Chipotle 2008 Annual Report Download - page 9

When we open a new restaurant, we plan a range of activities to introduce Chipotle to the local community
and to create interest in the restaurant from the start. Our advertising has generally included print, outdoor, transit
and radio ads. In addition, we continue to generate considerable media coverage, with scores of publications
writing favorably about our food, restaurant concept and business, and our food and restaurants have been
featured in a number of television news programs.
Collectively, these efforts have helped us create considerable word-of-mouth publicity, with our customers
learning about us and telling others, allowing us to build awareness with relatively low advertising expenditures.
We also recognize the need for our marketing to evolve, much as we have evolved our food culture and our
unique people culture. To help us improve our marketing direction and message, to deepen our relationships with
customers and continue to attract new customers, we hired our first ever Chief Marketing Officer in January
2009. Shortly after filling this new position, we hired a new advertising agency and are taking a fresh look at our
marketing strategy and direction with an eye to making our marketing more effective. As part of these efforts, we
have developed and introduced in select markets new logos and other branding.
Competition
The fast-casual segment of the restaurant industry is highly competitive and fragmented. In addition, fast-
casual restaurants compete against other segments of the restaurant industry, including quick-service restaurants
and casual dining restaurants. The number, size and strength of competitors vary by region, market and even
restaurant. All of these restaurants compete based on a number of factors, including taste, quality, speed of
service, value, name recognition, restaurant location, customer service and the ambience and condition of each
restaurant.
We compete with national and regional fast-casual, quick-service and casual dining restaurants. Our
competition also includes a variety of locally owned restaurants and the deli sections and in-restaurant cafés of
several major grocery store chains. Many of our competitors have greater financial and other resources, have
been in business longer, and have greater name recognition than we have, and are better established than we are
in the markets where our restaurants are located or are planned to be located.
We believe we’re well-positioned to continue to grow our market position in existing and new markets
given current consumer trends, including the increasing impact of Hispanic culture on food, the growth of the
Mexican food segment and increasing awareness and concern among consumers about what they eat and how it
is prepared. Some of our competitors have formats similar to ours. We believe, however, that Chipotle has
become one of the most recognized fast-casual restaurants and is known for its focus on preparing food using a
variety of fresh ingredients in an open restaurant kitchen to create delicious food and commitment to “Food With
Integrity”, which we think represents a significant competitive advantage in the segment in which we operate.
Seasonality
Seasonal factors cause our profitability to fluctuate from quarter to quarter. Historically, our average daily
restaurant sales and profits are lower in the first and fourth quarters due, in part, to the holiday season and
because fewer people eat out during periods of inclement weather (the winter months) than during periods of
mild or warm weather (the spring, summer and fall months). Other factors also have a seasonal effect on our
results. For example, restaurants located near colleges and universities generally do more business during the
academic year.
Our Intellectual Property and Trademarks
“Chipotle,” “Chipotle Mexican Grill,” “Chipotle Mexican Grill (in stylized font),” “Unburritable,” “Food
With Integrity,” “Fresh Is Not Enough, Anymore,” “The Gourmet Restaurant Where You Eat With Your Hands,”
the Chili Pepper Logo design, the Foil Burrito design and the Chipotle Medallion design are U.S. registered
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Annual Report