Chipotle 2005 Annual Report Download - page 20

• operating costs at our newly opened stores, which are often materially greater during the first
several months of operation;
• labor availability and wages of store management and crew;
• profitability of our stores, especially in new markets;
• changes in comp store sales and customer visits, including as a result of the introduction of new
menu items;
• variations in general economic conditions, including those relating to changes in gasoline prices;
• negative publicity about the ingredients we use or the occurrence of food-borne illnesses or
other problems at our stores;
• changes in consumer preferences and discretionary spending;
• increases in infrastructure costs; and
• fluctuations in supply prices.
Seasonal factors also cause our profitability to fluctuate from quarter to quarter. Our average store
sales are typically lower during the winter months and the holiday season and during periods of
inclement weather (because fewer people are eating out) and higher during the spring, summer and fall
months (for the opposite reason). Our revenue will also vary as a result of the number of trading days,
that is, the number of days in a quarter when a store is open.
As a result of these factors, results for any one quarter are not necessarily indicative of results to
be expected for any other quarter or for any year. Average store sales or comp store sales in any
particular future period may decrease. In the future, operating results may fall below the expectations
of securities analysts and investors. In that event, the price of our common stock would likely decrease.
Our success depends substantially upon the continued retention of certain key personnel.
We believe that our success has depended and continues to depend to a significant extent on the
efforts and abilities of our senior management team. The members of our management team currently
are employed by us on an ‘‘at-will’’ basis and may resign from our employment at any time, subject in
certain cases to the forfeiture of options or unvested shares they may hold. Our failure to retain
members of that team could materially adversely affect our ability to build on the efforts they’ve
undertaken with respect to our business. In particular, the loss of Steve Ells, our founder and Chief
Executive Officer, Monty Moran, our President and Chief Operating Officer, Jack Hartung, our Chief
Finance and Development Officer, or Bob Wilner, our Chief Administrative Officer, could materially
adversely affect us.
Our business could be adversely affected by increased labor costs or difficulties in finding the right teams
for our stores.
Labor is a primary component of our operating costs, and we believe good managers and crew are
a key part of our success. We devote significant resources to recruiting and training our store managers
and crew. Increased labor costs due to factors like competition, increased minimum wage requirements
and employee benefits would adversely impact our operating costs. Our success also depends in part on
the energy and skills of our employees and our ability to hire, motivate and keep qualified employees,
including especially store managers and crew members. Our failure to find and keep enough employees
who are a good fit with our culture could delay planned store openings, result in higher employee
turnover or require us to change our culture, any of which could have a material adverse effect on our
business and results of operations. Restaurant operators have traditionally experienced relatively high
employee turnover rates. Any increase in our turnover rates for managers or crew could be costly.
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