Chipotle 2013 Annual Report Download - page 9

other restaurant concepts, or that connect us to like-minded individuals or organizations. Beyond these traditional
means, we are continuing to explore and pioneer new avenues of branded content aimed at educating consumers
about issues that are important to us, and explaining why we are working to drive positive change in the nation’s
food supply. In addition, we continue to generate considerable media coverage, with scores of publications
writing favorably about our food, restaurant concept and business.
We also recognize the need for our marketing to evolve, much as we have evolved our food culture and our
unique people culture. To this end, we have been developing more “owned media,” including new video and
music programs, and a more visible event strategy that includes our “Cultivate” festivals of food, music and
ideas, and participation in relevant events in markets around the country. Many of these newer programs allow us
to tell our story with more nuance than is afforded by traditional advertising, and help forge stronger emotional
connections with our customers. We are also increasing our use of digital, mobile, and social media to our overall
marketing mix, giving customers greater opportunity to access Chipotle in ways that are convenient for them, and
broadening our ability to engage with our customers individually.
Collectively, these efforts and our excellent restaurant teams have helped us create considerable word-of-
mouth publicity, with our customers learning about us and telling others, allowing us to build awareness and
loyalty with relatively low advertising expenditures, even in a competitive category, and to differentiate Chipotle
as a company that is committed to doing the right things in every facet of our business.
Competition
The fast-casual, quick-service and casual dining segments of the restaurant industry are highly competitive
with respect to, among other things, taste, price, food quality and presentation, service, location and the ambience
and condition of each restaurant. Our competition includes a variety of restaurants in each of these segments,
including locally owned restaurants and national and regional chains. Many of our competitors offer dine-in,
carry-out and delivery services. Among our main competitors are a number of multi-unit, multi-market Mexican
food or burrito restaurant concepts, some of which are expanding nationally. Unlike us, a number of our
competitors grow through franchising.
Several of our competitors compete by offering menu items that are specifically identified as low in
carbohydrates, better for customers or otherwise targeted at particular consumer preferences. Many of our
competitors in the fast-casual and quick-service segments of the restaurant industry also emphasize lower-cost,
“value meal” menu options, a strategy we do not currently pursue.
Moreover, we may also compete with companies outside the fast casual and quick service and casual dining
segments of the restaurant industry. For example, competitive pressures can come from deli sections and in-store
cafés of several major grocery store chains, including those targeted at customers who want higher-quality food,
as well as from convenience stores and casual dining outlets. These competitors may have, among other things, a
more diverse menu, lower operating costs, better locations, better facilities, better management, more effective
marketing and more efficient operations than we have.
We believe we are well-positioned to continue to grow our market position in existing and new markets
given current consumer trends, including increasing awareness and concern among consumers about what they
eat and how it is prepared and the increasing prevalence of the fast-casual segment. Some of our competitors
have formats that might resemble ours, but we believe that Chipotle has become one of the most recognized fast-
casual restaurants and that we are known for our focus on having teams of top-performing employees prepare
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 adds up to a high quality customer experience in our
restaurants. We believe these elements represent significant competitive advantages in the segment in which we
operate.
Restaurant Site Selection
We believe that site selection is critical to our success and thus we devote substantial time and effort to
evaluating each potential location. Our site selection process includes the use of external real estate brokers with
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Annual Report