Chipotle Mexican Grill CMG

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Chipotle Mexican Grill (CMG)
BUY PresentationFebruary 22, 2006
Western Investment Club (WIC) Consumers Group
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What is Chipotle Mexican Grill?

• Chipotle Mexican Grill operates as a fast-casual,
  Mexican-theme restaurant
• Food is fresh, natural, real food that you dont
  regret eating (i.e. Taco Bell)
• Most of the restaurants offer beer and margaritas
  to go along with your normal soft drinks
• Ordering process is most like Subways

Chipotles quality is remarkably consistent in
all of its markets
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Menu
Menu extends to 65,000 variations
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Highlights for full year 2006

• Revenue increased 31.1 to 822.9 million
• Comparable restaurant sales increased 13.7,
  compared to 10.2 in 2005
• Restaurant level operating margins increased 240
  basis points to 20.9
• Income from operations approximately doubled to
  62.0 million
• Diluted earnings per share were 1.28, compared
  to 0.66 in 2005
• Currently, 547 Chipotles in 26 states

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Key Figures and Recent Events

• Market Cap 1.8 bln
• Employees 13,000
• Quarterly Revenue Growth (yoy) 28.3
• Revenue 776.52M
• Gross Margins 33.25
• EBITDA 92.29M
• Operating Margins 7.51
• Return on Assets 8.03
• Return on Equity 9.26
• EPS 1.13
• P/E 49
• Total Cash 157.6M
• Total Debt 4.13M

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Historical Price Chart
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Why Chipotle?

• Similar to Starbucks at this stage in its life
  cycle
• Fast-casual dining is currently the fastest
  growing segment of the restaurant industry.
  Fast-casual combines the high quality food of
  full-service restaurants coupled with the speed
  and convenience of fast food.
• Chipotle is committed to corporate social
  responsibility. Through its vision called "Food
  With Integrity," the company has embarked on an
  ongoing process to identify providers who are
  committed to pursuing healthy, humane and
  sustainable practices when it comes to raising
  animals and growing produce. Chipotle now serves
  more naturally raised meat than any other
  restaurant
• Focus on simplicity Doing fewer things allows
  us to do them better
• Restaurants designed to optimize throughput,
  transactions increased by 10 per hour in 2006.
  Currently implementing automatic change machines
• Expecting to open 95-105 locations this year

Qualitatively, Chipotle appears to have a bright
future and considerable room for growth
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Comparables

• YUM! YUM brands include KFC, Pizza Hut, Taco
  Bell, Long John Silver, AW
• Brinker International EAT brands include
  Chilis, Romanos Macaroni Grill, Maggianos
  Little Italy, On the Border Mexican Grill and
  Cantina
• Wendys WEN brands include Wendys, Café
  Express, Pasta Pomodoro
• McDonalds MCD brands include McDonalds,
  Chipotle, Boston Market
• OSI Restaurant Partners OSI brands include
  Outback Steakhouse, Carrabas Italian Grills,
  Bonefish Grills, Flemings Prime Steakhouse, Paul
  Lees Chinese Kitchens

Chipotle has consistently outperformed the
competition.
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Comparables
Chipotle has consistently outperformed the
competition.
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Valuation
Chipotle has consistently outperformed the
competition.
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Revenue Growth
25 annual revenue growth is expected over the
next few years.
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Number of Restaurants
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Average Store Sales
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Same Store Sales Growth
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Risks

• Chipotle needs to invest heavily in order to
  secure employees
• Growing rapidly in a tight labour environment is
  extremely difficult
• Chipotle will have to deal with higher food costs
  and higher costs to open up new stores as it
  enters more expensive markets
• Increase in minimum wage in the USA
• Susceptible to interest rate risk (own the
  locations)
• The ability to find new, quality locations
• California freeze could raise commodity prices
  (beans, chickens, etc)

Message Statement
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Proposed Transaction
Buy 100 common shares _at_ 63
Buying low and selling high is the name of the
game.
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Questions?
Please, ask us questions.