Question

I need information on Chipotle's price and cost management

Answer 1

Chipotles running bills

in the final part of this series, we noticed Chipotle Mexican Grill, Inc.(CMG) advertising expenditures. Now lets seem at Chipotle's key running fees to run the organizations restaurants. Three key operating expenditures incorporate the next:

meals costs
Labor bills
different operating fees

The above chart analyzes Chipotles food, labor, and different bills. The horizontal bars indicate the sales trend over the last six years, and the floating line above shows these costs as a percentage of income. The manufacturers food bills in 2013 represented 33.40%, or $1.1 billion, of revenues, which increased by means of seventy eight basis facets (or zero.78%) 12 months-over-12 months. There used to be an increasing cost strain for key parts, peculiarly beef, in late 2013 and early 2014 due to severe climate stipulations.

Meals fees for McDonalds (MCD) had been 33% of enterprise operated sales in 2013. You to find McDonalds (MCD) in a broader portfolio such because the SPDR S&P 500 ETF (spy).

Labor and other running fees

Labor, Chipotle's 2d key working fee, represented 23% of the organizations complete revenues, or $739 million, in 2013. In the prior elements of this series, we saw that Chipotle doesn't franchise, because of this that each one Chipotle's labor costs are taken by using the corporation. Burger King (BKW), which operates nearly exclusively in line with the franchise mannequin, had labor expenses of 5.9% in 2013. Popeyes (PLKI), which operates a combination of enterprise-operated and franchise items, had labor costs of 30% in 2013.

Chipotles other operating costs incorporate promoting and advertising and marketing costs, bank and bank card expenses, restaurant preservation bills, and utilities. These costs accounted for 10% of the organizations revenues in 2013.

Chipotles labor and different working bills have been declining as a percent of earnings, which indicates that bills are spreading because the corporations volume raises.

Within the next part of this series, lets appear at how Chipotles operating fees have translated into operating margins for the company.