Chipotle 2013 Annual Report Download - page 26

• changes in consumer preferences and discretionary spending;
• labor availability and wages of restaurant management and crew, as well as temporary fluctuations in
labor costs as a result of large-scale changes in workforce;
• fluctuations in supply costs, particularly for our most significant food items;
• the timing of new restaurant openings and related revenues and expenses;
• operating costs at newly opened restaurants, which are often materially greater during the first several
months of operation;
• the impact of inclement weather, natural disasters and other calamities, such as freezes that have
impacted produce crops and droughts that have impacted livestock and the supply of certain meats;
• variations in general economic conditions, including the impact of declining interest rates on our
interest income;
• negative publicity about the ingredients we use or the occurrence of food-borne illnesses or other
problems at our restaurants;
• increases in infrastructure costs;
• litigation, settlement costs and related legal expense;
• tax expenses, impairment charges and other non-operating costs; and
• potential distraction or unusual expenses associated with our expansion into international markets or
initiatives to expand new concepts.
Seasonal factors also cause our results to fluctuate from quarter to quarter. Our restaurant 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
restaurant sales will also vary as a result of the number of trading days—that is, the number of days in a quarter
when a restaurant 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 restaurant sales or comparable restaurant sales in any particular
future period may decrease. In the future, operating results may fall below the expectations of securities analysts
and investors, which could cause our stock price to fall. We believe the market price of our common stock, which
has generally traded at a higher price-earnings ratio than stocks of most or all of our peer companies, reflects
high market expectations for our future operating results. The trading market for our common stock has been
volatile at times as well. As a result, if we fail to meet market expectations for our operating results in the future,
any resulting decline in the price of our common stock could be significant.
Our anti-takeover provisions may delay or prevent a change in control of us, which could adversely affect
the price of our common stock.
Certain provisions in our corporate documents and Delaware law may delay or prevent a change in control
of us, which could adversely affect the price of our common stock. Our amended and restated certificate of
incorporation and amended and restated bylaws contain some provisions that may make the acquisition of control
of us without the approval of our board of directors more difficult, including provisions relating to the
nomination, election and removal of directors, the structure of the board of directors and limitations on actions by
our shareholders. In addition, Delaware law also imposes some restrictions on mergers and other business
combinations between us and any holder of 15% or more of our outstanding common stock. Any of these
provisions may discourage a potential acquirer from proposing or completing a transaction that may have
otherwise presented a premium to our shareholders.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
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Annual Report