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SEC Filings

CHIPOTLE MEXICAN GRILL INC filed this Form S-1/A on 12/23/2005
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costs, and we've historically had access to the McDonald's distribution network. We also use many of the same suppliers for our paper and packaging products. See "Risk Factors—Risks Relating to Our Business and Industry—As we increase our independence from McDonald's, we may face difficulties replacing services it currently provides to us and entering into new or modified arrangements with existing or new suppliers or service providers" and "Certain Relationships and Related Party Transactions."

Communicating With Customers: Advertising and Marketing

        Advertising and Other Ways Customers Learn About Chipotle.    We try to keep our customers coming back to our stores based on the experience we create. We spent about $8.7 million on advertising in 2004, and we expect to spend about $9.8 million on advertising in 2005, of which we had spent $7.8 million by September 30, 2005, representing in each case less than 2% of our total revenue in those periods. We believe that word-of-mouth is the best and most effective method of building our brand, and that the Chipotle experience inspires our customers to continue frequenting our stores and to recommend our food to others.

        We design our advertising to stir our customers' passion for great food without compromising convenience. And we do it using a low-key and irreverent voice that's been popular with customers. We target all kinds of customers; based on our most recent marketing survey, however, most of our customers are adults between the ages of 18 and 44, relatively evenly split by gender and marital status, with slightly more of our customers having no children. We spend our advertising budget primarily on print, outdoor, transit and radio ads and direct mailings in markets where we have some existing market penetration. We used television advertising for the first time in 2005, when we sponsored a program on the Public Broadcasting Service entitled "Bittman Takes on America's Chefs."

        We want our customers to think our advertising is creative. We try to surprise them each time with our ad messages, which are simple and focused, as we seek both to entertain and sell. Our print ads have been the core of our advertising efforts and focus on our iconic foil-wrapped burrito image (like the one on the cover of this prospectus), coupled with messages that emphasize our recipes, spicy flavors and the size of our portions, among other features. We've even included some examples in the electronic version of this prospectus so that you can get an idea of our approach (and you can see some of our print ads on the inside front and back covers). We use a number of individual free-lance artists and small advertising agencies to help to make each of our ads unique, and we have no long-term relationships with large advertising agencies. We also use our packaging to educate our customers about our vision and to surprise them with humorous messages similar in style to those used in our print ads. We also sell and give away t-shirts and other items bearing our messages and images.

        We also believe that our website is an important marketing tool that creates a strong customer connection. Through it, we generated about 290,000 visits in August 2005.

        Our approach to food, service and atmosphere has captured the attention of some of the country's most renowned news media, including several well-regarded food critics, which we think is unusual in our segment of the restaurant industry. The Washington Post, Food and Wine magazine, the New York Times, Fast Company magazine, the Seattle Times, the Atlanta-Journal Constitution, the Denver Post, and many other newspapers, magazines and media outlets have praised Chipotle. MTV's popular reality program, "The Osbournes," even had an entire episode devoted to rocker Ozzy Osbourne's love of Chipotle burritos. Chipotle has also appeared in MTV's "The Real World: Austin" series.

        Getting More People to Try Our Food.    We conduct targeted marketing and promotional campaigns to attract customers in a highly competitive marketplace. We focus significant promotional activities on new store openings, as described in more detail below. We also use more general promotional strategies to get people to try our food, such as "Free Burrito Day" and free giveaway promotions that require customer interaction and participation on holidays such as Halloween (we call it "Boo-Rito Day"), when customers dress up as their favorite Chipotle food or ingredient to get a free burrito. Recently, we gave away free burritos at some of our stores to people displaced by hurricane Katrina. We also offer a "Burrito Bank"


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