What the company does 💼
Chipotle Mexican Grill (CMG) is a fast-casual restaurant company that primarily earns revenue by owning and operating its own restaurants. In its 2024 Form 10-K, Chipotle describes its brand and operating model around “Food with Integrity” (a focus on ingredient standards and food quality) and a guest experience supported by both in-restaurant service and digital ordering. As of December 31, 2024, Chipotle operated 3,644 U.S. restaurants and 82 international restaurants, plus 3 international licensed restaurants, and it reports results as one reportable segment (meaning the business is reported as one combined operating unit for financial reporting).
Financial Highlights 📊
- Total revenue: $11,314m (up 14.6% year-over-year)
- Comparable restaurant sales: up 7.4% (driven by higher transactions and a higher average check)
- Profitability: operating income $1,916m; net income $1,534m
- Diluted EPS: $1.1 (up from $0.9)
- Cash generation: operating cash flow $2,105m
Beginner note: Comparable restaurant sales measures sales growth at restaurants that have been open long enough to be compared fairly across periods.
Key Risks ⚠️
- Food safety and brand trust: Incidents (or even rumors) could reduce guest traffic and raise costs, especially given the use of fresh ingredients.
- Labor pressure: Hiring, retention, labor law compliance, and wage inflation can affect service levels and restaurant margins.
- Digital and delivery dependency: Technology reliability and third-party delivery performance can impact sales and customer experience.
- Ingredient inflation and supply disruptions: Volatile prices or shortages for key items (such as proteins and avocados) can pressure costs.
- Expansion execution: Rapid new restaurant growth requires strong site selection, buildout execution, and operational consistency.
MD&A (Management Discussion) 🧭
Management highlighted key operating drivers including comparable restaurant sales, restaurant-level cost categories (food, labor, occupancy, and other operating costs as a percentage of revenue), and new restaurant openings. For 2024, management attributed comparable restaurant sales growth to higher transactions and a higher average check, and noted that digital sales represented 35.1% of food and beverage revenue. The company opened 304 restaurants in 2024, including 257 with a Chipotlane (a drive-through pickup lane designed for digital orders), and management expects continued expansion in 2025 with most new locations including Chipotlanes. Management also emphasized liquidity and capital allocation priorities, including funding restaurant growth, maintaining existing locations, and share repurchases supported by cash flow and cash/investment balances.
Takeaway ✅
Chipotle’s 2024 10-K presents a scaled restaurant business focused on growing sales through strong restaurant execution, digital convenience, and new unit expansion. Management reported strong year-over-year growth in revenue and earnings, while highlighting that long-term performance depends on consistently managing food safety, labor conditions, supply costs, technology reliability, and the complexity of expanding thousands of locations.
Key Financial Ratios 📈
| 2024 | 2023 | |
|---|---|---|
| ROE | 45.7% | 45.3% |
| ROA | 17.8% | 16.4% |
| Gross Margin | 70.2% | 70.5% |
| Operating Margin | 16.9% | 15.8% |
| Pre-Tax Margin | 17.8% | 16.4% |
| Net Margin | 13.6% | 12.4% |
| Debt-to-Equity | 151.8% | 162.7% |
| Current Ratio | 1.52x | 1.57x |
| Quick Ratio | 1.34x | 1.37x |
| Fixed Assets / Long-Term Capital | 29.7% | 30.9% |
Beginner note: Margins tell you how much profit a company keeps from each $1 of revenue. Chipotle’s net margin improved in 2024, meaning it kept more profit after all costs and taxes.
📝 Disclaimer
This article is intended for educational purposes only. It does not constitute financial, investment, or legal advice. All investment decisions involve risks, and readers should conduct their own research or consult with a licensed financial advisor.
👉 Chipotle Mexican Grill (CMG) 2024 10-K Analysis (Filed 2025) | Explained for Beginners