Denver, Colorado - 26 January, 2006 -

Chipotle Mexican Grill Inc.'s initial public offering rose 100% in the biggest opening-day gain from a U.S.-based deal in more than five years, as the McDonald's spinoff rolled into the history books Thursday. Tempting Wall Street with a combination of burritos packed with organic ingredients and growth to nearly 500 restaurants since its founding in 1993, Chipotle shares ended their first day of trading at $44 a share, up exactly twofold from its $22 price. The performance marks the best opening-day gain by a U.S.-based IPO since Transmeta rang up triple-digit gains in late 2000, according to Thomson Financial. It's also the second-highest opening by any restaurant-chain deal behind the 143% gain by Boston Chicken in 1993. The Nov. 18 IPO from Under Armour rose more than 100% in the course of the day, but ended its inaugural session with a gain of 92% Chipotle raised $173 million by offering 7.88 million shares priced above its $18 to $20 price range. The Denver-based restaurant chain bumped up its price Monday from a range of $15.50 to $17.50 a share as investors piled onto the deal. Morgan Stanley and SG Cowen led the offering. The company's founder and chief executive, 40-year-old Steve Ells, said that it's time to go back to "bringing quality fast food to the masses" now that he's taken Chipotle public. Ells also said that he's "happy there's a lot of excitement" about his company. Investors on the IPO's road show connected with Chipotle's mission to cook up fresh food such as free-range pork in an open kitchen. Ells referred a question over whether McDonald's will hold on to its controlling stake in the firm to his corporate parent. The IPO "certainly is impressive, but it's time to get back to business here at Chipotle," he said. "We're focusing on not only getting high-quality ingredients, but hiring the very best managers to run our stores." Chipotle said that it plans to use proceeds from the offering to pay down a $30 million line of credit to McDonald's and to provide additional long-term capital. The company posted net income of $4 million on sales of $470.7 million in 2004. Average-store sales grew from $1.06 million in 2002 to $14 million for the trailing 12-month period ended Sept. 30. Chipotle sold 6.06 million shares in the IPO and McDonald's sold 1.82 million shares. Chipotle has been drawing a line of investors based partly on the growth of the fast-casual segment, now totaling $7 billion and considered the fastest-growing part of the restaurant industry with a projected five-year compound annual growth rate of at least 11%. "Based on its robust market opportunities, impressive same-store sales growth and beneficial relationships with McDonald's, coupled with the momentum behind the restaurant group, we believe this deal is spicy hot," Renaissance Capital said in its IPO of the week column.

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