Chipotle 2012 Annual Report Download - page 24

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 results may fluctuate significantly and could fall below the expectations of securities
analysts and investors due to various factors.
Our quarterly 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, as well as temporary fluctuations in
labor costs as a result of large-scale changes in workforce;
• fluctuations in supply costs, particularly for our most significant food items;
• our ability to raise menu prices without adversely impacting customer traffic;
• the impact of inclement weather, natural disasters and other calamities, such as freezes that have
impacted produce 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;
• tax expenses, impairment charges and other non-operating costs; and
• potential distraction or unusual expenses associated with our expansion into international markets or
initiatives to explore new concepts.
Seasonal factors also cause our results to fluctuate from quarter to quarter. Our restaurant sales are typically
lower during the winter months and the holiday season and during periods of inclement weather (because fewer
people are eating out) and higher during the spring, summer and fall months (for the opposite reason). Our
restaurant sales will also vary as a result of the number of trading days—that is, the number of days in a quarter
when a restaurant is open.
As a result of these factors, results for any one quarter are not necessarily indicative of results to be expected
for any other quarter or for any year. Average restaurant sales or comparable restaurant sales in any particular
future period may decrease. In the future, operating results may fall below the expectations of securities analysts
and investors, which could cause our stock price to fall. We believe the market price of our common stock, which
has generally traded at a higher price-earnings ratio than stocks of most or all of our peer companies, reflects
high market expectations for our future operating results. As a result, if we fail to meet market expectations for
our operating results in the future, any resulting decline in the price of our common stock could be significant.
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Annual Report