Must-know: Why Chipotle’s restaurants are performing well

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Must-know: Chipotle Mexican Grill quarterly overview 2Q14 (Part 11 of 14)

(Continued from Part 10)

Sales per new restaurant

The Chipotle Mexican Grill’s (CMG) new restaurant opening sales volume has been in the range of $1.6 million to $1.7 million. But the company now expects this sales volume for new restaurants to be in the range of $1.7 million to $1.8 million.

 

The overall operating profit margins for the second quarter was 17.1% as shown in the chart above. The operating margins at the restaurant level for the quarter were 27.3%, which decreased by 30 basis points year-over-year. On a year-to-date basis, the operating margins were 26.7%, which also decreased by 30 basis points over the same period.

Panera Bread (PNRA) reported an operating margin of 11.7%, and Potbelly (PBPB) reported an operating margin of 4.1%.

Restaurateur diagnostic tool

An improvement in the throughput, which was at record levels during the quarter, resulted in higher average transactions during peak hour. The company also credits the “restaurateur diagnostic tool” for the improved performance. This tool helped the field managers understand the company’s needs and also helped to develop top performing team, according to Co-CEO M. Moran.

Marketing

The company creates customer awareness through various forms of media such as radio and billboards. The company stated that it also markets locally to get people into restaurants through fundraisers. Many restaurant chains have a marketing budget, helping them generate sales, but it needs to be balanced so that it helps the top line without ruining the bottom line.

Investors who would like to gain exposure to the entire restaurant industry can invest in ETFs like the Consumer Discretionary Select Sector SPDR Fund (XLY) and the PowerShares Dynamic Food & Beverage ETF (PBJ).

Continue to Part 12

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