Chipotle Expands, Refines

Chipotle, which operates more than 500 restaurants, expects to open new locations at an accelerated pace toward the end of the year to reach its previously stated goal, company officials said during a conference call with financial analysts on Monday. The company has said that it will open between 80 and 90 new locations this year.

Chipotle opened 14 company-owned restaurants during the second quarter, including 12 restaurants in existing markets and two in new markets. The company has opened 29 company-owned restaurants for the first six months of the year, including 24 restaurants in existing markets and five restaurants in two new markets.

Besides opening new stores, the chain is working on new designs to create "stores that will allow us to accommodate a higher customer volume and that are more efficient from an energy standpoint," Chipotle CEO Steve Ells commented during the conference call. Ells noted that Chipotle has been delivering double-digit comparable store sales for eight years.

For the latest quarter, the comp-store sales rose 14.5% on total revenue that grew 31.1% to $204.9 million. Net income for the second quarter of 2006 was $10.8 million, compared to $25.7 million in the second quarter of 2005, but both the total net and the net per share last year reflected a one-time event that boosted income by more than $20 million. Diluted earnings per share were 33 cents as compared to 98 cents in the second quarter of last year, but the 2005 second quarter included that same non-recurring tax benefit, which boosted results by 77 cents per share.

The results reported Monday included an estimate of up to $1.5 million in legal, audit, printing and other fees for the second half of fiscal 2006 associated with McDonald's previously announced plan to dispose of all of its remaining interest in Chipotle through a tax-free exchange offer to its shareholders by the end of October, subject to market conditions. Chipotle said that it will file a prospectus with the Securities and Exchange Commission in connection with the proposed separation of the company from McDonald's.