Chipotle 2012 Annual Report Download - page 32

One of our primary goals is for all of our restaurants to continue serving meats that are raised to meet our
standards, but we have and will continue to face challenges in doing so. Some of our restaurants served
conventionally raised beef for short periods during 2012 and the beginning of 2013, and more of our restaurants
may periodically serve conventionally raised meats in the future due to supply constraints. When we become
aware that one or more of our restaurants will serve conventionally raised meat, we clearly and specifically
disclose this temporary change on signage in each affected restaurant, so that customers can avoid those meats if
they choose to do so.
Our food costs increased in 2012 as a result of inflationary pressures on many of our ingredients,
particularly beef, chicken, and rice, and initiatives to improve the taste and quality of our food. The increase was
partially offset by the impact of menu price increases and relief in avocado prices. We expect that food cost
inflation will continue in 2013 and that our food costs as a percentage of revenue will increase. If food inflation
continues to pressure food costs, we may, after taking into account the general economic environment, consumer
confidence, and our sales trends, raise menu prices later in 2013.
Stock Repurchases. In accordance with stock repurchases authorized by our Board of Directors we
purchased stock with an aggregate total repurchase price of $206.4 million during 2012. As of December 31,
2012, $100.2 million was available to be repurchased under the current repurchase authorizations, which were
announced on October 18, 2012 and November 20, 2012. On February 5, 2013 we announced that our Board of
Directors authorized the expenditure of up to an additional $100 million to repurchase shares of our common
stock. We have entered into an agreement with a broker under SEC rule 10b5-1(c), authorizing the broker to
make open market purchases of common stock from time to time, subject to market conditions. The existing
repurchase agreement and the Board’s authorization of the repurchases may be modified, suspended, or
discontinued at any time.
On November 20, 2012, we also entered into a privately negotiated accelerated share repurchase transaction
(“ASR”) to repurchase $25 million of our common stock. The $25 million is part of the $100 million repurchase
program announced on November 20, 2012. We advanced the $25 million upon commencement of the
transaction and received 65,187 shares, which represented 70% of the total number of shares to be repurchased
calculated using the closing price on the commencement date. The final number of shares to be repurchased
under the ASR will be determined based generally on the volume-weighted average share price of our common
stock over a specified period. The ASR will be completed during the first quarter of 2013.
Restaurant Openings, Relocations and Closures
The following table details restaurant unit data for the years indicated.
For the years ended
December 31
2012 2011 2010
Beginning of year ............................ 1,230 1,084 956
Openings ................................... 183 150 129
Relocations ................................. (3) (4) (1)
Total restaurants at end of year ................... 1,410 1,230 1,084
Results of Operations
Our results of operations as a percentage of revenue and period-over-period variances are discussed in the
following section. As our business grows, as we open more restaurants and hire more employees, our restaurant
operating costs and depreciation and amortization increase.
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Annual Report