Chipotle 2009 Annual Report Download - page 5

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PART I
ITEM 1. BUSINESS
General
Chipotle Mexican Grill, Inc. (“Chipotle”, the “Company”, or “We”) operates 956 restaurants in 35 states
throughout the United States, the District of Columbia, and Ontario, Canada as of December 31, 2009. Our
restaurants serve a focused menu of tacos, burritos, salads and burrito bowls (a burrito without the tortilla), made
using fresh ingredients. We are focused on trying to find the highest quality ingredients we can to make great
tasting food; on recruiting and retaining top performing people to ensure that the restaurant experience we
provide is exceptional; on building restaurants that are operationally efficient and aesthetically pleasing; and on
doing all of this with increasing awareness and respect for the environment. We have grown substantially over
the past five years, and expect to open between 120 and 130 additional restaurants in 2010.
Chipotle began with a simple philosophy: demonstrate that food served fast doesn’t have to be a traditional
“fast-food” experience. Over the years, that vision has evolved. Today, our vision is to change the way the world
thinks about and eats fast food. We do this by avoiding a formulaic approach when creating our restaurant
experience, looking to fine-dining restaurants for inspiration. We use high-quality raw ingredients, classic
cooking methods and a distinctive interior design and have friendly people to take care of each customer—
features that are more frequently found in the world of fine dining. Our approach is also guided by our belief in
an idea we call “Food With Integrity”. Our objective is to find the highest quality ingredients we can—
ingredients that are grown or raised with respect for the environment, animals and people who grow or raise the
food.
We manage our operations and restaurants based on five regions that all report into a single segment.
Financial information about our operations, including our revenues and net income for the years ended
December 31, 2009, 2008, and 2007, and our total assets as of December 31, 2009 and 2008, is included in our
consolidated financial statements and accompanying notes in Item 8, “Financial Statements and Supplementary
Data”. Substantially all of our revenues are generated and assets are located in the U.S.
Chipotle Mexican Grill, Inc. is a Delaware corporation. Our business was founded in Colorado in 1993, and
McDonald’s Corporation made a series of equity investments in us beginning in February 1998, becoming our
majority shareholder in 2000. We completed our initial public offering in January 2006. McDonald’s sold a
portion of its interest in us in the initial public offering, sold an additional portion of its interest in us in a
secondary offering in May 2006, and disposed of its remaining interest in us in an exchange offer to its
shareholders that was completed in October 2006.
Our Menu and Food Preparation
Food With Integrity. More than anything, serving high quality food is what motivates us and is the
cornerstone of our vision to change the way the world thinks about and eats fast food. As part of our Food With
Integrity philosophy, we believe that using fresh ingredients is not enough, so we spend time on farms and in the
field to understand where our ingredients come from and how the animals are raised. Because our menu is so
focused, we can concentrate on where we obtain each ingredient, and this has become a cornerstone of our
continuous effort to improve our food. All of our pork and all of our chicken, for example, is naturally raised. We
define naturally raised as coming from animals that are fed a pure vegetarian diet, never given antibiotics or
hormones, and raised in open pastures or deeply bedded pens—which is more stringent than the USDA’s
standard for naturally raised marketing claims. We also serve naturally raised beef in about 60% of our
restaurants. In addition, we work with leading animal ethicists to try to support more humane farming practices.
We’re also investigating the use of more sustainably grown produce, meaning produce grown by suppliers who
we believe respect the environment and their employees, while still charging reasonable prices for our food.
Today, about 40% of all of the beans we buy are organically grown—that is, they meet U.S. Food and Drug
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Annual Report