Chipotle 2012 Annual Report Download - page 34

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Labor costs as a percentage of revenue decreased in 2011 due primarily to the benefit of higher average
restaurant sales, including the impact of menu price increases, partially offset by increased average wage rates, as
well as labor inefficiencies.
Occupancy Costs
For the years ended
December 31
%
increase
2012 over
2011
%
increase
2011 over
20102012 2011 2010
(dollars in millions)
Occupancy costs ................ $ 171.4 $ 147.3 $ 128.9 16.4% 14.2%
As a percentage of revenue ........ 6.3% 6.5% 7.0%
Occupancy costs decreased as a percentage of revenue in 2012 and in 2011 primarily due to the benefit of
higher average restaurant sales on a partially fixed-cost base.
Other Operating Costs
For the years ended
December 31
%
increase
2012 over
2011
%
increase
2011 over
20102012 2011 2010
(dollars in millions)
Other operating costs ............ $ 286.6 $ 251.2 $ 202.9 14.1% 23.8%
As a percentage of revenue ........ 10.5% 11.1% 11.1%
Other operating costs include, among other items, marketing and promotional costs, bank and credit card
fees, and restaurant utilities and maintenance costs. Other operating costs decreased as a percentage of revenue in
2012 due primarily to the benefit of higher average restaurant sales on a partially fixed-cost base and lower
marketing and promotional spend as a percentage of revenue. We expect marketing and promotional spend as a
percentage of revenue to increase in 2013.
Other operating costs remained consistent as a percentage of revenue in 2011. The benefit of higher average
restaurant sales on a partially fixed-cost base and lower marketing and promotional spend as a percentage of
revenue was offset by increased credit card fees resulting from a higher percentage of customers using credit
cards, as well as increased maintenance of restaurants as they age and general inflationary pressures.
General and Administrative Expenses
For the years ended
December 31
%
increase
2012 over
2011
%
increase
2011 over
20102012 2011 2010
(dollars in millions)
General and administrative
expense ..................... $ 183.4 $ 149.4 $ 118.6 22.7% 26.0%
As a percentage of revenue ........ 6.7% 6.6% 6.5%
The increase in general and administrative expenses in dollar terms in 2012 primarily resulted from an
increase in non-cash stock-based compensation expense due to awards granted in 2012 with a higher stock price
on the date of grant and additional expense related to non-vested stock awards subject to performance conditions,
and costs from our biennial All Managers’ Conference which we held during the year.
The increase in general and administrative expenses in dollar terms in 2011 primarily resulted from an
increase in non-cash stock-based compensation expense due to awards granted in 2011 with a significantly higher
stock price on the date of grant as well as hiring more employees as we grew. These increases were partially
offset by costs from the biennial All Managers’ Conference held during the third quarter of 2010.
32
Annual Report