Chipotle 2009 Annual Report Download - page 2

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Dear Shareholders,
A key aspect of our mission is what we call “Food With Integrity”-- a philosophy about food that leads us to seek
better tasting and more sustainable sources for all of our ingredients. Throughout the year, we continued to work
hard to increase our supply of naturally raised meat while also increasing the amount of local and organic produce
we served. Today, 100% of our pork, 100% of our chicken, and about 60% of our beef is naturally raised. All of
our naturally raised meat comes from animals that are humanely raised on a vegetarian diet, and never given
antibiotics or added hormones. Through our local produce program, we committed to serve at least 35% of at least
one produce item from local farms when seasonally available, and we often vastly exceeded that goal.
Additionally, about 40% of all of our beans were organically grown.
Similarly, we are committed to improve our dairy supply. Currently, all of our dairy (cheese and sour cream) is
made with milk from cows that are never given the synthetic hormone rBGH (recombinant bovine growth
hormone). We are working hard to create a dairy supply which would allow us to source 100% of our dairy from
cattle raised on pasture. While 30% of our dairy already comes from such sources, we are committed to getting
all of our milk from these better suppliers as soon as possible.
Another key aspect of our mission is the creation of an exceptional people culture: one where we select only the
best and brightest people to join our organization and where each of these people empowers the people they work
with to be at their very best. The foundation of this culture is the restaurant manager position, since it is the most
important position in our company. For this reason, we are tremendously focused on developing more
Restaurateurs, which are our very best restaurant managers. Having a strong bench of Restaurateurs in 2009
resulted in a number of significant improvements to our business. These improvements were the result of our
highest performers working more efficiently while delivering exceptional food and outstanding customer service.
By creating a culture that appeals only to high performers, we were able to increase our rate of internal promotions
to manager from 60% at the beginning of 2009 to 85% at the end. We currently have over 150 Restaurateurs,
with their impact and influence affecting almost 250 restaurants through direct mentoring relationships. By
continuing to expand this program we have a better pipeline of potential managers, which will help us ensure high
standards for restaurant operations.
Our restaurant level margins for 2009 were the highest we have ever achieved as a company, and among the
highest in the industry. These margins are attributable to our economic model which results from our focus
on doing just a few things better than anyone else. Our new restaurant economics were further strengthened
by a significant decline in new restaurant development costs in 2009. The decline was the result of our effort
to continue to reduce our investment cost as well as taking advantage of our growth during these difficult
economic times.
We remain committed to delivering shareholder value through the pursuit of our vision of changing the way people
think about and eat fast food.
Sincerely,
Steve Ells Monty Moran
Founder, Chairman, & Co-CEO Co-CEO
We’re proud of our strong performance during 2009, as we delivered outstanding results while remaining true to our
vision to change the way people think about and eat fast food. Our success has been driven by our focus on doing
just a few things, but doing them better than anyone else. This focus allows us to seek the best ingredients we can
find, prepare great tasting food using classic cooking techniques, create a special people culture which leads to
exceptional interactive service and an extraordinary dining experience, and serve our customers in an environment
designed to complement our brand. We’re able to do all this while strengthening our unit economic model and
continuing to successfully open new restaurants, resulting in attractive returns for our shareholders.