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Why Chipotle Mexican Grill’s same-store sales are important

Amit Jhaveri

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

(Continued from Part 1)

Same-store sales

Chipotle Mexican Grill (CMG) reported a same-store sales growth of 17.3%. Same-store sales are one of the important drivers of the restaurant industry. It measures the percentage change in revenues generated by existing restaurant locations over the similar period a year ago.

Chipotle Mexican Grill’s same-store sales increase contributed towards the revenue growth of $1.05 billion, which grew by 28.6%, from $0.82 billion as of the second quarter that ended June 30, 2013.

Along with an increase in same-store sales, the new unit count also helped with revenue growth. Chipotle Mexican Grill opened 45 new restaurants in the second quarter of 2014. Its competitor, Panera Bread (PNRA) opened a total of 110 new restaurants, of which 56 were new company-operated restaurants.

On a year-to-date basis, the sales for Chipotle Mexican Grill increased by 26.6% to $1.95 billion, compared to $1.55 billion in the previous year.

Chipotle Mexican Grill business model

Unlike other restaurant chains such as McDonald’s, Panera Bread, and Noodles & Company (NDLS), Chipotle Mexican Grill does not franchise its restaurants. All locations are company-operated, giving management full control over the restaurants. Read here to learn more about the pros and cons of a company-operated restaurant model.

The restaurant industry forms a part of the consumer discretionary group. As the name suggests, when the consumer has  more discretionary income, he or she will spend more at restaurants and vice versa. An investor can invest in consumer discretionary ETFs such as the Consumer Discretionary Select Sector SPDR Fund (XLY) and the PowerShares Dynamic Food & Beverage ETF (PBJ).

Continue to Part 3

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