarter, year over year, total revenue increased 15.4% to $2.5 billion. Comparable restaurant sales increased 8.4%; the operating margin was 14.4%, an increase from 13.6%; the restaurant level operating margin was 25.4%, an increase of 140 basis points; and diluted earnings per share was $10.21, a 27.3% increase from $8.02. Adjusted diluted earnings per share, which excluded a $0.15 after-tax impact from expenses related to accelerated depreciation, partially offset by a reduction in contingencies related to certain legal proceedings, was $10.36, a 25.0% increase from $8.29. The company opened 121 new restaurants with 110 locations, including a Chipotlane (which features a mobile pickup drive-thru window).

In 2023, year over year, total revenue increased 14.3% to $9.9 billion. Comparable restaurant sales increased 7.9%; the operating margin was 15.8%, an increase from 13.4%; the restaurant level operating margin was 26.2%, an increase of 230 basis points; and diluted earnings per share was $44.34, a 38.4% increase from $32.04. Adjusted diluted earnings per share, which excluded a $0.52 after-tax impact from expenses related to restaurant and corporate level impairment and closure costs, accelerated depreciation and corporate restructuring, partially offset by a reduction in contingencies related to certain legal proceedings, was $44.86, a 36.9% increase from $32.78. Overall, the company opened 271 new restaurants with 238 locations, including a Chipotlane.

"2023 was an outstanding year where we delivered strong transaction growth driven by throughput and menu innovation, opened a record number of new restaurants, surpassed $3 million in AUVs and formed our first international partnership," said Brian Niccol, chairman and CEO, Chipotle. "I am more confident than ever that we have the right people and the right strategy to achieve our long-term growth goals of reaching 7,000 restaurants in North America, $4 million in AUVs, expanding our industry leading margins and returns and furthering our purpose of cultivating a better world globally."

Total revenue in the fourth quarter was $2.5 billion, an increase of 15.4% compared to the fourth quarter of 2022. The increase in total revenue was driven by an 8.4% increase in comparable restaurant sales attributable to higher transactions of 7.4% and an increase in average check of 1.0%, and to a lesser extent, new restaurant openings. Digital sales represented 36.1% of total food and beverage revenue.

Food, beverage and packaging costs in the fourth quarter were 29.7% of total revenue, an increase of 40 basis points compared to the fourth quarter of 2022. Food costs increased due to a higher mix of beef as well as inflation across the menu, most notably higher costs for beef, produce and queso. These increases were partially offset by the benefit of menu price increases and, to a lesser extent, lower paper costs.

Restaurant level operating margin in the fourth quarter was 25.4%, compared to 24.0% in the fourth quarter of 2022. The improvement was primarily due to the benefit of sales leverage and, to a lesser extent, lower paper costs. These decreases were partially offset by higher inflation across several food costs and, to a lesser extent, wage inflation.

General and administrative expenses for the fourth quarter were $169.2 million on a GAAP basis, or $170.0 million on a non-GAAP basis, excluding a $0.8 million reduction in contingencies related to certain legal proceedings. GAAP and non-GAAP general and administrative expenses for the fourth quarter also include $122 million of underlying general and administrative expenses, $35.7 million of non-cash stock compensation, $10.1 million of higher bonus accruals and payroll taxes on equity vesting and exercises and $2.2 million of other costs, primarily related to the company’s upcoming All Managers Conference scheduled for the first quarter of 2024.

The effective income tax rate for the fourth quarter was 26.2% compared to 26.3% in the fourth quarter of 2022. The slight decrease in the tax rate was primarily due to an increase in tax benefits from option exercises and equity vesting, partially offset by an increase in tax reserves and nondeductible expenses.

Net income for the fourth quarter was $282.1 million, or $10.21 per diluted share, compared to $223.7 million, or $8.02 per diluted share, in the fourth quarter of 2022. Excluding a $0.15 after-tax impact from expenses related to accelerated depreciation, partially offset by a reduction in contingencies related to certain legal proceedings, adjusted net income was $286.2 million and adjusted diluted earnings per share was $10.36.

2024 OUTLOOK. For 2024, Chipotle management said it is anticipating full year comparable restaurant sales growth in the mid-single digit range; 285 to 315 new restaurant openings, which assumes developer, permit, inspection, and utility delays do not worsen; and an estimated underlying effective full year tax rate between 25% and 27% before discrete items.