Chipotle 2013 Annual Report Download - page 33

contain genetically modified organisms, or GMOs, and we are working to replace ingredients containing GMOs
in our food (not including beverages) with non-GMO ingredients. While the meat and poultry we serve is not
genetically modified, the animals are likely fed a diet containing GMOs. We will continue to search for quality
ingredients that not only taste delicious, but also benefit local farmers or the environment, or otherwise benefit or
improve the sustainability of our supply chain.
One of our primary goals is for all of our restaurants to continue serving meats that are raised to meet our
standards, but we have and will continue to face challenges in doing so. Some of our restaurants served
conventionally raised beef and chicken for periods during 2013 and some are continuing to serve conventionally
raised beef, due to supply constraints for our Responsibly Raised meats. More of our restaurants may periodically
serve conventionally raised meats in the future due to supply constraints. When we become aware that one or
more of our restaurants will serve conventionally raised meat, we clearly and specifically disclose this temporary
change on signage in each affected restaurant, so that customers can avoid those meats if they choose to do so.
Our food costs increased as a percentage of revenue in 2013 as a result of inflationary pressures on many of
our ingredients, particularly salsa ingredients, as well as dairy, cooking oils, and chicken. We expect that food
cost inflation will continue into 2014.
Stock Repurchases. In accordance with stock repurchases authorized by our Board of Directors we
purchased shares of our common stock with an aggregate total repurchase price of $110.0 million during 2013.
As of December 31, 2013, $90.2 million was available to be repurchased under the current repurchase
authorization announced on February 5, 2013. We have entered into an agreement with a broker under SEC rule
10b5-1(c), authorizing the broker to make open market purchases of common stock from time to time, subject to
market conditions. The existing repurchase agreement and the Board’s authorization of the repurchases may be
modified, suspended, or discontinued at any time.
On November 20, 2012, we entered into a privately negotiated accelerated share repurchase transaction
(“ASR”) to repurchase $25 million of our common stock. We advanced the $25 million upon commencement of
the transaction and received 65,187 shares, which represented 70% of the total number of shares to be
repurchased calculated using the closing price on the commencement date. The agreement was settled in
February 2013, and we received an additional 21,860 shares, resulting in a weighted-average share price per
share of $287.20 for the ASR.
Restaurant Openings, Relocations and Closures
The following table details restaurant unit data for the years indicated.
For the years ended
December 31
2013 2012 2011
Beginning of year .................. 1,410 1,230 1,084
Openings ......................... 185 183 150
Relocations ....................... — (3) (4)
Total restaurants at end of year .......... 1,595 1,410 1,230
Results of Operations
Our results of operations as a percentage of revenue and period-over-period variances are discussed in the
following section. As our business grows, as we open more restaurants and hire more employees, our restaurant
operating costs and depreciation and amortization increase.
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Annual Report