Chipotle 2012 Annual Report Download - page 2

Dear Shareholders,
We are pleased with Chipotle’s performance in 2012, and are confident that the continuing strength of our business is a direct result
of our focus on the key elements that drive our business, primarily our unique food and people cultures. Together, these priorities are
at the heart of our vision to change the way people think about and eat fast food.
Our food culture sets us apart from other restaurants. We have always used great quality ingredients and prepared the food we serve
using classic cooking techniques in open kitchens. We are proud of the way we source the finest ingredients we can find and
skillfully prepare and cook them with great care, because we know it results in exceptional tasting food that our customers
appreciate. We believe this bond with our customers only deepens as they become more curious about where their food comes
from, and they discover the special way we source our food. We believe the more people care about their food, and where it comes
from, the more likely they are to become loyal customers of Chipotle.
Throughout 2012, we continued to push ourselves to find better, more sustainable sources for the ingredients we use and to refine
our cooking techniques so that we are continually offering our customers the very best food we can. Our local produce program
exceeded our expectations as we served more than 15 million pounds of produce from local farms across the country last year,
exceeding our goal of 10 million pounds. We also increased our use of cheese and sour cream made with milk from dairy cattle given
access to pasture. Finally, we continued to serve meat raised in a responsible way (from animals that are raised in a humane
manner and without the use of subtherapeutic antibiotics or added hormones) in all of our restaurants, except when we have
experienced periodic short-term disruptions to our supply. We are proud of the unique supply chain we have built over the years and
we will continue to identify additional suppliers, and grow our existing ones, to meet the growing demand for these high-quality
ingredients.
We continue to build a people culture that attracts and empowers top performers. We now have more empowered top performers
than ever developing from crew positions in our company. In 2012, we promoted 190 new Restaurateurs, giving us a total of 421 of
these elite leaders including field leaders who were promoted from Restaurateur positions. Also, we are seeing a higher percentage
of candidates promoted to the Restaurateur position than ever before, demonstrating that our field teams better understand how to
create these special cultures, and that the quality of managers in our restaurants is getting better all the time. At our September All
Managers’ Conference, we brought together an extraordinary group of 2,000 leaders to share details about our vision, and to
provide opportunities for them to learn about programs that will help them run our restaurants even better. This inspiring experience
made us feel as confident as ever that the future of our business is in good hands.
Last year we opened 183 restaurants, grew our revenue by 20.3% to $2.73 billion, and saw comparable restaurant sales grow 7.1%
for the year. Our restaurant-level margins were among the highest in the industry at 27.1%. We are pleased with our performance,
and anticipate continued growth and success. We plan to open an additional 165-180 restaurants in 2013, and are confident that
we are developing great leaders to run these restaurants in a way that we can feel proud of. We are also planting seeds for future
growth in Europe and Canada, where we currently operate 12 restaurants, and with our ShopHouse Southeast Asian Kitchen
concept, which is currently open in Washington, DC.
In 2012, our marketing focused on building the Chipotle brand and engaging with our customers in ways that create stronger,
deeper bonds than is possible with “limited time offers,” and on connecting with people emotionally in a way that is both true and
meaningful. With programs like our award-winning “Back to the Start” animated short film and our Cultivate food and music
festivals, we are creating a lasting connection with our customers and continuing a tradition of building our brand in unconventional
ways.
During 2013 we will celebrate Chipotle’s 20th anniversary. We are grateful for our past success, but even more excited about what is
yet to come. There is tremendous opportunity for Chipotle in the years ahead. We are confident that we are well positioned for
continued success.
Sincerely,
Steve Ells Monty Moran
Founder, Chairman, & Co-CEO Co-CEO
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