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Chipotle net income more than doubles

Burrito chain says same-store sales up by 11.3 percent

Janet Forgrieve, Rocky Mountain News

Published November 1, 2006 at midnight

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Chipotle Mexican Grill Inc.'s net income more than doubled in the third quarter, and revenue rose 28.3 percent to $211.3 million.

The Denver-based burrito chain also reported an 11.3 percent increase in same-store sales in the quarter ended Sept. 30, mainly due to an increase in the number of transactions.

Labor costs held steady at 28.2 percent of sales, a fact the company largely attributes to a retention and promotion plan that helps Chipotle groom future managers and has reduced turnover, said President and Chief Operating Officer Monty Moran in a conference call with analysts.

"We're seeing an increase in the numbers of hourly crew members that are being promoted, and expect this trend will continue," Moran said.

The company reported net income of $11.8 million or 36 cents per share, compared with $5.1 million or 19 cents per share in the year-ago quarter.

Chipotle has opened 59 new restaurants since the beginning of the year, including 30 in the third quarter, and expects to have opened between 80 and 90 by year's end.

"This is a high-growth potential concept," Deutsche Bank Securities Inc. analyst Laurie Hahn in Greenwich, Conn., wrote in an Oct. 18 investors note. She rates Chipotle as "hold."

"Expansion of brand equity and new store openings should continue to fuel growth," she said.

Chipotle closed the quarter with 539 restaurants, with average quarterly sales per store of $1.6 million, up from $1.4 million in the same period last year.

The company expects to report 2006 same-store sales growth in the low double digits.

It's forecasting a low-to-mid-single-digit increase in 2007 and plans to open up to 105 new restaurants.

or 303-954-5191. Bloomberg News contributed to this report.