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SEC Filings

CHIPOTLE MEXICAN GRILL INC filed this Form S-1/A on 12/23/2005
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    Failure to receive frequent deliveries of higher-quality food ingredients and other supplies could harm our operations.

        Our ability to maintain our menu depends in part on our ability to acquire ingredients that meet our specifications from reliable suppliers. Shortages or interruptions in the supply of ingredients caused by unanticipated demand, problems in production or distribution, food contamination, inclement weather or other conditions could adversely affect the availability, quality and cost of our ingredients, which could harm our operations. If any of our distributors or suppliers performs inadequately, or our distribution or supply relationships are disrupted for any reason, our business, financial condition, results of operations or cash flows could be adversely affected. We currently depend on three or four suppliers for our pork, chicken and beef supplies. It could be more difficult to replace our pork suppliers if we were no longer able to rely on them. We do not have long-term contracts with any of our suppliers. In addition, we've relied on the McDonald's distribution network. As we begin to increase our independence from McDonald's, we may have to seek new suppliers and service providers. If we cannot replace or engage distributors or suppliers who meet our specifications in a short period of time, that could increase our expenses and cause shortages of food and other items at our stores, which could cause a store to remove items from its menu. If that were to happen, affected stores could experience significant reductions in sales during the shortage or thereafter, if our customers change their dining habits as a result. Our focus on a limited menu would make the consequences of a shortage of a key ingredient more severe.

        In addition, our approach to competing in the restaurant industry depends in large part on our continued ability to adhere to the principle of "food with integrity." We use a substantial amount of naturally raised and sustainably grown ingredients, and try to make our food as fresh as we can, in light of pricing considerations. As we increase our use of these ingredients, the ability of our suppliers to expand output or otherwise increase their supplies to meet our needs may be constrained. Our inability to obtain a sufficient and consistent supply of these ingredients on a cost-effective basis, or at all, could cause us difficulties in aligning our brand with the principle of "food with integrity." That could make us less popular among our customers and cause sales to decline.

    Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to various factors.

        Our quarterly operating results may fluctuate significantly because of various factors, including:

    the impact of inclement weather, natural disasters and other calamities, such as hurricanes Katrina and Rita in 2005;

    the timing of new store openings and related revenues and expenses;

    operating costs at our newly opened stores, which are often materially greater during the first several months of operation;

    labor availability and wages of store management and crew;

    profitability of our stores, especially in new markets;

    changes in comp store sales and customer visits, including as a result of the introduction of new menu items;

    variations in general economic conditions, including those relating to changes in gasoline prices;

    negative publicity about the ingredients we use or the occurrence of food-borne illnesses or other problems at our stores;

    changes in consumer preferences and discretionary spending;

    increases in infrastructure costs; and


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