Professional Documents
Culture Documents
Consumer Goods
Investment Thesis
Key Statistics
52 Week Price Range
50-Day M oving Average
$413.40
0.81
Dividend Yield
N/A
CMG has experimented implementing its business model into other cuisines
and if successful, could introduce Chipotle to new markets.
We recommend a hold because the market has already priced in much of the
firms domestic growth, but aggressive international expansion presents a
tremendous upside.
$432.11 - $439.42
Estimated Beta
M arket Capitalization
13.535B
44.70%
Trading Statistics
Diluted Shares Outstanding
31.35 million
.484 million
Institutional Ownership
100.7%
Insider Ownership
1.68%
EV/EBITDA
28.13x
$500.00
$450.00
$400.00
$350.00
Gross M argin
25.96%
$300.00
EBITDA M argin
20.97%
$250.00
Net M argin
20.57%
$200.00
$150.00
N/A
$100.00
Leverage Ratio
N/A
$50.00
$0.00
Nov-08
Mar-09
Jul-09
Nov-09
Mar-10
Price
Jul-10
50-Day Avg
Nov-10
Mar-11
Jul-11
Nov-11
Mar-12
200-Day Avg
Date of Presentation
Business Overview
Steve Ells, a graduate of the Culinary Institute of America, founded Chipotle
Mexican Grill, Inc. (CMG) in 1993 in Denver, Colorado. CMG offers a focused
menu of burritos, tacos, burrito bowls, and salads in its 1,230 company -operated
restaurants across the Unites States, Canada, and the UK. The 1,230 restaurants
also includes one ShopHouse Southeast Asian Kitchen, which is a new concept
restaurant that follows the Chipotle format but serves cuisine inspired by
Thailand, Malaysia, and Vietnam. The first ShopHouse was opened in 2011, and
CMG plans to open another in 2012 due to the success of the first restau rant.
The ShopHouse test concept will be discussed in greater detail later in this
section.
Number of Restaurants
1200
Number of Restaurants
1000
800
600
400
200
0
2008
2009
Comparable
2010
2011
New
1.8
1.6
1.4
1.2
1
0.8
CMG believes that the format used in Chipotle restaurants can be successfully
adapted to other cuisines. This special format includes:
0.6
0.4
0.2
0
2008
2009
Comparable
2010
New
2011
As noted above, CMGs first attempt at extending the Chipotle restaurant model
is ShopHouse Southeast Asian Kitchen. The first was opened in 2011, and
serves rice or noodle bowls and banh mi sandwiches. Even though CMG plans
to open an additional ShopHouse in 2012, the companys focus remains on
building and developing the Chipotle brand.
Overall, CMG is a firm that is very conscious of the value of its culture and
brand, and makes strategic decisions to maintain and leverage this brand equity
to grow in deliberate ways.
UOIG 2
Date of Presentation
Strategic Positioning
CMG operates in the limited-service restaurant industry, which includes a
number of fast-food restaurants and grocery stores. However, CMG is
determined to change the way consumers think about fast food. Inspired by
attributes of fine dining, CMG employs a number of strategies that set it ap art as
a limited-service restaurant. The following subsections highlight a few of
CMGs core strategies for differentiating their brand.
UOIG 3
Date of Presentation
Domestic Growth
This continues to be CMGs main growth focus. With strong new restaurant
openings over the past five years, CMG expects to open an additional 155-165
restaurants in 2012. Management has also stated that there is no shortage of
quality locations in the United States, so market saturation is not an issue
Chipotle is facing at this time.
It is also important to note that many of the new restaurants that CMG plans to
open are what the company calls A Model restaurants. A Model restaurants
are restaurants opened in secondary trade area locations with attractive
demographics and lower investment and occupancy costs.
Geographic Distribution of
CMGs Restaurants
Country
United States
Canada
UK
Number of Restaurants
1,226
2
2
International Growth
CMGs international growth strategy is still under development. Curren tly,
CMG has two restaurants in Canada, two restaurants in Great Britain, and plans
to open one restaurant in Paris, France in 2012. These restaurants have been
successful in their respective markets, and Chipotle plans to continue expanding
abroad. However, this process has been slow, steady, and focused because the
company does not want to make any mistakes that may damage its brand image
on a global scale. Overall, international growth expansion remains a huge
growth opportunity for Chipotle in the future.
UOIG 4
Date of Presentation
Chipotle format gains popularity and ShopHouse shows continued signs of
success.
Industry
Types of Limited-Service Restaurants
Overview
CMG competes in the limited-service restaurant industry (also known as the fast
food industry). This industry includes: cafeterias and buffets, drive-thru limitedservice restaurants, off-premises (take-out) limited-service restaurants, and onpremises limited-service restaurants. At limited-service restaurants, customers
pay for their food before consuming it. Additionally, customers often have the
option of eating their food at the restaurant, taking it to go, or purchasing it
through a drive-thru.
Cafeterias/Buffets
Drive-thru
Off-premises
On-premises
Industry Revenue
As a whole, this industry has struggled over the past four years as the recession
hurt consumer spending. Consumers were less likely to eat out at fast food
restaurants, and decided to eat at home instead. In 2010 and 2011, the economy
has displayed signs of recovery, including strong increases in consumer
spending. Overall revenue growth in the limited-service restaurant industry has
seen growth in line with this increase in consumer spending. The following
sections will discuss the key drivers and analyze the degree of competition in
this industry.
$172,000
$170,000
$168,000
$166,000
$164,000
$162,000
$160,000
$158,000
$156,000
Key Drivers
$154,000
$152,000
2007
2008
2009
2010
2011
Consumer Spending
The recession caused an increase in unemployment, which resulted in a
significant decrease in consumer spending. This had a largely negative effect on
the limited-service restaurant industry, resulting in an average annual decrease
in revenue of 1.6% over the past five years. As the United States (and the rest of
the global economy) emerges from the recession, consumer s pending is
projected to increase. This will have a positive effect on players in the limited service restaurant industry, with a projected 2012 increase in revenue of around
2.1%, a growth rate that is expected to continue through 2016.
Consumer Spending
11500
11000
10500
10000
9500
9000
8500
8000
2008A
2011A
2014E
2017E
UOIG 5
Date of Presentation
Consumer Preferences
As with almost all industries in the consumer goods sector, the limited-service
restaurant industry is highly dependent on the preferences of consumers.
Recently, consumers have shown a preference for more health cons cious and
internationally varied food options at limited-service restaurants.
Consumers are becoming increasingly aware of the unhealthy nature of many
fast-food chains, and are demanding more healthy options. Even though many
limited-service restaurants have responded to this trend by offering more healthconscious items on their menus, this trend has had an overall negative impact on
the typically unhealthy limited-service restaurants. However, consumer diets
continue to be poor, and the healthy eating index (measured as a percentage
reflecting the degree to which Americans stick to the consumption guidelines set
out by the USDA) is expected to continue decreasing in the near future.
74%
73%
73%
72%
72%
71%
71%
70%
2008A
2011A
2014E
2017E
In spite of this trend, consumer awareness about health issues surrounding fast food restaurants is expected to be a significant trend in the industry, and the
most successful limited-service restaurants will be able to successfully adapt
their brand images to align with the health preferences of consumers. This has
led to the emergence and popularity of the fast-casual segment of the limitedservice restaurant industry. Customers of fast-casual restaurants still seek
convenient and affordable meals, but tend to care more about the origin and
preparation of the food.
Limited-service restaurants have also diversified into a variety of specialty and
ethnic cuisines in order to match the preferences of consumers. For example,
McDonalds has begun serving specialty coffee drinks in their fast-food
restaurants. Much of this success has been found in international markets
(especially China), and these specialty and ethnic options have largely
outperformed the rest of the industry.
Food Commodity Prices
The limited-service restaurant industry is highly dependent on commodity prices
because food ingredients are the main input for their products. As a result, many
of the players in this industry enter into contracts and strong supplier
relationships in order to ensure a reliable source of inputs for their operations.
Increasing global demand has caused commodity prices to increase on average,
and this squeezes margins for the industry as a whole. The companies within the
industry that are able to leverage their brand equity to increase prices without
losing business will be better able to cope with rising commodity prices.
Percent Change
3
2
1
0
-1
-2
-3
-4
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
It is difficult to project how commodity prices will behave in the future for the
purposes of valuation. Although commodity prices may rise in general, not all
commodity prices move in the same way. As a result, a company that is exposed
to a large number of commodities may experience moves in the price of some
commodity that are offset by an opposite movement in the price of a different
commodity.
Competition
Competitors in the limited-service restaurant industry include cafeterias and
buffets, on-site limited-service restaurants, drive-thru limited-service
restaurants, and off-premises limited-service restaurants. The major players in
this industry include McDonalds Corporation, Yum! Brands, Inc., Doctors
Associates, Inc. (private owner of Subway), Wendys International, Inc., and
Burger King Corporation.
UOIG 6
Date of Presentation
The major bases of competition between players in the limited -service restaurant
industry are price, location, variety, brand, and service. Since patrons of fastfood restaurants usually seek quick, convenient, and cheap eating options, the
limited-service restaurants that can deliver these attributes the most profitably to
consumers are the most successful.
McDonald's
Yum!
Docotr's Associates
Wendy's
Burger King
Chipotle
Other
Companies also benefit from brand awareness and equity, which is increased
through effective marketing and franchising. Franchising (or operating as a
multi-establishment restaurant such as CMG) has become increasingly important
in this industry, especially through the recession, because it allows firms to
reach economies of scale and increase profitability. In 2010, franchised and
multi-establishment companies accounted for 65% of industry revenues, while
only accounting for around 10% of total establishments.
UOIG 7
Date of Presentation
Recent News
April 18, 2012 Can Chipotles earnings continue to fire up the stock?
(Forbes.com)
Analysts are cautious on their outlook for CMGs stock as rising food prices
may squeeze margins. As a result, many analysts have slightly lowered their
estimates for projected EBITDA. However, consistent new restaurant openings
are projected to continue into the future. Analysts are also still waiting to see
how well received Chipotle restaurants are in international markets because this
will be a huge growth opportunity for the company going forward.
April 18, 2012 Dark meat chicken surge spurs shortages, price hikes
(InvestorPlace.com)
Consumer preferences have shifted toward dark meat chicken (leg and thigh
meat) as a result of several cooking shows and other cooking media promoting
the taste. This has resulted in shortages in chicken leg meat, which has caused
price increases. Although CMG offers mostly dark chicken meat that appeals to
consumers, it is also required to pay slightly prices for this meat due to the
shortages.
April 16, 2012 Chipotle Mexican Grill Responds to FDAs Voluntary Plan to
Reduce Antibiotic Use in Farm Animals (InvestorPlace.com)
Chipotle applauded the FDAs recognition of the use of antibiotics to stimulate
growth in livestock. However, they would like to see more done to further
prevent the use. The plan also would require a prescription to put antibio tics in
feed. Ells, the founder, stated, These voluntary guidelines seem unlikely to
cause producers to change the practices that necessitate dependence on drugs in
the first place. Its an important first step, but stronger action will be needed to
bring about meaningful change in an industry where their practices are so well
entrenched.
This press release is an indicator of Chipotles ongoing effort to promote Food
with Integrity. Chipotle continues to promote its dedication to naturally raised
meet. It currently provides more naturally raised meats than any other restaurant
in the nation.
Catalysts
There are many macro and micro factors that can influence Chipotles future
cash flows. Below are both upside and downside catalysts that, if realized, will
affect the share price of Chipotle.
Upside
North America
Europe
Asia
South America
Oceania
UOIG 8
Date of Presentation
Consumers becoming more conscious about the foods they eat could
bring attention to Chipotles Food With Integrity business model and
garner more loyal customers.
Downside
Comparable Analysis
Chipotle has many competitors, but few have experienced growth like Chipotle.
In selecting companies for the comparable analysis portion of the valuation, we
looked at growth estimates, size, product offering, risk to the market, and brand
image.
The multiples used were EV/EBIT and EV/EBITDA. We chose to weight only
the bottom line multiples because they are a better indicator of the companys
cash flows , and have a lesser chance of being influenced by our LTM numbers.
UOIG 9
Date of Presentation
Revenue Model
Projecting revenue required estimating future amounts for three different values:
new restaurants, average revenue per comparable restaurant, and average
revenue per new restaurant. The number of comparable restaurants was not
projected because it is simply the addition of the previous years number of
comparable restaurants and the previous years new restaurants.
New Restaurants
The number of new restaurants was projected based on management guidance
and historical values and growth rates. For 2012, management stated they would
add between 155 and 165 restaurants. From 2013 to 2014, we trended the
number of new restaurants slightly upward as Chipotle takes advantage of the
large number of A Model locations available. From 2015 until 2021, we trend
down the number of new restaurants as the market becomes more saturated and
less strong locations are available.
UOIG 10
Date of Presentation
Average Comparable Restaurant Revenue
For 2012, management expects average comparable restaurant revenue to
experience a percent increase in the mid-single digits. CMG will experience this
growth through customer loyalty (more repeat visits), increased advertising, and
exemplary customer service. Since historical increases have been roughly in line
with this mid-single digit growth, we simply trended down average comparable
restaurant revenue growth into the year 2021.
23.00%
$9,000.00
22.00%
$8,000.00
$7,000.00
21.00%
$6,000.00
$5,000.00
20.00%
$4,000.00
19.00%
$3,000.00
$2,000.00
18.00%
$1,000.00
$0.00
17.00%
Total Revenue
EBITDA Margin
Tax Rate
CMGs tax rate has historically been in the high 38% range. Going forward,
however, CMG expects its tax rate to be in the low 39% due to the expiration of
certain legislation (HIRE Act) and tax credits. The tax rate is subject to change
if Congress renews the Act or issues additional tax credits, but we projected
CMGs tax rate at 39.3%.
UOIG 11
Date of Presentation
Working Capital
Current Assets and Current Liabilities were projected to remain roughly the in
line as a percent of revenue going forward. Where applicable, certain accounting
ratios were used to project line items. Days Sales Outstanding and Days Payable
Outstanding trend slightly up and slightly down, respectively, as Chipotle
matures as a company and is able to develop better relations with suppliers.
Projected Capital Expenditures and Acquisitions
$600.00
Capital Expenditures
$500.00
$400.00
$300.00
$200.00
$100.00
$0.00
Beta
Three different betas were calculated and weighted evenly for Chipotle Mexican
Grill: 5 year monthly, 3 year monthly, and a 1 year weekly. The discrepancy
between the 5 year monthly and 3 year monthly betas are due an extremely
volatile period between 2007 and 2009. While these swings were unusual, we
feel Chipotle is exposed to similar risk in its growth strategy.
Capital Expenditures
Beta
1.01
0.49
0.94
0.81
SD
0.27
0.34
0.15
Weighting
33.33%
33.33%
33.33%
Because of CMGs consistent growth and huge upside potential for international
expansion, we decided that a terminal growth rate of 3% immediately after 2021
into perpetuity was not appropriate. In order to account for Chipotles consistent
performance and large international growth opportunities, we used an
intermediate growth rate of 7% for the five years following 2021 until 2026. We
then introduced the terminal growth rate of 3% in 2027. This required us to
calculate a new terminal value and then discount it five additional years.
Recommendation
Although we believe CMGs strong brand image, focused business model, and
deliberate growth strategies will result in consistent growth for the company, we
feel that the market has already priced this in. This relatively fair valuation can
be seen in our DCF result of 6.54% overvalued. Additionally, the high
overvaluation that resulted from our relative analysis suggests that now may not
be the best time to invest in CMG. As a result, we are recommending a HOLD
for all portfolios.
Final Valuation
Discounted Cash Flow Analysis
Comparable Anaylsis
Price Target
Overvalued
Implied Price
Weighting
403.77
100.00%
279.29
0.00%
$403.77
(6.54%)
UOIG 12
Date of Presentation
Max
$432.03
403.85
345.25
1.19
Min
Weight Avg. Median
$22.74
$106.14
$84.07
23.48
109.17
83.77
21.73
96.02
72.21
0.73
1.01
0.92
CMG
PNRA
Chipotle Mexican
Grill, Inc.
Panera Bread Co.
40.00%
$432.03
$151.58
403.85
160.33
345.25
142.73
0.81
0.89
SBUX
Starbucks
Corporation
20.00%
$58.95
54.64
47.20
1.19
WFM
Whole Foods
Market, Inc.
25.00%
$84.42
83.77
74.61
1.10
BWLD
JACK
Buffalo Wild
Jack in the Box,
Wings Inc.
Inc.
15.00%
0.00%
$84.07
$22.74
87.79
23.48
72.21
21.73
0.92
0.73
44.25
549.50
1,569.50
2.50
0.00
776.60
45,344.18
44,326.68
0.00
0.00
13.64
0.00
0.00
18.51
1,004.49
1,484.69
6.72
114.65
538.53
0.50
0.00
217.53
15,049.71
14,633.04
0.34
19.00
222.64
0.00
0.00
48.91
4,615.75
4,393.11
0.00
0.00
370.19
0.00
0.00
31.35
13,535.86
13,165.67
0.00
0.00
222.64
0.00
0.00
30.48
4,615.75
4,393.11
0.00
549.50
1,569.50
2.50
0.00
776.60
45,344.18
44,326.68
0.34
19.00
529.99
0.00
0.00
188.95
15,607.00
15,096.34
44.25
0.00
20.53
0.00
0.00
18.51
1,552.13
1,575.85
21.04
472.81
13.64
0.00
0.00
48.91
1,004.49
1,484.69
49.44%
17.94%
21.13%
21.13%
11.79%
5.49%
8.82%
8.82%
21.71%
11.30%
15.60%
15.60%
27.01%
10.97%
17.02%
17.02%
26.49%
17.94%
21.13%
21.13%
23.04%
12.63%
17.02%
17.02%
27.48%
15.60%
19.95%
19.95%
11.79%
5.92%
8.82%
8.82%
27.01%
10.97%
17.34%
17.34%
49.44%
5.49%
9.89%
9.89%
$34.00
33.26%
228.88%
1723.90%
$0.00
0.00%
0.00%
37.60%
$8.10
.70%
9.92%
805.32%
$3.88
1.24%
22.60%
236.88%
$3.23
0.00%
0.00%
803.15%
$0.82
0.00%
0.00%
1723.90%
$34.00
1.24%
22.60%
53.62%
$3.88
.13%
2.09%
420.14%
$0.00
2.81%
32.53%
NA
$18.30
33.26%
228.88%
37.60%
$12,185.50
3,159.60
1,900.90
2,431.20
1,281.20
$784.48
211.88
86.10
136.01
50.43
$5,907.35
1,149.42
640.52
862.05
411.24
$2,181.30
1,139.29
230.12
310.02
135.95
$2,400.77
636.08
430.66
507.19
231.23
$1,822.03
419.83
230.12
310.02
135.95
$12,185.50
3,159.60
1,900.90
2,431.20
1,281.20
$10,495.07
1,271.15
621.52
925.59
372.21
$784.48
211.88
86.10
136.01
50.43
$2,181.30
1,139.29
119.67
215.77
60.15
5.48x
20.70x
30.57x
25.96x
56.94x
0.68x
1.30x
12.41x
6.88x
24.68x
2.35x
11.08x
21.12x
15.13x
34.67x
2.01x
10.46x
19.09x
14.17x
32.31x
5.48x
20.70x
30.57x
25.96x
56.94x
2.41x
10.46x
19.09x
14.17x
32.31x
3.64x
14.03x
23.32x
18.23x
34.60x
1.44x
11.88x
24.29x
16.31x
40.56x
2.01x
7.44x
18.30x
11.59x
31.25x
0.68x
1.30x
12.41x
6.88x
24.68x
Multiple
EV/Revenue
EV/Gross Profit
EV/EBIT
EV/EBITDA
EV/Net Income
Price Target
Current Price
Overvalued
Implied Price
Weight
192.02
0.00%
236.57
0.00%
301.95
50.00%
256.63
50.00%
267.58
0.00%
$279.29
432.03
(35.35%)
UOIG 13
Date of Presentation
2008A
1332.00
2010A
1835.90
20.91%
1346.52
73.34%
$489.38
26.66%
118.59
6.46%
68.92
3.75%
7.77
0.34%
6.30
.34%
$287.81
15.68%
0.27
.01%
(1.50)
(.08%)
289.04
15.74%
110.08
38.09%
$178.96
9.75%
68.92
0.17
$248.04
13.51%
177.07
9.64%
123.05
6.70%
$54.01
2.94%
82.28
113.20
6.17%
$52.57
2011A
2269.50
23.62%
1680.32
74.04%
$589.18
25.96%
149.43
6.58%
74.94
3.30%
8.50
0.26%
5.81
.26%
$350.51
15.44%
2.95
.13%
(2.95)
(.13%)
350.51
15.44%
134.76
38.45%
$215.75
9.51%
74.94
1.81
$292.51
12.89%
93.71
4.13%
157.45
6.94%
($63.74)
(2.81%)
-117.75
151.10
6.66%
$259.16
Q1 2012A
640.60
Q2-4 2012E
2080.60
465.26
72.63%
$175.34
27.37%
49.33
7.70%
20.08
3.14%
2.45
0.38%
1.25
.20%
$102.22
15.96%
0.00%
(0.43)
(.07%)
102.66
16.03%
39.99
38.96%
$62.66
9.78%
20.08
0.00
$82.75
12.92%
174.63
27.26%
124.55
19.44%
$50.09
1556.59
74.81%
$524.01
25.19%
131.63
6.33%
100.06
4.81%
5.72
0.27%
0.00%
$286.61
13.78%
2.72
.13%
(2.29)
(.11%)
286.17
13.75%
112.82
39.42%
$173.36
152.10
11.42%
($20.91)
2009A
1518.36
13.99%
1139.90
75.07%
$378.46
24.93%
99.15
6.53%
61.31
4.04%
8.40
0.39%
5.96
.39%
$203.65
13.41%
0.41
.03%
(0.93)
(.06%)
204.17
13.45%
77.38
37.90%
$126.79
8.35%
61.31
0.25
$188.35
12.40%
74.75
4.92%
103.02
6.78%
($28.26)
(1.86%)
-71.21
117.20
7.72%
$142.36
113.83
41.86
6.54%
($72.95)
176.8
13.28%
265.0
17.45%
356.7
19.43%
425.5
18.75%
122.3
19.09%
1045.04
78.46%
$286.96
21.54%
89.16
6.69%
52.77
3.96%
11.62
0.87%
9.34
.70%
$124.07
9.31%
0.30
.02%
(3.47)
(.26%)
127.24
9.55%
49.00
38.51%
$78.24
5.87%
52.77
0.19
$131.19
9.85%
120.47
9.04%
77.53
5.82%
$42.95
3.22%
-46.34
125.49
6.03%
$195.91
185.33
2012 A+E
2721.20
19.90%
2021.85
74.30%
$699.35
25.70%
180.96
6.65%
120.15
4.42%
8.16
0.30%
1.25
0.00%
$388.83
14.29%
2.72
.10%
(2.72)
(.10%)
388.83
14.29%
152.81
39.30%
$236.02
8.67%
120.15
1.65
$357.82
13.15%
183.78
6.75%
180.03
6.62%
$3.75
.14%
67.49
167.35
6.15%
$122.97
108.03
2013E
3225.08
18.52%
2386.56
74.00%
$838.52
26.00%
209.63
6.50%
144.74
4.49%
11.29
0.35%
0.00%
$472.87
14.66%
2.90
.09%
(2.58)
(.08%)
472.54
14.65%
185.71
39.30%
$286.83
8.89%
144.74
1.76
$433.33
13.44%
218.61
6.78%
212.50
6.59%
$6.10
.19%
2.36
196.73
6.10%
$234.25
191.10
2014E
3786.21
17.40%
2782.87
73.50%
$1,003.35
26.50%
242.32
6.40%
173.61
4.59%
15.14
0.40%
0.00%
$572.28
15.11%
3.03
.08%
(2.27)
(.06%)
571.52
15.09%
224.61
39.30%
$346.91
9.16%
173.61
1.84
$522.36
13.80%
257.33
6.80%
247.79
6.54%
$9.54
.25%
3.43
230.96
6.10%
$287.97
218.17
2015E
4396.10
16.11%
3217.95
73.20%
$1,178.16
26.80%
276.95
6.30%
206.85
4.71%
17.58
0.40%
0.00%
$676.76
15.39%
0.00%
0.00%
676.76
15.39%
265.97
39.30%
$410.80
9.34%
206.85
0.00
$617.65
14.05%
300.17
6.83%
285.75
6.50%
$14.43
.33%
4.89
265.96
6.05%
$346.80
243.99
2016E
5046.90
14.80%
3674.14
72.80%
$1,372.76
27.20%
312.91
6.20%
245.02
4.85%
17.66
0.35%
0.00%
$797.16
15.80%
0.00%
0.00%
797.16
15.80%
313.29
39.30%
$483.88
9.59%
245.02
0.00
$728.90
14.44%
344.42
6.82%
327.15
6.48%
$17.27
.34%
2.85
305.34
6.05%
$420.71
274.88
2017E
5729.74
13.53%
4162.65
72.65%
$1,567.08
27.35%
349.51
6.10%
288.35
5.03%
17.19
0.30%
0.00%
$912.03
15.92%
0.00%
0.00%
912.03
15.92%
358.43
39.30%
$553.60
9.66%
288.35
0.00
$841.95
14.69%
390.86
6.82%
370.65
6.47%
$20.22
.35%
2.94
346.65
6.05%
$492.36
298.74
2018E
6441.36
12.42%
4663.55
72.40%
$1,777.82
27.60%
386.48
6.00%
242.67
3.77%
16.10
0.25%
0.00%
$1,132.56
17.58%
0.00%
0.00%
1,132.56
17.58%
445.10
39.30%
$687.47
10.67%
242.67
0.00
$930.13
14.44%
439.11
6.82%
415.25
6.45%
$23.86
.37%
3.65
386.48
6.00%
$540.00
304.27
2019E
7178.39
11.44%
5193.56
72.35%
$1,984.82
27.65%
423.52
5.90%
291.27
4.06%
14.36
0.20%
0.00%
$1,255.67
17.49%
0.00%
0.00%
1,255.67
17.49%
493.48
39.30%
$762.19
10.62%
291.27
0.00
$1,053.46
14.68%
489.03
6.81%
461.18
6.42%
$27.85
.39%
3.98
430.70
6.00%
$618.78
323.78
2020E
7936.96
10.57%
5718.58
72.05%
$2,218.38
27.95%
460.34
5.80%
329.88
4.16%
15.87
0.20%
0.00%
$1,412.28
17.79%
0.00%
0.00%
1,412.28
17.79%
555.03
39.30%
$857.26
10.80%
329.88
0.00
$1,187.14
14.96%
540.55
6.81%
509.19
6.42%
$31.36
.40%
3.52
476.22
6.00%
$707.40
343.74
2021E
8712.78
9.77%
6264.49
71.90%
$2,448.29
28.10%
496.63
5.70%
370.63
4.25%
17.43
0.20%
0.00%
$1,563.60
17.95%
0.00%
0.00%
1,563.60
17.95%
614.50
39.30%
$949.11
10.89%
370.63
0.00
$1,319.74
15.15%
593.15
6.81%
557.80
6.40%
$35.35
.41%
3.99
522.77
6.00%
$792.99
357.83
386.7
18.58%
509.0
18.70%
617.6
19.15%
745.9
19.70%
883.6
20.10%
1042.2
20.65%
1200.4
20.95%
1375.2
21.35%
1546.9
21.55%
1742.2
21.95%
1934.2
22.20%
100.06
1.65
$275.07
13.22%
183.78
8.83%
180.03
8.65%
$3.75
UOIG 14
Date of Presentation
Revenue Model
($ in millions)
2008A
2009A
2010A
2011A
Comparable Restaurants
$1,149.70
$1,356.66
$1,657.20
$2,031.60
18.00%
22.15%
22.59%
$182.30
$161.70
$178.70
$237.90
% Growth
New Restaurants
% Growth
Total Revenue
9.03%
(11.30%)
10.52%
33.13%
$1,332.00
$1,518.36
$1,835.90
$2,269.50
13.99%
20.91%
23.62%
% Growth
Comparable Restaurants
Average Revenue
% Growth
New Restaurants
Average Revenue
% Growth
Total Restaurants
704
$1.633
839
$1.617
-0.99%
133
119
$1.371 $1.359
-0.87%
837
958
956
1084
$1.733 $1.874
7.20% 8.12%
128
146
$1.396 $1.629
2.75% 16.71%
1084
1230
2013E
$6,808.11
2020E
$7,563.81
2021E
20.28%
19.56%
18.30%
17.14%
15.90%
14.41%
13.16%
12.06%
11.10%
10.24%
$303.52
$329.91
$347.23
$354.38
$360.82
$366.15
$370.28
$373.15
$374.70
16.71%
9.31%
8.70%
5.25%
2.06%
1.82%
1.48%
1.13%
.77%
.41%
$640.60
$2,080.60
$2,721.20
$3,225.08
$3,786.21
$4,396.10
$5,046.90
$5,729.74
$6,441.36
$7,178.39
$7,936.96
$8,712.78
19.90%
18.52%
17.40%
16.11%
14.80%
13.53%
12.42%
11.44%
10.57%
9.77%
1230
$1.987
6.00%
160
$1.735
6.50%
1390
1390
$2.102
5.80%
165
$1.839
6.00%
1555
1555
$2.223
5.75%
170
$1.941
5.50%
1725
1725
$2.347
5.60%
170
$2.043
5.25%
1895
1895
$2.476
5.50%
165
$2.148
5.15%
2060
2060
$2.606
5.25%
160
$2.255
5.00%
2220
2220
$2.737
5.00%
155
$2.362
4.75%
2375
2375
$2.867
4.75%
150
$2.469
4.50%
2525
2525
$2.996
4.50%
145
$2.573
4.25%
2670
2670
$3.123
4.25%
140
$2.676
4.00%
2810
1390
$6,075.21
2019E
$277.66
1262
$5,368.92
2018E
$208.24
160
$1.302
$4,692.52
2017E
$13.88
32
$0.43
$4,048.87
2016E
$2,443.54
1230
$1.522
$3,456.30
2015E
$1,872.35
1230
$0.510
$2,921.56
2014E
$626.72
$8,338.09
COGS Model
($ in millions)
2008A
2009A
$466.03
2010A
$561.11
2011A
$738.72
Q1 2012A
$206.59
$903.44
2013E
$1,073.95
2014E
$1,257.02
2015E
$1,459.51
2016E
$1,670.52
2017E
$1,896.54
2018E
$2,125.65
2019E
$2,368.87
2020E
$2,607.29
2021E
$2,862.15
% Revenue
32.43%
30.69%
30.56%
32.55%
32.25%
33.49%
33.20%
33.30%
33.20%
33.20%
33.10%
33.10%
33.00%
33.00%
32.85%
32.85%
Labor
$351.01
$385.07
$453.57
$543.12
$151.99
$495.66
$647.65
$762.73
$889.76
$1,026.49
$1,170.88
$1,320.70
$1,475.07
$1,640.26
$1,801.69
$1,964.73
% Revenue
26.35%
25.36%
24.71%
23.93%
23.73%
23.82%
23.80%
23.65%
23.50%
23.35%
23.20%
23.05%
22.90%
22.85%
22.70%
22.55%
$98.07
$114.22
$128.93
$147.27
$40.51
$129.57
$170.08
$193.50
$217.71
$252.78
$290.20
$329.46
$370.38
$412.76
$456.38
$500.98
Occupancy Costs
% Revenue
Other Operating Costs
7.36%
7.52%
7.02%
6.49%
6.32%
6.23%
6.25%
6.00%
5.75%
5.75%
5.75%
5.75%
5.75%
5.75%
5.75%
5.75%
$164.02
$174.58
$202.90
$251.21
$66.18
$234.51
$300.69
$356.37
$418.38
$479.18
$542.54
$615.95
$692.45
$771.68
$853.22
$936.62
% Revenue
12.31%
11.50%
11.05%
11.07%
10.33%
11.27%
11.05%
11.05%
11.05%
10.90%
10.75%
10.75%
10.75%
10.75%
10.75%
10.75%
Total COGS
$1,045.04
$1,139.90
$1,346.52
$1,680.32
$465.26
$1,556.59
$2,021.85
$2,386.56
$2,782.87
$3,217.95
$3,674.14
$4,162.65
$4,663.55
$5,193.56
$5,718.58
$6,264.49
% Revenue
78.46%
75.07%
73.34%
74.04%
72.63%
74.81%
74.30%
74.00%
73.50%
73.20%
72.80%
72.65%
72.40%
72.35%
72.05%
71.90%
UOIG 15
Date of Presentation
2008A
$1,332.00
2009A
$1,518.36
2010A
$1,835.90
2011A
$2,269.50
Q1 2012A
$640.60
2012 A+E
$2,721.20
2013E
$3,225.08
2014E
$3,786.21
2015E
$4,396.10
2016E
$5,046.90
2017E
$5,729.74
2018E
$6,441.36
2019E
$7,178.39
2020E
$7,936.96
2021E
$8,712.78
3.64
1.00
0.27%
4.79
1.68
0.36%
11.76
4.12
0.88%
0.29
0.02%
99.99
7.51%
120.47
9.04%
4.76
1.14
0.31%
5.61
1.80
0.37%
14.38
4.60
0.95%
0.00
0.00%
50.00
3.29%
74.75
4.92%
5.66
1.12
0.31%
7.10
1.92
0.39%
16.02
4.34
0.87%
23.53
1.28%
124.77
6.80%
177.07
9.64%
8.39
1.35
0.37%
8.91
1.94
0.39%
21.40
4.65
0.94%
0.00
0.00%
55.01
2.42%
93.71
4.13%
9.09
1.31
1.42%
10.02
NA
1.56%
26.16
NA
4.08%
34.89
5.45%
94.48
14.75%
174.63
27.26%
10.44
1.4
0.38%
10.97
1.98
0.40%
26.31
4.75
0.97%
$0.00
0.00%
$136.06
5.00%
183.78
6.75%
13.22
1.5
0.41%
13.08
2.00
0.41%
31.06
4.75
0.96%
$0.00
0.00%
$161.25
5.00%
218.61
6.78%
16.55
1.6
0.44%
15.25
2.00
0.40%
36.22
4.75
0.96%
$0.00
0.00%
$189.31
5.00%
257.33
6.80%
21.02
1.75
0.48%
17.58
2.00
0.40%
41.76
4.75
0.95%
$0.00
0.00%
$219.81
5.00%
300.17
6.83%
24.13
1.75
0.48%
20.13
2.00
0.40%
47.81
4.75
0.95%
$0.00
0.00%
$252.35
5.00%
344.42
6.82%
27.40
1.75
0.48%
22.81
2.00
0.40%
54.17
4.75
0.95%
$0.00
0.00%
$286.49
5.00%
390.86
6.82%
30.80
1.75
0.48%
25.55
2.00
0.40%
60.69
4.75
0.94%
$0.00
0.00%
$322.07
5.00%
439.11
6.82%
34.32
1.75
0.48%
28.38
2.00
0.40%
67.40
4.75
0.94%
$0.00
0.00%
$358.92
5.00%
489.03
6.81%
37.95
1.75
0.48%
31.33
2.00
0.39%
74.42
4.75
0.94%
$0.00
0.00%
$396.85
5.00%
540.55
6.81%
41.66
1.75
0.48%
34.33
2.00
0.39%
81.52
4.75
0.94%
$0.00
0.00%
$435.64
5.00%
593.15
6.81%
152.1
-52.77
585.90
706.37
53.03%
585.9
117.2
-61.31
636.41
711.17
46.84%
636.4
113.2
-68.92
676.88
853.95
46.51%
676.9
151.1
-74.94
751.95
845.66
37.26%
751.95
41.86
-20.08
773.12
947.75
147.95%
752.0
167.35
-120.15
799.16
982.94
36.12%
799.2
196.73
-144.74
851.15
1069.76
33.17%
851.2
230.96
-173.61
908.50
1165.83
30.79%
908.5
265.96
-206.85
967.61
1267.79
28.84%
967.6
305.34
-245.02
1027.93
1372.35
27.19%
1027.9
346.65
-288.35
1086.23
1477.09
25.78%
1086.2
386.48
-242.67
1230.04
1669.15
25.91%
1230.0
430.70
-291.27
1369.48
1858.50
25.89%
1369.5
476.22
-329.88
1515.81
2056.36
25.91%
1515.8
522.77
-370.63
1667.94
2261.09
25.95%
23.89
8.37
1.79%
52.82
18.50
3.97%
77.53
5.82%
25.23
8.08
1.66%
72.62
23.25
4.78%
103.02
6.78%
33.71
9.14
1.84%
89.23
24.19
4.86%
123.05
6.70%
46.38
10.08
2.04%
106.70
23.18
4.70%
157.45
6.94%
49.15
9.72
7.67%
75.26
14.88
11.75%
124.55
19.44%
52.62
9.5
1.93%
127.40
23
4.68%
180.03
6.62%
62.12
9.5
1.93%
150.39
23
4.66%
212.50
6.59%
72.43
9.5
1.91%
175.36
23
4.63%
247.79
6.54%
83.53
9.5
1.90%
202.22
23
4.60%
285.75
6.50%
95.63
9.5
1.89%
231.52
23
4.59%
327.15
6.48%
108.34
9.5
1.89%
262.30
23
4.58%
370.65
6.47%
121.38
9.5
1.88%
293.87
23
4.56%
415.25
6.45%
134.81
9.5
1.88%
326.37
23
4.55%
461.18
6.42%
148.84
9.5
1.88%
360.35
23
4.54%
509.19
6.42%
163.05
9.5
1.87%
394.75
23
4.53%
557.80
6.40%
Tax Rate
Risk Free Rate
Beta
Market Risk Premium
% Equity
% Debt
Cost of Debt
CAPM
WACC
Considerations
Considerations
3.00%
24,462
8,059
4,597
12,656
0
370
12,656
31.35
403.77
432.03
(6.54%)
10.67%
NA
47.90%
16.45%
18.24%
63.7%
20.5x
4.2x
12%
7%
UOIG 16
Date of Presentation
Intermediate
Growth Rate
Adjusted Beta
404
0.61
0.71
0.81
0.91
1.01
404
5%
6%
7%
8%
9%
Und
3.5%
699.84
542.09
435.90
364.54
309.97
4.0%
820.78
609.35
476.75
391.66
328.65
Under
3.5%
406.64
421.00
435.90
451.34
467.35
4.0%
443.81
459.98
476.75
494.14
512.16
Appendix 8 Sources
UOIG 17