Operating Expenses Of Chipotle

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Operating Expenses Projections.
This section is dedicated to explaining the assumptions that are used to forecast the operating expenses of Chipotle from 2017 to 2021. All the expenses are estimated as a percentage of sales revenue. The table below summarizes all the assumptions that are used to forecast different operating expenses.

Food, beverage and packaging costs As shown in the graph, from 2012 to 2016, the costs of food, beverage and packaging were the most significant costs for Chipotle, around a third of its total sales revenue. Hence, for 2017 to 2021, it is assumed that these costs will still be the most prominent costs for the company. Moreover, the historical data of 2012 to 2016 are used to calculate the average costs of food, beverage and packaging, as a percentage of revenue. It is assumed that this average is applicable for 2017 and onwards. Thus, from 2017 to 2021, food, beverage and packaging costs are forecasted to be 33.8% of Chipotle’s sales revenue.

Labor costs As demonstrated in the graph, labor costs increased as a percentage of revenue in 2016, to 28.3%. This was due to lower sales in Chipotle …show more content…

For example, Chipotle incurred higher loss on disposal and impairment of assets because they company wrote down the value of the long-term assets of its ShopHouse restaurants, which were 15 non-Chipotle concept fast food restaurants, since the company was seeking strategic alternatives for the concept. Another example is Chipotle’s decision to not implement an internally developed accounting software, which lead to higher loss on disposal and impairment of assets in 2015 (CMG, 2017). As demonstrated by these two examples, loss on disposal and impairment of assets are often unusual and non-recurring. Thus, no projections are made for this extraordinary item, that is loss on disposal and impairment of assets are assumed to be zero for 2017 and

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