Chipotle Mexican Grill, Inc. (CMG) is a quick-service restaurant providing a focused menu of burritos, tacos, and salads. Chipotle’s income statements for the end of two recent years are as follows:

a. Prepare a horizontal analysis of the two income statements. Round percentages to one decimal place.

b. Interpret the horizontal analysis.

c. Can you think of a reason why Chipotle’s revenues and operating income may have decreased so significantly in Year 2?

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Chipotle Mexican Grill, Inc. Income Statements For the Years Ended December 31 (in thousands) Year 2 Year 1 Revenue $ 3,904,384 $ 4,501,223 Expenses: Food, beverage, packing $(1,365,580) $(1,503,835) Labor.... (1,105,001) (1,045,726) Rent (occupancy) (293,636) (262,412) General and administrative (641,953) (514,963) Other... (463,647) (410,698) Total expenses Operating income $(3,869,817) $(3,737,634) $ 34,567 $ 763,589