Chipotle 2008 Annual Report Download - page 32

Download and view the complete annual report

Please find page 32 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

Depreciation and amortization increased in 2008 and 2007 primarily due to the increase in the number of
restaurants from January 1, 2006 to December 31, 2008.
In 2008, as a percentage of total revenue, depreciation and amortization remained constant due to new store
openings increasing the average per store depreciable base offset by higher average restaurant sales on a partially
fixed cost base. In 2007, as a percentage of revenue depreciation and amortization decreased as a result of higher
average restaurant sales on a partially fixed-cost base.
Pre-opening Costs
For the years ended
December 31,
%
increase
2008 over
2007
%
increase
2007 over
20062008 2007 2006
(dollars in millions)
Pre-opening costs ............................ $11.6 $ 9.6 $6.8 21.3% 41.4%
As a percentage of revenue ..................... 0.9% 0.9% 0.8%
Restaurant openings .......................... 136 125 94
Pre-opening costs increased in 2008 and 2007 primarily due to an increase in rent expense recognized
during the construction period and an increase in the number of restaurants opened. Pre-opening costs include
non-cash straight-line rent expense of $5.9 million, $4.6 million and $2.7 million for 2008, 2007 and 2006,
respectively.
Loss on Disposal of Assets
For the years ended
December 31,
%
increase
2008 over
2007
%
increase
2007 over
20062008 2007 2006
(dollars in millions)
Loss on disposal of assets ....................... $9.3 $6.2 $4.0 51.4% 54.9%
As a percentage of revenue ...................... 0.7% 0.6% 0.5%
Loss on disposal of assets increased in 2008 as a result of an increase in both the age and number of
restaurants and updating older restaurants in certain markets, an increase in write-offs associated with
investigating potential restaurant sites that we considered but subsequently rejected, and an impairment charge
related to a pending closure of a restaurant.
The increase in 2007 in loss on disposal of assets was due to an increase in both the age and number of
restaurants, the upgrade of restaurant security systems and an increase in the write-offs associated with
investigating potential restaurant sites that we considered but subsequently rejected.
Interest Income
For the years ended
December 31,
%
decrease
2008 over
2007
%
decrease
2007 over
20062008 2007 2006
(dollars in millions)
Interest income ................................ $3.5 $6.1 $6.6 (43.3)% (7.0)%
As a percentage of revenue ...................... 0.3% 0.6% 0.8%
In 2008, interest income decreased primarily due to lower yields on our investments. In addition, late in the
third quarter of 2008, we moved our investments into more secure, but lower yielding U.S. Treasury funds. This
30
Annual Report