Chipotle 2013 Annual Report Download - page 5

PART I
ITEM 1. BUSINESS
General
Chipotle Mexican Grill, Inc. and its subsidiaries (“Chipotle”, the “Company”, or “we”) operate Chipotle
Mexican Grill restaurants, which serve a focused menu of burritos, tacos, burrito bowls (a burrito without the
tortilla) and salads, made using fresh ingredients. As of December 31, 2013, we operated 1,572 Chipotle
restaurants throughout the United States, as well as seven in Canada, six in England, two in France, and one in
Germany. Additionally, our restaurants include six ShopHouse Southeast Asian Kitchen restaurants, serving
Asian-inspired cuisine, and we are an investor in a consolidated entity that owns and operates one Pizzeria
Locale, a fast casual pizza concept, resulting in a total of 1,595 restaurants as of December 31, 2013. We focus
on trying to find the highest quality ingredients we can to make great tasting food; on building a special people
culture that is centered on creating a team of top performers empowered to achieve high standards; 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 180 and 195 additional restaurants in 2014, including a small number of ShopHouse and/or
Pizzeria Locale restaurants.
Our vision is to change the way people think about and eat 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 seven regions that aggregate into one reportable
segment. Financial information about our operations, including our revenues and net income for the years ended
December 31, 2013, 2012, and 2011, and our total assets as of December 31, 2013 and 2012, 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. For a discussion of risks
related to our international operations, see “Risks Related to Our Growth Strategy and Future Expansion—Our
expansion into international markets may present increased risks due to lower customer awareness of our brand,
our unfamiliarity with those markets and other factors” in Item 1A, Risk Factors.
Our Menu and Food Preparation
Food With Integrity. Serving high quality food while still charging reasonable prices is critical to our vision
to change the way people think about and eat fast food. As part of our Food With Integrity philosophy, we
believe that purchasing fresh ingredients and preparing them by hand are not enough, so we spend time on farms
and in the field to understand where our food comes from and how it is raised. Because our menu is so focused,
we can concentrate on the sources of each ingredient, and this has become a cornerstone of our continuous effort
to improve our food.
In all of our restaurants, we endeavor to serve only meats that were raised without the use of subtherapeutic
antibiotics or added hormones, and in accordance with criteria we’ve established in an effort to improve
sustainability and promote animal welfare. We brand these meats as “Responsibly RaisedTM.” One of our primary
goals is for all of our restaurants to serve meats 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 additional 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.
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Annual Report