Chipotle Mexican Grill Inc (CMG)

Inventory turnover

		Dec 31, 2024	Dec 31, 2023	Dec 31, 2022	Dec 31, 2021	Dec 31, 2020
Cost of revenue	US$ in thousands	7,196,630	6,307,620	5,661,730	5,087,090	4,203,080
Inventory	US$ in thousands	48,942	39,309	35,668	32,826	26,445
Inventory turnover		147.04	160.46	158.73	154.97	158.94

December 31, 2024 calculation

Inventory turnover = Cost of revenue ÷ Inventory
= $7,196,630K ÷ $48,942K
= 147.04

Chipotle Mexican Grill Inc's inventory turnover has shown a relatively stable trend over the past five years, with values ranging from 147.04 to 160.46. The formula for inventory turnover is Cost of Goods Sold divided by Average Inventory. A higher inventory turnover ratio indicates that the company is selling its inventory quickly, which is generally considered favorable as it signifies efficient inventory management.

In Chipotle's case, the inventory turnover ratios have been consistently high, indicating efficient management of inventory levels. This can lead to lower holding costs and a reduced risk of inventory obsolescence. Although there was a slight decrease in 2024 compared to previous years, the overall trend suggests that Chipotle has been effectively managing its inventory turnover to support its operations and financial performance.

Businesses like Chipotle that operate in the food industry where freshness and quality are crucial can benefit significantly from maintaining a high inventory turnover ratio to ensure that inventory is sold before it spoils or becomes obsolete. The consistent performance of Chipotle's inventory turnover ratio reflects positively on its operational efficiency and financial health.