Chipotle 2009 Annual Report Download - page 28

Food With Integrity. In addition to continuing to serve naturally raised pork in all our restaurants, we now
serve naturally raised chicken in all of our restaurants and naturally raised beef in about 60%. We define
naturally raised as coming from animals that are fed a pure vegetarian diet, never given antibiotics or hormones,
and raised humanely in open pastures or deeply bedded pens—which is more stringent than the USDA’s recently
adopted standard for naturally raised marketing claims. The current economic conditions have led to natural
chicken supply shortages. As a result, we have on occasion temporarily suspended serving naturally raised
chicken in certain limited restaurants for short periods of time. We expect additional shortages during the first
half of 2010 due to a supplier suspending production of naturally raised chickens. In 2009, 35% of all beans we
bought were organically grown and we have increased the percentage to 40% for 2010. Also during 2009, we
exceeded our goal to purchase at least 35% of at least one produce item while in season for each of our markets
from small and midsize local farmers. We expect to increase the amount of locally grown produce purchased
during 2010. At the end of 2009, 30% of the milk used in our cheese came from cows raised in pastures and we
expect to increase that percentage during 2010.
Marketing. While our marketing approach has often been considered edgy and innovative, we recognize the
need for our marketing to evolve, much as we have evolved our food culture and our unique people culture. In
January 2009 we hired our first Chief Marketing Officer and we continue to review our marketing strategy and
messaging approach to make it more effective. One component of that effort is to develop our advertising so that
it more effectively communicates how Chipotle is different than other restaurant concepts, and so that it
resonates more with our customers. In addition, we began testing an expanded menu in the Denver market that is
designed to broaden the appeal of our restaurants to families and to customers who are unfamiliar with Chipotle
or are seeking lower-priced eating options but still value high-quality ingredients and great taste. Based on the
results thus far, we’ve expanded the kid’s meal portion of the expanded menu to a total of 7 markets and expect
the kid’s menu to be rolled out nationwide in 2010.
Stock Repurchases. In September 2008, our Board of Directors approved the expenditure of up to $100
million to repurchase shares of our class B common stock, and we repurchased shares in each month thereafter
through August 2009, when the authorized repurchases were completed. In November 2009, we announced that
our Board of Directors approved the expenditure of up to an additional $100 million to repurchase shares of our
common stock. We have entered into an agreement with a broker under SEC rule 10b5-1, authorizing the broker
to make open market purchases of common stock from time to time, subject to market conditions. The
repurchase agreement and the Board’s authorization of the repurchase program may be modified, suspended, or
discontinued at any time. We repurchased stock with an aggregate total repurchase price of $84.1 million in the
year ended December 31, 2009.
Cash and Securities. As of December 31, 2009, we had cash and securities of $269.6 million. Given the
recent financial turmoil, we have focused on capital preservation and our cash equivalent holdings consist of
highly-rated money market funds or FDIC insured accounts.
Stock Conversion. In December 2009, our shareholders approved a proposal to convert all of the outstanding
shares of our class B common stock to shares of class A common stock on a one-for-one basis, and to rename the
class A common stock as “common stock.” The conversion was completed on December 21, 2009.
26
Annual Report