Chipotle 2008 Annual Report Download - page 30

Download and view the complete annual report

Please find page 30 of the 2008 Chipotle annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 110

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110

sales growth was driven by menu price increases and in 2007 was due primarily to an increase in the number of
transactions and menu price increases in certain markets in conjunction with the introduction of naturally raised
beef or chicken.
Food, Beverage and Packaging Costs
For the years ended
December 31,
%
increase
2008 over
2007
%
increase
2007 over
20062008 2007 2006
Food, beverage and packaging ............. $431.9 $346.4 $258.0 24.7% 34.3%
As a percentage of revenue ................ 32.4% 31.9% 31.4%
Food, beverage and packaging costs increased as a percentage of revenue in 2008 due to increased product
cost, primarily cheese, chicken and avocados, partially offset by menu price increases in selected markets. We
saw significantly higher costs for many of our raw ingredients in 2008.
In 2007, food costs increased as a percentage of revenue due primarily to increased product costs, primarily
avocados, chicken and steak, partially offset by menu price increases in selected markets in conjunction with the
introduction of naturally raised beef or chicken, and improvements in food controls.
Labor Costs
For the years ended
December 31,
%
increase
2008 over
2007
%
increase
2007 over
20062008 2007 2006
(dollars in millions)
Labor costs ............................ $351.0 $289.4 $231.1 21.3% 25.2%
As a percentage of revenue ................ 26.4% 26.7% 28.1%
Labor costs decreased as a percentage of revenue in 2008 primarily due to the impact of menu price
increases partially offset by increased average wage rates and labor inefficiencies associated with the new
restaurant openings.
In 2007, labor costs as a percentage of revenue decreased due to more effective management of staffing,
improved efficiency as restaurant sales increased faster than the need to add labor and lower insurance claims
benefiting us as we became self-insured in the fourth quarter of 2006. The decrease was partially offset by an
increase in average wage rates.
Occupancy Costs
For the years ended
December 31,
%
increase
2008 over
2007
%
increase
2007 over
20062008 2007 2006
(dollars in millions)
Occupancy costs ........................... $98.1 $75.9 $58.8 29.2% 29.1%
As a percentage of revenue ................... 7.4% 7.0% 7.1%
Occupancy costs increased as a percentage of revenue in 2008 primarily due to higher average rents for new
locations primarily due to our opening proportionately more restaurants in expensive urban areas in 2008 and a
one-time $2.6 million non-cash correction of our historical straight-line rent expense. The increase was partially
offset by higher average restaurant sales on a partially fixed cost base.
28
Annual Report