Chipotle 2008 Annual Report Download - page 2

Dear Shareholders,
While 2008 was a challenging year for restaurant companies, including Chipotle, we remained focused on our
vision to change the way the world thinks about and eats fast food, and made considerable progress in our
effort to serve Food With Integrity.
This past year, we reached the important milestone of serving 100% naturally raised chicken in all of our U.S.
restaurants while increasing the quantity of naturally raised beef to more than 60%. Of course, 100% of the
pork we serve is also naturally raised. All of our naturally raised meat comes from animals that are raised in a
humane way, never given antibiotics or added hormones, and fed a pure vegetarian diet with no animal
byproducts; a standard that exceeds the recently adopted USDA definition of “naturally raised,” which does
not address humane treatment of animals.
We also launched a program to serve locally grown produce when it is seasonally available, making Chipotle
the only national restaurant company with a significant commitment to using produce from local farms. In the
first year of our local produce program, we met or exceeded our goal to serve at least 25% of at least one
local produce item in all of our markets, and we plan to expand the program in 2009.
Additionally, we made some important changes to strengthen our management team. First, we promoted
Monty Moran to the position of Co-Chief Executive Officer. Monty’s promotion recognizes the tremendous
impact he has had on our business as President and Chief Operating Officer, including his work to establish a
unique and dynamic people culture that rivals our food culture. Second, we named Mark Crumpacker as our
first-ever Chief Marketing Officer. Mark has long-standing ties with Chipotle, having developed our original
logo and identity package, and will now lead all of our marketing efforts. And finally, we asked Bill Niman to
work with us in a consulting capacity as a Sustainable Agriculture Advisor. Bill founded Niman Ranch, which
provides much of our naturally raised pork and some of our naturally raised beef, and is a pioneer in the
sustainable food movement.
Beyond our efforts to serve the best-tasting food, made with more sustainable ingredients, we believe the
most important thing we can do to ensure the success of our company is to build a culture which attracts
and empowers the highest performers. We hire people who possess those certain characteristics one
cannot train, and we teach them the skills they need to be successful at Chipotle. The energy and optimism
among our managers and crew are apparent from the moment one steps into our restaurants, as each
member of the team knows there is significant potential at Chipotle, and is ready and eager to delight our
customers.
During 2008, we increased our revenue by 22.7% to $1.3 billion, grew comparable restaurant sales by 5.8%,
and increased diluted earnings per share 10.8% to $2.36. Our healthy balance sheet and strong unit economic
model allowed us to open 136 restaurants funded entirely with operating cash flow, opportunistically pursue
a $100 million stock repurchase program, and deliver restaurant level margins of 21.5%.
Looking at the current environment, we will continue to seek opportunities to strengthen our business by
making sure we are as disciplined and efficient as possible in everything we do. It starts with our selection of
new restaurant sites, and continues through the way we source ingredients, the way we prepare food, and
the way we interact with our customers. We are confident that this approach will make Chipotle an even
stronger company, allowing us to continue to increase the quality of our dining experience, and ultimately
increase shareholder value over time.
Sincerely,
Steve Ells Monty Moran
Founder, Chairman, & Co-CEO Co-CEO