Chipotle 2009 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, restaurants and company have
been featured in a number of television 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. We also developed and introduced new logos, advertising and other branding elements in 2009. We
continue to review our entire marketing strategy and messaging approach to make it more effective, and have
developed new advertising and marketing strategies that we intend to implement in 2010. Our goals are to
effectively communicate how Chipotle is different than other restaurant concepts and ensure that our marketing
message resonates more with our customers.
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 that we are known for our focus on preparing food
using a variety of fresh ingredients in an open restaurant kitchen to create delicious food, as well as our
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.
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Annual Report