Chipotle 2008 Annual Report Download - page 19

new outside advertising agency. In addition, we have developed and introduced in select markets new logos and
other branding. We are still developing many facets of our new marketing and branding strategy, and do not have
any assurance that our new strategy will be successful. If new advertising, modified branding and other
marketing programs do not drive increased restaurant sales, the expense associated with these programs will
adversely impact our financial results.
We may not be able to adequately protect our intellectual property, which could harm the value of our
brands and adversely affect our business.
Our intellectual property is material to the conduct of our business. Our ability to implement our business
plan successfully depends in part on our ability to further build brand recognition using our trademarks, service
marks, trade dress and other proprietary intellectual property, including our name and logos and the unique
ambience of our restaurants. If our efforts to protect our intellectual property are inadequate, or if any third party
misappropriates or infringes on our intellectual property, either in print or on the internet, the value of our brands
may be harmed, which could have a material adverse effect on our business and might prevent our brands from
achieving or maintaining market acceptance. We may also encounter claims from prior users of similar
intellectual property in areas where we operate or intend to conduct operations. This could harm our image, brand
or competitive position and cause us to incur significant penalties and costs.
Our quarterly operating results may fluctuate significantly and could fall below the expectations of
securities analysts and investors due to various factors.
Our quarterly operating results may fluctuate significantly because of various factors, including:
• changes in comparable restaurant sales and customer visits, including as a result of declining consumer
confidence or the introduction of new menu 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;
• labor availability and wages of restaurant management and crew;
• profitability of our restaurants, especially in new markets;
• the impact of inclement weather, natural disasters and other calamities, such as snow storms in many of
our primary markets in 2006 and 2007 and freezes in California and Chile during 2008 which impacted
avocado crops;
• 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;
• changes in consumer preferences and discretionary spending;
• increases in infrastructure costs;
• fluctuations in supply prices; and
• tax expenses, impairment charges and other non-operating costs.
Seasonal factors also cause our operating 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 revenue 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.
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Annual Report