Chipotle 2009 Annual Report Download - page 20

We may in the future become subject to additional claims for purportedly fraudulent transactions arising out
of the actual or alleged theft of credit or debit card information, and we may also be subject to lawsuits or other
proceedings in the future relating to these types of incidents. Proceedings related to theft of credit or debit card
information may be brought by payment card providers, banks and credit unions that issue cards, cardholders
(either individually or as part of a class action lawsuit) and federal and state regulators. Any such proceedings
could distract our management from running our business and cause us to incur significant unplanned losses and
expenses. Consumer perception of our brand could also be negatively affected by these events, which could
further adversely affect our results and prospects.
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 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 are aware of restaurants in
foreign jurisdictions using menu items, logos and other branding that we believe are based on our intellectual
property, and our ability to halt these restaurants from using these elements may be limited in jurisdictions in
which we are not operating. This could have an adverse impact on our ability to successfully expand into other
jurisdictions in the future. 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 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.
18
Annual Report