Chipotle Mexican Grill (CMG) 10-K risk factor changes: FY2014 vs FY2013

While future sales growth will depend [removed: substantially] [added: to an extent] on our opening new restaurants, changes in comparable restaurant sales (which represent the change in period-over-period sales for restaurants beginning in their 13th full month of operations) will also affect our sales growth and will continue to be a critical factor affecting profit growth.

| | • | | our ability to increase menu prices without adversely impacting transaction counts to such a degree that the impact from lower transactions equals or exceeds the benefit of the menu price [removed: increase;] [added: increase and without “trade down” by customers or other reduction in average check in response to price increases;] |

| | • | | initial sales performance of new restaurants, [added: and potential adverse impact of new restaurants on existing restaurant sales,] which [removed: is subject to the risks] [added: are further] described below under “_Our new restaurants, once opened, may not be profitable, and may adversely impact the sales of our existing restaurants_”; |

As a result of these factors it is possible that we will not achieve our targeted [added: or expected] comparable restaurant sales or that the change in comparable restaurant sales could be negative.

We plan to increase the number of our restaurants significantly in the next three years, and plan to open between [removed: 180] [added: 190] and [removed: 195] [added: 205] new restaurants in [removed: 2014.][added: 2015.]

However, we have in the past experienced delays in opening some restaurants and that could happen again as a result of any [added: one or more] of the following factors:

| | • | | difficulty managing construction and development costs of new restaurants at affordable levels, particularly in competitive [removed: markets;] [added: markets and when real estate development activity is robust;] |

[removed: Delays] [added: Our decision to delay] or [removed: failures in opening] [added: forego a significant number of] new [added: restaurant openings, or our inability to open the number of new] restaurants [added: we plan,] due to any of the reasons set forth above could materially and adversely affect our growth strategy and our expected results.

Moreover, as we open and operate more restaurants our rate of expansion relative to the size of our [added: existing] restaurant base will decline, which [removed: may in turn slow] [added: will make it increasingly difficult to maintain] our [added: past rates of] sales and profitability growth.

[removed: If we are unable to build the customer base that we expect for new restaurant locations or] overcome the higher fixed costs associated with new restaurant locations, new restaurants may not have similar results as our existing restaurants and may not be profitable.

[removed: We also have lowered] [added: In addition, after several years of lowering] the average development cost, net of landlord reimbursements, for new Chipotle restaurants in the U.S. [removed: significantly in recent years,] from about $916,000 in 2008 to about $800,000 in [removed: 2013.][added: 2013, our average developments costs, net of landlord reimbursements, for new Chipotle restaurants in the U.S. have begun to increase.]

In the event we are not able to [removed: achieve the] [added: contain increases in our] average [added: restaurant] development [removed: costs we expect for 2014 or sustain the benefits achieved in prior years,] [added: costs,] which could result from inflation, [added: an increase in the proportion of higher cost locations,] project mismanagement or other reasons, our new restaurant locations could also result in decreased profitability.

[removed: Additionally,] [added: Moreover,] our new restaurant development activity has broadened recently to incorporate trade areas or restaurant sites in which we have little or no prior experience, including smaller or more economically mixed communities, highway sites, outlet centers, and restaurants in airports, food courts, or on military sites.

The risks relating to building a customer base and managing development and operating costs may be more significant in some or all of these types of trade areas or restaurant [removed: sites.][added: sites, which could have an unexpected negative impact on our new restaurant operating results.]

[removed: In addition, we] [added: We] have now opened restaurants in nearly all major metropolitan areas across the U.S. New restaurants opened in existing markets may adversely impact sales in previously-opened restaurants in the same market as customers who frequent our established restaurants begin to visit a newly-opened restaurant instead.

As of December 31, [removed: 2013, 16] [added: 2014, 17] of our restaurants were located outside of the U.S. As a result of our small number of restaurants outside the U.S. and the relatively short time we have been operating those restaurants, we have lower brand awareness, lower sales and/or transaction counts, and less operating experience in these markets.

Specifically, due to lower consumer familiarity with the Chipotle brand, differences in customer tastes or spending patterns, or for other reasons, sales at restaurants opened outside the U.S. may take longer to ramp up and reach expected sales and profit levels, and may never do so, thereby affecting our overall [added: growth and] profitability.

We may also find it more difficult in international markets to hire, motivate and keep qualified employees who can project our vision, passion and [removed: culture.][added: culture, and labor costs may be higher in international markets due to increased regulation or local market conditions.]

In addition, restaurants outside the U.S. have had higher construction, occupancy and [removed: operating] [added: food] costs than restaurants in existing markets, and we may have difficulty finding reliable suppliers or distributors or ones that can provide us, either initially or over time, with adequate supplies of ingredients meeting our quality standards.

Our overall results may also be [added: negatively] affected by currency risk on the transactions in other currencies and translation adjustments resulting from the conversion of our international financial results into the U.S. dollar.

In order to see how our model works when we use different ingredients and a different style of food, we opened ShopHouse Southeast Asian Kitchen during 2011 and now have a total of [removed: six] [added: nine] ShopHouse restaurants, in Washington D.C. and the Los Angeles area.

We also [removed: announced in late 2013 that we] have [removed: invested] [added: a majority ownership interest] in a company operating [removed: a new] [added: two] fast casual Pizzeria Locale [removed: restaurant] [added: restaurants] in Denver, Colorado, and [removed: that] we plan to invest in and assist with the expansion of Pizzeria Locale in the future.

[added: Food prices for a number of our key] ingredients escalated markedly at various points during 2013 and [added: 2014 and] we expect that there will be additional pricing pressures on some of those ingredients, [removed: including avocados,] [added: primarily] beef, [removed: dairy and chicken] during [removed: 2014.][added: 2015, which we expect will be partially or fully offset by relief in dairy prices.]

We could also be adversely impacted by price increases specific to meats raised in accordance with our sustainability and [removed: responsibility] [added: animal welfare] criteria or other food items we buy as part of our Food With Integrity focus, the markets for which are generally smaller and more concentrated than the markets for [removed: commodity] food [removed: products.][added: products that are conventionally raised and grown.]

Weather related issues, such as freezes or drought, may also lead to temporary [removed: spikes in the prices of some ingredients such as produce or meats.]

For instance, [removed: two years of] drought conditions in parts of the U.S. have resulted in significant increases in beef prices during [removed: late 2013] [added: 2014,] and [removed: early 2014.][added: we expect beef prices to remain high throughout 2015.]

The resulting broad-based civil and criminal investigations by the U.S. Attorney for [added: the District of Columbia and U.S. Securities and Exchange Commission of our compliance with work authorization requirements and related disclosures and statements are ongoing.]

[removed: See Note 9] “Commitments and Contingencies” in our consolidated financial statements included in Item 8.

[removed: We could also become subject to] fines, penalties and other costs related to claims that we did not fully comply with all recordkeeping obligations of federal and state immigration compliance laws.

Our [added: reputation and] financial performance may be materially harmed as a result of any of these factors.

[removed: For instance, on] [added: On] a small number of occasions [removed: a] [added: one or more] Chipotle [removed: restaurant has] [added: restaurants have] been associated with customer illness, and on those occasions our sales have [added: sometimes] been adversely impacted, at times even in markets beyond those impacted by the illness.

If our customers become ill from food-borne or localized illnesses or if an illness is attributed to our food, even incorrectly, we could also be forced to temporarily close some [removed: restaurants.][added: restaurants, further impacting sales.]

These problems, other food-borne illnesses (such as hepatitis A or norovirus) and injuries caused by food tampering have had in the past, and could have in the future, an adverse [removed: affect] [added: effect] on the price and availability of affected ingredients.

The risk of illnesses associated with our food might [added: also] increase in connection with an expansion of our catering business or other situations in which our food is served in conditions we cannot control.

Many of our competitors have existed longer than we have and may have a more established market presence with substantially greater financial, marketing, personnel and other resources than [added: we have.]

Some of these [removed: competitors,] [added: competitors] and other fast casual [removed: concepts,] [added: concepts] have sought to duplicate various elements of our business operations, and more chains may copy us to varying degrees in the future.

Additionally, our newer concepts, ShopHouse Southeast Asian Kitchen and Pizzeria Locale, operate in markets in which there are numerous competitors, including a number of large and [removed: well-known brands.]

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 [removed: casual] [added: other] dining outlets.

_Failure to receive frequent deliveries of higher-quality food ingredients and other supplies [added: meeting our specifications] could harm our operations._

Shortages or interruptions in the supply of ingredients caused by unanticipated demand, problems in production or distribution, food contamination, inclement weather, a supplier ceasing operations or [added: deciding not to follow our required protocols, or] other conditions could adversely affect the availability, quality and cost of our ingredients, which could harm our operations.

We expect 2015 full year

comparable restaurant sales increases to be in the low to mid-single digit range as comparisons become more difficult, particularly during the final three quarters of the year as we begin to overlap nationwide menu price increases implemented in 2014.

Moreover, even the expectation of declining comparable restaurant sales increases has had a significant impact on our stock price in the past.

For example, when we announced in October 2014 that we expect comparable restaurant sales for 2015 in the low to mid-single digit range (as opposed to the double-digit comparable restaurant sales increases we reported for the third quarter of 2014), the price of our common stock declined nearly 7% on the following trading day.

We had 1,783 restaurants in operation as of December 31, 2014.

| | • | | difficulty ramping up the growth of our international business or new restaurant concepts, including for the reasons described below under “—_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_” and “—_ShopHouse Southeast Asian Kitchen and Pizzeria Locale may not contribute to our growth_”; |

These factors could negatively impact our ability to drive occupancy costs lower as a percentage of revenue, which would adversely impact our profitability growth.

In addition, any of these factors may be exacerbated by any ongoing economic recovery, as developers and contractors see increased demand.

If we are unable to build the customer base that we expect for new restaurant locations or

In 2014 these costs rose to about $843,000, and we expect them to decrease slightly in 2015.

As a result, we expect that food costs as a percentage of revenue in 2015 will remain consistent with the full year 2014 or will increase slightly.

spikes in the prices of some ingredients such as produce or meats.

See Note 9.

We could also become subject to

well-known brands.

In particular, shortages of one or more of our menu items could force our restaurants to remove items from their menus, which may result in customers choosing to eat elsewhere.

If that happens, our affected restaurants could experience significant reductions in sales during the menu item shortage, and potentially thereafter if customers do not return to us after the shortage is resolved.

Our focus on a limited menu would make the consequences of a shortage of a key ingredient more severe than at other restaurants.

In the first quarter of 2015, through our ongoing auditing of suppliers, we identified a pork supplier that was not meeting our standards and suspended purchases of pork from this supplier.

Without this supply, we do not

have enough pork meeting our specifications for all of our restaurants and a large number of our restaurants are not serving carnitas as of February 4, 2015.

This may result in lost sales from customers who choose to eat elsewhere rather than substituting a different one of our menu items for carnitas.

accruals, and similar requirements and these changes could increase our labor costs.

_Privacy/Cybersecurity_

We are required to collect and maintain personal information about our employees, and we collect information about customers as part of some of our marketing programs as well.

healthcare plans.

Furthermore, we have been sued in shareholder class action and derivative lawsuits regarding our financial disclosures and our Board’s oversight of our business, and as a publicly-traded company we cannot be assured that similar actions will not be brought against us in the future.

in traffic during late 2008 and throughout 2009 that we attribute in part to customer resistance to menu price increases.

If customers are not persuaded that we offer a good value for their money, our restaurant transaction counts could be adversely affected, which would negatively impact our business results.

And in the first quarter of 2015, through our ongoing auditing of suppliers, we identified a pork supplier that was not meeting our standards and suspended purchases of pork from this supplier.

Without this supply, we do not have enough pork meeting our specifications for all of our restaurants and a large number of our restaurants are not serving carnitas as of February 4, 2015.

philosophy.

proceedings in the future relating to these types of incidents.

The collection and use of such information is regulated at the federal and state levels, and by the European Union and its member states, and the regulatory environment related to information security and privacy is increasingly demanding.

At the same time, we are relying increasingly on cloud computing and other technologies that result in third parties holding significant amounts of customer or employee information on our behalf.

If the security and information systems of ours or of outsourced third party providers we use to store or process such information are compromised or if we, or such third parties, otherwise fail to comply with these laws and regulations, we could face litigation and the imposition of penalties that could adversely affect our financial performance.

Our reputation as a brand or as an employer could also be adversely affected from these types of security breaches or regulatory violations, which could impair our sales or ability to attract and keep qualified employees.

Additionally, negative publicity about our employment practices

##### [Table of Contents](#toc)

_Cautionary Note Regarding Forward-Looking Statements_

This report includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are intended to come within the safe harbor protection provided by those sections.

These statements, which involve risks and uncertainties, relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability, liquidity and capital resources and to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable.

Forward-looking statements include our projections of the number of restaurants we expect to open in 2014, our expected comparable restaurant sales results during 2014, our expectations for food cost inflation and food costs as a percentage of revenue in 2014, statements about potential menu price increases in 2014, projections of restaurant development costs and other expenses, statements of our intention to open restaurants in one or more specified locations, statements regarding the potential impact of ongoing economic uncertainty on our business, statements about possible repurchases of our common stock, forecasts of

marketing and promotional spending and general and administrative expenses as a percentage of revenue in 2014, and our projections of our effective tax rate for 2014, and other statements of our expectations and plans.

We have used words such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “think,” “estimate,” “seek,” “expect,” “predict,” “could,” “project,” “potential” and other similar terms and phrases, including references to assumptions, in this report to identify forward-looking statements.

These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks and factors relating to our operations and business environments, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by these forward-looking statements.

Such risks and other factors include those listed in this Item 1A.

“Risk Factors,” and elsewhere in this report.

When considering forward-looking statements in this report or that we make in other reports or statements, you should keep in mind the cautionary statements in this report and future reports we file with the SEC.

New risks and uncertainties arise from time to time, and we cannot predict when they may arise or how they may affect us.

We assume no obligation to update any forward-looking statements after the date of this report as a result of new information, future events or other developments, except as required by applicable laws and regulations.

We expect comparable restaurant sales increases in 2014 to be in the low to mid-single digits, excluding any menu price increases, due in part to difficult comparisons with 2013.

| --- | --- | --- | --- |

| | • | | any “trade down” by customers or other reduction in average check in response to price increases, which could reduce or eliminate the benefit of the price increase on comparable restaurant sales; |

There were 1,595 restaurants in operation as of December 31, 2013.

These factors may be exacerbated by any ongoing economic uncertainty, as developers may continue to delay or be unable to finance new projects.

In 2014, we expect average development costs to increase about 5%.

Food prices for a number of our key

the District of Columbia and U.S. Securities and Exchange Commission of our compliance with work authorization requirements and related disclosures and statements are ongoing.

we have.

restaurant industry.

included in Item 8.

The U.S. health care reform law included nation-wide menu labeling and nutrition disclosure requirements as well, and our restaurants will be covered by these national requirements when they go into effect, which may be as early as 2014.

restaurant openings.

wrongful termination, and similar matters, and we could become subject to class action or other lawsuits related to these or different matters in the future.

Recent reports have indicated continued consumer uncertainty that may persist during 2014, so our ability to increase menu prices or customer visits may be significantly hampered for the foreseeable future.

We have announced that we are likely to increase menu prices during 2014, and if we do so it may adversely impact our customer traffic.

welfare, we may experience shortages of meat, particularly chicken or steak, meeting these criteria due to suppliers suspending production, market conditions, or other forces beyond our control.

expense associated with these programs will adversely impact our financial results, and we may not generate the levels of comparable restaurant sales we expect.

| | • | | changes in consumer preferences and discretionary spending; |

[removed: 2013] [added: 2014] Highlights and Trends

As of December 31, [removed: 2013,] [added: 2014,] we had [removed: 1,595] [added: 1,783] restaurants in operation, including [removed: 1,572] [added: 1,755] Chipotle restaurants throughout the United States, with an additional seven in Canada, six in England, [removed: two] [added: three] in France, and one in Germany.

Our restaurants include [removed: six] [added: nine] ShopHouse Southeast Asian Kitchen restaurants, serving Asian-inspired cuisine, and we are an investor in a consolidated entity that owns and operates [removed: one] [added: two] Pizzeria [removed: Locale,] [added: Locale restaurants,] a fast casual pizza concept.

New restaurants have contributed substantially to our restaurant sales growth and we opened [removed: 185] [added: 192] restaurants in [removed: 2013,] [added: 2014,] and expect to open between [removed: 180] [added: 190] and [removed: 195] [added: 205] restaurants in [removed: 2014,] [added: 2015,] including a small number of ShopHouse [removed: and/or] [added: and] Pizzeria Locale restaurants.

Average restaurant sales were [removed: $2.169] [added: $2.472] million as of December 31, [removed: 2013,] [added: 2014,] increasing from [removed: $2.113] [added: $2.169] million as of December 31, [removed: 2012.][added: 2013.]

Our comparable restaurant sales increases were [removed: 5.6%] [added: 16.8%] in [removed: 2013.][added: 2014.]

Comparable restaurant sales increases [added: contributed $150.3 million of the increase] in [removed: 2013 were driven] [added: restaurant sales, due] primarily [removed: by an increase] [added: to increases] in customer visits.

During 2013, we launched our catering service in Chipotle restaurants throughout the U.S, except New York [removed: City where we expect to introduce catering later in 2014.][added: City.]

_Food With Integrity._ In all of our restaurants, we endeavor to serve only meats that were raised without the use of [removed: subtherapeutic] [added: non-therapeutic] 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 [removed: RaisedTM.”] [added: Raised TM.”] In addition, a portion of some of the produce items we serve is organically grown, and/or sourced locally when in season (by which we mean within 350 miles of the restaurant where it is served), and a portion of the beans we serve is organically grown and a portion is grown using conservation tillage methods that improve soil conditions, reduce erosion and help preserve the environment in which they are grown.

[removed: Milk used to make much of our] cheese and [added: all of] our sour cream is sourced from pasture-based dairies that provide an even higher standard of animal welfare by providing outdoor access for their cows.

[added: Further, we disclose on our website which ingredients] 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.

Some of our restaurants served conventionally raised beef and chicken for periods during [removed: 2013] [added: 2014] and [removed: some are continuing] [added: we expect] to serve conventionally raised [removed: beef,] [added: beef in 2015,] due to supply constraints for our Responsibly Raised meats.

Our food costs increased as a percentage of revenue in [removed: 2013] [added: 2014] as a result of inflationary pressures on many of our ingredients, [removed: particularly salsa ingredients, as well as dairy, cooking oils,] [added: primarily beef, avocados,] and [removed: chicken.][added: dairy.]

_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 [removed: $110.0] [added: $88.0] million during [removed: 2013.][added: 2014.]

As of December 31, [removed: 2013, $90.2] [added: 2014, $102.2] million was available to be repurchased under the current repurchase [removed: authorization] [added: authorizations] announced on February 5, [removed: 2013.][added: 2013 and April 17, 2014.]

| | | [removed: For the years ended December] [added: Years ended December] 31 | | | | | | | | | | |

| | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | |

| Beginning of [removed: year] [added: period] | | | [removed: 1,410] [added: 1,595] | | | | [removed: 1,230] [added: 1,410] | | | | [removed: 1,084] [added: 1,230] | |

| Openings | | | [removed: 185] [added: 192] | | | | [removed: 183] [added: 185] | | | | [removed: 150] [added: 183] | |

| Relocations | | | [removed: —] [added: (4] | [added: )] | | | [removed: (3] [added: —] | [removed: )] | | | [removed: (4] [added: (3] | ) |

| Total restaurants at end of [removed: year] [added: period] | | | [removed: 1,595] [added: 1,783] | | | | [removed: 1,410] [added: 1,595] | | | | [removed: 1,230] [added: 1,410] | |

| | | For the [removed: years ended December] [added: Years ended December] 31 | | | | | | | | | | | | % increase [removed: 2013] [added: 2014] over [removed: 2012] [added: 2013] | | | | % increase [removed: 2012] [added: 2013] over [removed: 2011] [added: 2012] | | |

| | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | | | | | | | | |

| Revenue | | $ | [removed: 3,214.6] [added: 4,108.3] | | | $ | [removed: 2,731.2] [added: 3,214.6] | | | $ | [removed: 2,269.5] [added: 2,731.2] | | | | [removed: 17.7] [added: 27.8] | % | | | [removed: 20.3] [added: 17.7] | % |

| Average restaurant sales | | $ | [removed: 2.169] [added: 2.472] | | | $ | [removed: 2.113] [added: 2.169] | | | $ | [removed: 2.103] [added: 2.113] | | | | [removed: 2.7] [added: 14.0] | % | | | [removed: 0.5] [added: 2.7] | % |

| Comparable restaurant sales increases | | | [removed: 5.6] [added: 16.8] | % | | | [removed: 7.1] [added: 5.6] | % | | | [removed: 11.2] [added: 7.1] | % | | | | | | | | |

| Number of restaurants as of the end of the period | | | [removed: 1,595] [added: 1,783] | | | | [removed: 1,410] [added: 1,595] | | | | [removed: 1,230] [added: 1,410] | | | | [removed: 13.1] [added: 11.8] | % | | | [removed: 14.6] [added: 13.1] | % |

| Number of restaurants opened in the period, net of relocations | | | [removed: 185] [added: 188] | | | | [removed: 180] [added: 185] | | | | [removed: 146] [added: 180] | | | | | | | | | |

[removed: The] [added: In 2013, the] significant factors contributing to our increases in sales were new restaurant openings and comparable restaurant [removed: sales increases.][added: sales.]

Restaurant sales from restaurants not yet in the comparable [added: restaurant] base contributed $333.9 million of the increase in [removed: sales in 2013,] [added: sales,] of which $156.6 million was attributable to restaurants opened [removed: during the year.][added: in 2013.]

[removed: In 2012, restaurant] [added: Restaurant] sales from restaurants not yet in the comparable [removed: restaurant] base contributed [removed: $304.7] [added: $364.7] million of the increase in [removed: sales,] [added: sales in 2014,] of which [removed: $134.8] [added: $173.9] million was attributable to restaurants opened [removed: in 2012.][added: during the year.]

Comparable restaurant sales [removed: growth in 2013 was due primarily to] increases [added: contributed $530.0 million of the increase] in [removed: customer visits, and comparable] restaurant [removed: sales growth in 2012 was] [added: sales,] due primarily to increases in customer visits, [removed: as well as] [added: and an increase in average check price, including] the [removed: impact of] [added: benefit from] menu price increases.

| Food, beverage and packaging | | $ | [removed: 1,073.5] [added: 1,421.0] | | | $ | [removed: 891.0] [added: 1,073.5] | | | $ | [removed: 738.7] [added: 891.0] | | | | [removed: 20.5] [added: 32.4] | % | | | [removed: 20.6] [added: 20.5] | % |

| As a percentage of revenue | | | [removed: 33.4] [added: 34.6] | % | | | [removed: 32.6] [added: 33.4] | % | | | [removed: 32.5] [added: 32.6] | % | | | | | | | | |

Food, beverage and packaging costs increased as a percentage of revenue in [removed: 2012] [added: 2014] due to inflation on many food items, primarily beef, [removed: chicken, and rice, and initiatives to improve the taste] [added: avocados,] and [removed: quality of our food.][added: dairy.]

The increase was partially offset by the impact of menu price [removed: increases, and relief in avocado prices.][added: increases.]

| Labor costs | | $ | [removed: 739.8] [added: 904.4] | | | $ | [removed: 641.8] [added: 739.8] | | | $ | [removed: 543.1] [added: 641.8] | | | | [removed: 15.3] [added: 22.3] | % | | | [removed: 18.2] [added: 15.3] | % |

| As a percentage of revenue | | | [removed: 23.0] [added: 22.0] | % | | | [removed: 23.5] [added: 23.0] | % | | | [removed: 23.9] [added: 23.5] | % | | | | | | | | |

Labor costs as a percentage of revenue decreased in [removed: 2012] [added: 2014] due primarily to the benefit of higher average restaurant sales, including the impact of menu price increases, partially offset by [added: an] increased [removed: average] [added: number of managers and crew in our restaurants and normal] wage [removed: rates.][added: inflation.]

Comparable restaurant sales increases in 2014 were driven primarily by an increase in customer visits, and to a lesser extent from an increase in average check, including the impact of a menu price increase during the second quarter of 2014 at all U.S. Chipotle locations.

Menu price increases accounted for 3.8% of our comparable restaurant sales increases for 2014.

We expect 2015 comparable restaurant sales to be in the low to mid-single digits as comparisons become more difficult, particularly during the final three quarters of the year.

Catering represented approximately 1.3% of revenue for the year ended 2014.

Milk used to make much of our

In January 2015, through an ongoing audit of our suppliers, we identified a pork supplier that was not meeting our standards related to the size and condition of the housing offered to some of the pigs, so we suspended our purchases from this supplier.

Without this supply, we cannot get enough pork that meets our standards for all of our restaurants, and we will not be able to serve carnitas in about one-third of our U.S. restaurants until we can find additional sources which meet our standards to make up the shortfall.

Because we have elected to remove all affected pork from our supply chain, including our distribution centers, and—because the meat is food safe but does not meet our rigorous standards—we disposed of it, primarily through donations to local food banks.

The increase was partially offset by the impact of the menu price increase in the second quarter.

We expect that food costs as a percentage of revenue in 2015 will remain consistent with the full year 2014 or will increase slightly.

On February 3, 2015 we announced that our Board of Directors authorized the expenditure of up to an additional $100 million to repurchase shares of our common stock.

| | | Years ended December 31 | | | | | | | | | | | | % increase 2014 over 2013 | | | | % increase 2013 over 2012 | | |

In 2014, the significant factors contributing to our increases in sales were comparable restaurant sales and new restaurant openings.

| | | Years ended December 31 | | | | | | | | | | | | % increase 2014 over 2013 | | | | % increase 2013 over 2012 | | |

| | 2014 | | | | 2013 | | | | 2012 | | | | | | | | | | | |

We expect that food costs as a percentage of revenue in 2015 will remain consistent with the full year 2014 or will increase slightly.

| | 2014 | | | | 2013 | | | | 2012 | | | | | | | | | | | |

In 2015, we expect labor costs to increase slightly as a percentage of revenue due to the Affordable Care Act and minimum wage increases in a number of jurisdictions.

| | | For the Years ended December 31 | | | | | | | | | | | | % increase 2014 over 2013 | | | | % increase 2013 over 2012 | | |

| | 2014 | | | | 2013 | | | | 2012 | | | | | | | | | | | |

| | | For the Years ended December 31 | | | | | | | | | | | | % increase 2014 over 2013 | | | | % increase 2013 over 2012 | | |

| | 2014 | | | | 2013 | | | | 2012 | | | | | | | | | | | |

| | | For the Years ended December 31 | | | | | | | | | | | | % increase 2014 over 2013 | | | | % increase 2013 over 2012 | | |

| | 2014 | | | | 2013 | | | | 2012 | | | | | | | | | | | |

| | | For the Years ended December 31 | | | | | | | | | | | | % increase 2014 over 2013 | | | | % increase 2013 over 2012 | | |

| | 2014 | | | | 2013 | | | | 2012 | | | | | | | | | | | |

| | | For the Years ended December 31 | | | | | | | | | | | | % increase 2014 over 2013 | | | | % increase 2013 over 2012 | | |

| | 2014 | | | | 2013 | | | | 2012 | | | | | | | | | | | |

The 2014 effective tax rate decreased by 1.1% from 2013 due to a decrease in the state tax rate and filing the 2013 tax returns, which included a change in the estimate of usable employer credits.

| Revenue | | $ | 904.2 | | | $ | 1,050.1 | | | $ | 1,084.2 | | | $ | 1,069.8 | |

| Operating income | | $ | 135.7 | | | $ | 179.8 | | | $ | 207.4 | | | $ | 187.9 | |

| Net income | | $ | 83.1 | | | $ | 110.3 | | | $ | 130.8 | | | $ | 121.2 | |

| Comparable restaurant sales increase | | | 13.4 | % | | | 17.3 | % | | | 19.8 | % | | | 16.1 | % |

Seasonal factors, however, might be moderated or outweighed by other factors that may influence our quarterly results, such as fluctuations in food or packaging costs or the timing of menu price increases.

| | | 2014 | | | | | | | | | | | | | | | | | | |

| Operating leases | | $ | 3,044,197 | | | $ | 206,413 | | | $ | 417,338 | | | $ | 423,587 | | | $ | 1,996,859 | |

| Deemed landlord financing | | $ | 4,717 | | | $ | 401 | | | $ | 844 | | | $ | 846 | | | $ | 2,626 | |

| Other contractual obligations(1) | | $ | 221,584 | | | $ | 218,191 | | | $ | 3,393 | | | $ | — | | | $ | — | |

| Total contractual cash obligations | | $ | 3,270,498 | | | $ | 425,005 | | | $ | 421,575 | | | $ | 424,433 | | | $ | 1,999,485 | |

Inflationary increases have increased our food, beverage, and packaging costs as a percentage of revenue for the past three years.

We expect 2014 comparable restaurant sales to be in the low to mid-single digits assuming we do not increase menu prices.

Based on continued food cost inflation, we are likely to increase menu prices at some point during 2014, most likely the second half of the year.

Catering represented approximately 1% of sales in markets in which catering was offered during the fourth quarter.

Further, we disclose on our website which ingredients

We expect that food cost inflation will continue into 2014.

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.

Comparable restaurant sales increases contributed $150.3 million and $156.4 million of the increase in restaurant sales in 2013 and 2012, respectively.

We expect general and administrative expenses to increase as a percentage of revenue in 2014 due primarily to higher estimated non-cash stock-based compensation expense of about $100 million given the current stock price and an increase in the number of shares granted, and the 2014 AMC.

The 2012 effective tax rate increased primarily due to expiration of certain federal credits, a smaller benefit from food donations, and higher foreign losses which we are not yet able to recognize.

The increase was partially offset by prior period adjustments.

The 2012 effective tax rate would have been lower by approximately 0.7% if certain federal credits that were realized in the 2012 tax return after being extended during 2013 had instead been extended during 2012.

| Revenue | | $ | 640.6 | | | $ | 690.9 | | | $ | 700.5 | | | $ | 699.2 | |

| Operating income | | $ | 102.2 | | | $ | 133.8 | | | $ | 117.7 | | | $ | 102.2 | |

| Net income | | $ | 62.7 | | | $ | 81.7 | | | $ | 72.3 | | | $ | 61.4 | |

| Comparable restaurant sales increase | | | 12.7 | % | | | 8.0 | % | | | 4.8 | % | | | 3.8 | % |

because fewer people eat out during periods of inclement weather (the winter months) than during periods of mild or warm weather (the spring, summer and fall months).

| | | 2013 | | | | | | | | | | | | | | | | | | |

| Operating leases | | $ | 2,856,522 | | | $ | 185,866 | | | $ | 378,988 | | | $ | 383,499 | | | $ | 1,908,169 | |

| Deemed landlord financing | | $ | 5,111 | | | $ | 394 | | | $ | 822 | | | $ | 846 | | | $ | 3,049 | |

| Other contractual obligations(1) | | $ | 163,441 | | | $ | 156,629 | | | $ | 6,812 | | | $ | — | | | $ | — | |

| Total contractual cash obligations | | $ | 3,025,074 | | | $ | 342,889 | | | $ | 386,622 | | | $ | 384,345 | | | $ | 1,911,218 | |

performance.

As of December 31, [removed: 2013,] [added: 2014,] we had [removed: $652.5] [added: $981.1] million in investments and interest-bearing cash accounts, including an insurance related restricted trust account classified in other assets, and [removed: $240.7] [added: $262.2] million in accounts with an earnings credit we classify as interest income, which combined earned a weighted average interest rate of [removed: 0.33%.][added: 0.43%.]

##### [Table of Contents](#toc)

As of December 31, [removed: 2013,] [added: 2014,] we operated [removed: 1,572] [added: 1,755] Chipotle restaurants throughout the United States, as well as seven in Canada, six in England, [removed: two] [added: three] in France, and one in Germany.

Additionally, our restaurants include [removed: six] [added: nine] ShopHouse Southeast Asian Kitchen restaurants, serving Asian-inspired cuisine, and we are an investor in a consolidated entity that owns and operates [removed: one] [added: two] Pizzeria [removed: Locale,] [added: Locale restaurants,] a fast casual pizza concept, resulting in a total of [removed: 1,595] [added: 1,783] restaurants as of December 31, [removed: 2013.][added: 2014.]

We have grown substantially over the past five years, and expect to open between [removed: 180] [added: 190] and [removed: 195] [added: 205] additional restaurants in [removed: 2014,] [added: 2015,] including a small number of ShopHouse [removed: and/or] [added: and] Pizzeria Locale restaurants.

We use high-quality raw ingredients, classic cooking methods and a distinctive interior design and have friendly people [removed: to take care of each customer—features that are more frequently found in the world of fine dining.]

We manage our operations and restaurants based on [removed: seven] [added: eight] regions that aggregate into one reportable segment.

[removed: 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 [removed: 1A, Risk Factors.][added: 1A.]

In all of our restaurants, we endeavor to serve only meats that were raised without the use of [removed: subtherapeutic] [added: non-therapeutic] 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 [removed: RaisedTM.”] [added: Raised TM.”] 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.

[removed: Some] [added: In addition, some] of our restaurants served conventionally raised beef and chicken for periods during [removed: 2013,] [added: 2014,] and [added: we expect] some [removed: are continuing] to serve conventionally raised [removed: beef,] [added: beef in 2015,] due to supply constraints for our Responsibly Raised meats.

We also seek to use more [removed: sustainably] [added: responsibly] grown produce, meaning produce grown by suppliers who we believe respect the environment and their employees.

Also, milk used to make much of our cheese and [added: all our] sour cream is sourced from pasture-based dairies that provide an even higher standard of animal welfare by providing outdoor access for their cows.

[removed: There are] [added: In addition to the supply challenges noted above, there can be] higher costs and other risks associated with purchasing ingredients grown or raised with an emphasis on quality, environmental sustainability and other responsible practices.

Growth rate and weight gain can be lower for chickens, cattle and pigs that are not fed [removed: subtherapeutic] [added: non-therapeutic] antibiotics and for cattle that are not given growth hormones.

And we believe that as consumers become more educated about better animal welfare and farming practices as well as social accountability, they will foster greater demand for [removed: sustainably] [added: responsibly] grown foods in the long term.

If we are able to continue growing while focusing on Food With Integrity, [added: we believe] our sourcing flexibility [removed: should] [added: will] improve over time, though we expect that most of these ingredients and other raw materials will remain more expensive than conventionally raised, commodity-priced equivalents.

But because customers can choose from four different [removed: meats,] [added: meats or tofu,] two types of beans and a variety of extras such as salsas, guacamole, cheese and lettuce, there’s enough variety to extend our menu to provide countless choices.

We plan to keep a simple menu, but we’ll consider additions that we think make sense, such as the recent introduction in [removed: select] [added: all U.S. and Canadian] markets of Sofritas, our [removed: new] vegan protein option made with braised organic tofu.

The four pillars are having a dedicated expeditor, who works just before the cashier to get drink and side orders and bag to-go orders; a dedicated linebacker, to make sure the serving line is stocked with all our ingredients so the employees on the line can focus on each customer’s order; proper _mise en place_; and ensuring that we have “aces in their [removed: places”,] [added: places,”] or the best employees at each position during all of our peak periods.

And we constantly strive to improve the speed of service in all of our restaurants, so that we can accommodate more [removed: customers and larger orders without disrupting restaurant traffic.]

Quality and food safety [removed: is] [added: are] integrated throughout our supply chain and everything we do; from the farms that supply our food all the way through to our front line.

We are committed to developing our people and promoting from within, with about [removed: 85%] [added: 90%] of salaried management and about [removed: 96%] [added: 98%] of hourly management coming from internal promotions.

This provides an opportunity for Restaurateurs to develop [added: into] field leadership roles one restaurant at a time.

Restaurateurs who have shown they can successfully run four restaurants by developing teams of [removed: all] [added: empowered] top performers (including at least one Restaurateur), thereby creating a culture of high standards, constant improvement and empowerment in each of their restaurants, can be promoted to apprentice team leaders.

Our crews use classic cooking methods: they marinate and grill meats, hand-cut [added: produce and herbs, make fresh salsa and guacamole, and cook rice in small batches throughout the day.]

Our restaurant and kitchen designs intentionally place crew members up front with customers to reinforce our focus on service, and our open kitchen design allows customers to see that we prepare our food [removed: fresh,] [added: fresh throughout] each and every day.

[removed: _The Basics._] [added: _Restaurant Team__._] Each restaurant typically has a general manager [added: or Restaurateur] (a position we’ve characterized as the most important in the company), an apprentice manager (in [removed: more than three-quarters] [added: most] of our restaurants), [added: and we aim to have] one to three hourly service managers, one or two hourly kitchen managers and an average of [removed: 23] [added: 24] full and part-time crew members.

Our [removed: 23] [added: 22] independently owned and operated regional distribution centers purchase from various suppliers we carefully select based on quality and their understanding of our mission, and we seek to develop mutually beneficial long-term relationships with suppliers.

But there is still a need to introduce our brand to [removed: consumers,] [added: consumers in other ways,] and to help them understand what makes Chipotle different than other restaurants.

Our advertising and promotional programs, in-store communications, and other design elements all help to communicate something about what [removed: makes] [added: differentiates] Chipotle [removed: different] from other fast food companies.

Whether it’s engaging with our company via social media, participating in our local events or simply eating a burrito at one of our restaurants, each [removed: interaction with a] customer [added: interaction] affords us an important opportunity to build our brand.

Our advertising has generally included print, outdoor, transit and radio ads, but we [removed: are] also [removed: incorporating] [added: incorporate] online advertising into the mix, and [removed: adding] [added: conduct] strategic promotions that demonstrate [removed: how Chipotle is different than][added: our Food With Integrity mission while connecting us to like-minded individuals or organizations.]

Beyond these traditional [removed: means,] [added: channels,] we are continuing to explore and pioneer new avenues of branded content aimed at [removed: educating] [added: making] consumers [added: more curious] about issues that are important to us, and explaining why [added: and how] we are working to drive positive change in the nation’s food supply.

We also recognize the need for our marketing to evolve, much as we have evolved our [added: unique] food [removed: culture] and [removed: our unique] people [removed: culture.][added: cultures.]

To this end, we have been developing more “owned media,” including new video and music programs, [removed: and] a more visible event strategy that includes our “Cultivate” [removed: festivals of] food, music and [removed: ideas,] [added: ideas festivals,] and participation in relevant events in markets around the country.

[removed: 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 [removed: are] [added: have] also [removed: increasing] [added: increased] our use of digital, mobile, and social media [removed: to] [added: in] our overall marketing mix, giving customers greater opportunity to access Chipotle in ways that are convenient for [removed: them,] [added: them] and broadening our ability to engage with our customers individually.

[removed: 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] [added: This approach allows] 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 [removed: things] [added: thing] in every facet of our business.

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, [removed: location] [added: location,] and the ambience and condition of each restaurant.

Our competition includes a variety of restaurants in each of these segments, including [removed: locally owned] [added: locally-owned] restaurants and national and regional chains.

Unlike [removed: us,] [added: Chipotle,] a number of our competitors grow through franchising.

to take care of each customer—features that are more frequently found in the world of fine dining.

Financial information about our operations, including our revenues and net income for the years ended December 31, 2014, 2013, and 2012, and our total assets as of December 31, 2014 and 2013, is included in our consolidated financial statements and accompanying notes in Item 8.

“Risk Factors.”

In January 2015, through an ongoing audit of our suppliers, we identified a pork supplier that was not meeting our standards related to the size and condition of the housing offered to some of the pigs, so we suspended our purchases from this supplier.

Without this supply, we cannot get enough pork that meets our standards for all of our restaurants and we will not be able to serve carnitas in about one-third of our U.S. restaurants until we can find additional sources which meet our standards to make up the shortfall.

customers and larger orders without disrupting restaurant traffic.

For a discussion of risks related to our supply chain, see “_Risks Related to Operating in the Restaurant Industry—Failure to receive frequent deliveries of higher-quality food ingredients and other supplies meeting our specifications could harm our operations”_ and “_Risks Related to our Unique Business Strategy—Our Food With Integrity philosophy subjects us to risks”_ in Item 1A.

“Risk Factors.”

Many of these newer programs allow us to tell our

Collectively, these efforts and our excellent restaurant teams have helped us create considerable word-of-mouth publicity as our customers learn more about us and share with others.

For more information, see “_Risks Related to Operating in the Restaurant Industry—Competition could adversely affect us_” in Item 1A.

“Risk Factors.”

Our

Seasonal factors, however, might be moderated or outweighed by other factors that may influence our quarterly results, such as fluctuations in food or packaging costs or the timing of menu price increases.

The restaurant structure includes a point-of-sales system that operates locally at the restaurant and is integrated with other functions necessary to restaurant operations.

It records sales transactions, receives out of store orders, and authorizes, batches and transmits credit card transactions.

The system also allows employees to enter time clock information and to produce a variety of

##### [Table of Contents](#toc)

management reports.

The services available within this infrastructure include supply chain, inventory, scheduling, training, human capital management, financial tools, and data protection services.

In addition to processing payment card transactions and collecting and storing information about our employees, we also collect and store information about customers as part of some of our marketing programs.

We are relying increasingly on cloud computing and other technologies that result in third parties holding significant amounts of employee or customer information on our behalf.

The collection and use of such information is regulated at the federal and state levels, and the regulatory environment related to information security and privacy is increasingly demanding.

A number of retailers have experienced actual or potential security breaches in which information may have been stolen, including a number of highly publicized incidents with well-known retailers in recent years.

“Risk Factors,” for a discussion of risks associated with our information systems.

produce and herbs, make fresh salsa and guacamole, and cook rice in small batches throughout the day.

So we pay close attention to all of these details, monitoring customer sentiment and awareness of Chipotle and keeping our communications closely aligned with the ways our customers experience our brand.

other restaurant concepts, or that connect us to like-minded individuals or organizations.

We believe these elements represent significant competitive advantages in the segment in which we operate.

expertise in specific markets, taking direction from our internal team of real estate managers.

This system includes a point-of-sales local area network that helps facilitate the operations of the restaurant by recording sales transactions and printing orders in the appropriate locations within the restaurant.

Additionally, the point-of-sales system is used to authorize, batch and transmit credit card transactions, to record employee time clock information, and to produce a variety of management reports.

[removed: For information regarding legal proceedings, see Note 9] “Commitments and Contingencies” in our consolidated financial statements included in Item 8.

For information regarding legal proceedings, see Note 9.

For the fiscal year ended December 31, [removed: 2013][added: 2014]

[removed: x] Yes [removed: ¨] [added: x] No [added: ¨]

As of June [removed: 28, 2013,] [added: 30, 2014,] the aggregate market value of the registrant’s outstanding common equity held by non-affiliates was [removed: $7.10] [added: $11.4] billion, based on the closing price of the registrant’s common stock on such date, the last trading day of the registrant’s most recently completed second fiscal quarter.

For purposes of this calculation, shares of common stock held by each executive officer and director and by holders of [removed: more than] 5% [added: or more] of the outstanding common stock have been excluded since those persons may under certain circumstances be deemed to be affiliates.

As of January 30, [removed: 2014,] [added: 2015,] there were [removed: 31,024,168] [added: 31,022,319] shares of the registrant’s common stock, par value of $0.01 per share outstanding.

Part III incorporates certain information by reference from the registrant’s definitive proxy statement for the [removed: 2014] [added: 2015] annual meeting of shareholders, which will be filed no later than 120 days after the close of the registrant’s fiscal year ended December 31, [removed: 2013.][added: 2014.]

| Item 1. | | [removed: [Business](#tx629534_1)] [added: [Business](#tx861905_1)] | | | 3 | |

| Item 1A. | | [Risk [removed: Factors](#tx629534_2)] [added: Factors](#tx861905_2)] | | | [removed: 9] [added: 10] | |

| Item 1B. | | [Unresolved Staff [removed: Comments](#tx629534_3)] [added: Comments](#tx861905_3)] | | | [removed: 24] [added: 26] | |

| Item 2. | | [removed: [Properties](#tx629534_4)] [added: [Properties](#tx861905_4)] | | | [removed: 25] [added: 27] | |

| Item 3. | | [Legal [removed: Proceedings](#tx629534_5)] [added: Proceedings](#tx861905_5)] | | | [removed: 26] [added: 28] | |

| Item 4. | | [Mine Safety [removed: Disclosures](#tx629534_6)] [added: Disclosures](#tx861905_6)] | | | [removed: 26] [added: 28] | |

| Item 5. | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#tx629534_7)] [added: Securities](#tx861905_7)] | | | [removed: 27] [added: 29] | |

| Item 6. | | [Selected Financial [removed: Data](#tx629534_8)] [added: Data](#tx861905_8)] | | | [removed: 29] [added: 31] | |

| Item 7. | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#tx629534_9)] [added: Operations](#tx861905_9)] | | | [removed: 30] [added: 32] | |

| Item 7A. | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#tx629534_10)] [added: Risk](#tx861905_10)] | | | [removed: 37] [added: 40] | |

| Item 8. | | [Financial Statements and Supplementary [removed: Data](#tx629534_11)] [added: Data](#tx861905_11)] | | | [removed: 39] [added: 41] | |

| Item 9. | | [Changes in and Disagreements With Accountants on Accounting and Financial [removed: Disclosure](#tx629534_12)] [added: Disclosure](#tx861905_12)] | | | [removed: 58] [added: 60] | |

| Item 9A. | | [Controls and [removed: Procedures](#tx629534_13)] [added: Procedures](#tx861905_13)] | | | [removed: 58] [added: 60] | |

| Item 9B. | | [Other [removed: Information](#tx629534_14)] [added: Information](#tx861905_14)] | | | [removed: 60] [added: 62] | |

| Item 10. | | [Directors, Executive Officers and Corporate [removed: Governance](#tx629534_15)] [added: Governance](#tx861905_15)] | | | [removed: 60] [added: 62] | |

| Item 11. | | [Executive [removed: Compensation](#tx629534_16)] [added: Compensation](#tx861905_16)] | | | [removed: 60] [added: 62] | |

| Item 12. | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#tx629534_17)] [added: Matters](#tx861905_17)] | | | [removed: 60] [added: 62] | |

| Item 13. | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#tx629534_18)] [added: Independence](#tx861905_18)] | | | [removed: 60] [added: 62] | |

| Item 14. | | [Principal Accounting Fees and [removed: Services](#tx629534_19)] [added: Services](#tx861905_19)] | | | [removed: 61] [added: 63] | |

| Item 15. | | [removed: [Exhibits and] [added: [Exhibits,] Financial Statement [removed: Schedules](#tx629534_20)] [added: Schedules](#tx861905_20)] | | | [removed: 62] [added: 64] | |

10-K 1 d861905d10k.htm FORM 10-K

| [Signatures](#tx861905_21) | | | | | 65 | |

_Cautionary Note Regarding Forward-Looking Statements_

This report includes statements of our expectations, intentions, plans and beliefs that constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 and are intended to come within the safe harbor protection provided by those sections.

These statements, which involve risks and uncertainties, relate to the discussion of our business strategies and our expectations concerning future operations, margins, profitability, trends, liquidity and capital resources and to analyses and other information that are based on forecasts of future results and estimates of amounts not yet determinable.

Forward-looking statements include our projections of the number and type of restaurants we expect to open in 2015, our expected comparable restaurant sales results during 2015, our expectations for food cost inflation and food costs as a percentage of revenue in 2015, our expectations for changes in labor costs as a percentage of revenue in 2015, projections of restaurant development costs and other expenses, statements regarding the potential impact of economic uncertainty on our business, statements about possible repurchases of our common stock, forecasts of marketing and promotional spending as a percentage of revenue in 2015, projections of our effective tax rate for 2015, and other statements of our expectations and plans.

We have used words such as “may,” “will,” “should,” “expect,” “intend,” “plan,” “anticipate,” “believe,” “think,” “estimate,” “seek,” “expect,” “predict,” “could,” “project,” “potential” and other similar terms and phrases, including references to assumptions, in this report to identify forward-looking statements.

These forward-looking statements are made based on expectations and beliefs concerning future events affecting us and are subject to uncertainties, risks and factors relating to our operations and business environments, all of which are difficult to predict and many of which are beyond our control, that could cause our actual results to differ materially from those matters expressed or implied by these forward-looking statements.

Such risks and other factors include those listed in Item 1A.

“Risk Factors,” and elsewhere in this report.

When considering forward-looking statements in this report or that we make in other reports or statements, you should keep in mind the cautionary statements in this report and future reports we file with the SEC.

New risks and uncertainties arise from time to time, and we cannot predict when they may arise or how they may affect us.

We assume no obligation to update any forward-looking statements after the date of this report as a result of new information, future events or other developments, except as required by applicable laws and regulations.

10-K 1 d629534d10k.htm 10-K

| [Signatures](#tx629534_21) | | | | | 63 | |

As of December 31, [removed: 2013,] [added: 2014,] there were [removed: 1,595] [added: 1,783] Chipotle and other concept restaurants in operation.

| Alabama | | | [removed: 7] [added: 9] | |

| Arizona | | | [removed: 63] [added: 64] | |

| Arkansas | | | [removed: 2] [added: 4] | |

| Colorado | | | [removed: 72] [added: 74] | |

| District of Columbia | | | [removed: 17] [added: 19] | |

| Florida | | | [removed: 84] [added: 99] | |

| Georgia | | | [removed: 25] [added: 32] | |

| Idaho | | | [removed: 2] [added: 3] | |

| Indiana | | | [removed: 22] [added: 25] | |

| Iowa | | | [removed: 6] [added: 7] | |

| Kentucky | | | [removed: 11] [added: 13] | |

| Louisiana | | | [removed: 2] [added: 4] | |

| Maine | | | [removed: 2] [added: 3] | |

| Maryland | | | [removed: 59] [added: 65] | |

| Massachusetts | | | [removed: 40] [added: 41] | |

| Michigan | | | [removed: 18] [added: 19] | |

| Minnesota | | | [removed: 55] [added: 57] | |

| Missouri | | | [removed: 31] [added: 35] | |

| Nevada | | | [removed: 13] [added: 19] | |

| New Jersey | | | [removed: 34] [added: 39] | |

| New York | | | [removed: 84] [added: 97] | |

| North Carolina | | | [removed: 23] [added: 32] | |

| Oklahoma | | | [removed: 8] [added: 10] | |

| Oregon | | | [removed: 15] [added: 17] | |

| Pennsylvania | | | [removed: 37] [added: 52] | |

| South Carolina | | | [removed: 11] [added: 13] | |

| Tennessee | | | [removed: 11] [added: 14] | |

| Virginia | | | [removed: 69] [added: 74] | |

| Washington | | | [removed: 17] [added: 23] | |

| Wisconsin | | | [removed: 15] [added: 16] | |

| France | | | [removed: 2] [added: 3] | |

Of our restaurants in operation as of December 31, [removed: 2013,] [added: 2014,] we had [removed: 970] [added: 1,081] end-cap locations, [removed: 264] [added: 283] in-line locations, [removed: 283] [added: 315] free-standing units, and [removed: 78] [added: 104] other.

The average restaurant size is about [removed: 2,580] [added: 2,550] square feet and seats about [removed: 56] [added: 58] people.

“Management’s Discussion and Analysis of Financial Condition and Results of Operations—_Contractual Obligations_,” as well as Note [removed: 7 “Leases” in our consolidated financial statements included in Item 8.][added: 7.]

| California | | | 325 | |

| Illinois | | | 109 | |

| Ohio | | | 152 | |

| Texas | | | 134 | |

| West Virginia | | | 2 | |

| Total | | | 1,783 | |

“Leases” in our consolidated financial statements included in Item 8.

| California | | | 288 | |

| Illinois | | | 104 | |

| Ohio | | | 148 | |

| Texas | | | 119 | |

| Total | | | 1,595 | |

As of January [removed: 30, 2014,] [added: 26, 2015,] there were approximately [removed: 1,100] [added: 1,062] holders of our common stock, as determined by counting our record holders and the number of participants reflected in a security position listing provided to us by the Depository Trust Company.

The table below reflects shares of common stock we repurchased during the fourth quarter of [removed: 2013.][added: 2014.]

| | | Total Number of Shares [removed: Purchased] [added: Purchased(1)] | | | | Average Price Paid Per Share | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) | | | | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or [removed: Programs(1)] [added: Programs(2)] | | |

| (1) | Shares were repurchased pursuant to [added: a] repurchase [removed: programs] [added: program] announced on [removed: November 20, 2012 and] February 5, 2013. Repurchases under [removed: each] [added: the] program were [removed: and are] limited to $100 million in total repurchase price, and there [removed: is] [added: was] no expiration date. [removed: Authorization of any ongoing repurchase] [added: Repurchases under this] program [removed: may be modified, suspended, or discontinued at any time.] [added: were completed in January 2015.] |

The following graph compares the cumulative annual stockholders return on our common stock from December 31, [removed: 2008] [added: 2009] through December 31, [removed: 2013] [added: 2014] to that of the total return index for the S&P 500 and the S&P 500 Restaurants Index assuming an investment of $100 on December 31, [removed: 2008.][added: 2009.]

[removed: ][added: ]

| 2014 | | | | | | | | |

| First Quarter | | $ | 622.90 | | | $ | 480.87 | |

| Second Quarter | | $ | 602.21 | | | $ | 472.41 | |

| Third Quarter | | $ | 697.93 | | | $ | 575.92 | |

| Fourth Quarter | | $ | 696.56 | | | $ | 607.55 | |

| October | | | 13,250 | | | $ | 638.83 | | | | 13,250 | | | $ | 118,335,698 | |

| November | | | 14,000 | | | $ | 654.33 | | | | 14,000 | | | $ | 109,175,068 | |

| December | | | 10,566 | | | $ | 659.16 | | | | 10,566 | | | $ | 102,210,371 | |

| Total | | | 37,816 | | | $ | 650.25 | | | | 37,816 | | | $ | 102,210,371 | |

| (2) | This column includes $100 million in authorized repurchases announced on April 17, 2014, but does not include an additional $100 million in authorized repurchases announced on February 3, 2015. These repurchase programs have no expiration date. Authorization of repurchase programs may be modified, suspended, or discontinued at any time. |

| 2012 | | | | | | | | |

| First Quarter | | $ | 426.57 | | | $ | 336.29 | |

| Second Quarter | | $ | 442.40 | | | $ | 370.19 | |

| Third Quarter | | $ | 404.59 | | | $ | 277.26 | |

| Fourth Quarter | | $ | 322.92 | | | $ | 233.82 | |

| October | | | 65,691 | (2) | | $ | 503.23 | | | | 9,853 | | | $ | 98,391,729 | |

| November | | | 7,461 | | | $ | 535.45 | | | | 7,461 | | | $ | 94,396,728 | |

| December | | | 8,012 | | | $ | 523.56 | | | | 8,012 | | | $ | 90,202,004 | |

| Total | | | 81,164 | | | $ | 508.19 | | | | 25,326 | | | $ | 90,202,004 | |

| (2) | Includes 55,838 shares of common stock that were surrendered by participants under the Amended and Restated Chipotle Mexican Grill, Inc. 2006 Stock Incentive Plan as payment of statutory minimum tax withholding on the vesting of performance shares and payout of the awards. Shares surrendered by the participants pursuant to the terms of that plan and the applicable award agreements are deemed repurchased by us, but are not part of publicly announced share repurchase programs. |

| | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | | | [removed: 2010] [added: 2011] | | | | [removed: 2009] [added: 2010] | | | |

| Revenue | | $ | [removed: 3,214,591] [added: 4,108,269] | | | $ | [removed: 2,731,224] [added: 3,214,591] | | | $ | [removed: 2,269,548] [added: 2,731,224] | | | $ | [removed: 1,835,922] [added: 2,269,548] | | | $ | [removed: 1,518,417] [added: 1,835,922] | |

| Food, beverage and packaging costs | | | [removed: 1,073,514] [added: 1,420,994] | | | | [removed: 891,003] [added: 1,073,514] | | | | [removed: 738,720] [added: 891,003] | | | | [removed: 561,107] [added: 738,720] | | | | [removed: 466,027] [added: 561,107] | |

| Labor costs | | | [removed: 739,800] [added: 904,407] | | | | [removed: 641,836] [added: 739,800] | | | | [removed: 543,119] [added: 641,836] | | | | [removed: 453,573] [added: 543,119] | | | | [removed: 385,072] [added: 453,573] | |

| Occupancy costs | | | [removed: 199,107] [added: 230,868] | | | | [removed: 171,435] [added: 199,107] | | | | [removed: 147,274] [added: 171,435] | | | | [removed: 128,933] [added: 147,274] | | | | [removed: 114,218] [added: 128,933] | |

| Other operating costs | | | [removed: 347,401] [added: 434,244] | | | | [removed: 286,610] [added: 347,401] | | | | [removed: 251,208] [added: 286,610] | | | | [removed: 202,904] [added: 251,208] | | | | [removed: 174,581] [added: 202,904] | |

| General and administrative expenses | | | [removed: 203,733] [added: 273,897] | | | | [removed: 183,409] [added: 203,733] | | | | [removed: 149,426] [added: 183,409] | | | | [removed: 118,590] [added: 149,426] | | | | [removed: 99,149] [added: 118,590] | |

| Depreciation and amortization | | | [removed: 96,054] [added: 110,474] | | | | [removed: 84,130] [added: 96,054] | | | | [removed: 74,938] [added: 84,130] | | | | [removed: 68,921] [added: 74,938] | | | | [removed: 61,308] [added: 68,921] | |

| Pre-opening costs | | | [removed: 15,511] [added: 15,609] | | | | [removed: 11,909] [added: 15,511] | | | | [removed: 8,495] [added: 11,909] | | | | [removed: 7,767] [added: 8,495] | | | | [removed: 8,401] [added: 7,767] | |

| Loss on disposal of assets | | | [removed: 6,751] [added: 6,976] | | | | [removed: 5,027] [added: 6,751] | | | | [removed: 5,806] [added: 5,027] | | | | [removed: 6,296] [added: 5,806] | | | | [removed: 5,956] [added: 6,296] | |

| Total operating expenses | | | [removed: 2,681,871] [added: 3,397,469] | | | | [removed: 2,275,359] [added: 2,681,871] | | | | [removed: 1,918,986] [added: 2,275,359] | | | | [removed: 1,548,091] [added: 1,918,986] | | | | [removed: 1,314,712] [added: 1,548,091] | |

| Income from operations | | | [removed: 532,720] [added: 710,800] | | | | [removed: 455,865] [added: 532,720] | | | | [removed: 350,562] [added: 455,865] | | | | [removed: 287,831] [added: 350,562] | | | | [removed: 203,705] [added: 287,831] | |

| Interest and other income (expense), net | | | [added: 3,503 | | | |] 1,751 | | | | 1,820 | | | | (857 | ) | | | 1,230 | | [removed: | | 520 | |]

| Income before income taxes | | | [removed: 534,471] [added: 714,303] | | | | [removed: 457,685] [added: 534,471] | | | | [removed: 349,705] [added: 457,685] | | | | [removed: 289,061] [added: 349,705] | | | | [removed: 204,225] [added: 289,061] | |

| Provision for income taxes | | | [removed: (207,033] [added: (268,929] | ) | | | [removed: (179,685] [added: (207,033] | ) | | | [removed: (134,760] [added: (179,685] | ) | | | [removed: (110,080] [added: (134,760] | ) | | | [removed: (77,380] [added: (110,080] | ) |

| Net income | | $ | [removed: 327,438] [added: 445,374] | | | $ | [removed: 278,000] [added: 327,438] | | | $ | [removed: 214,945] [added: 278,000] | | | $ | [removed: 178,981] [added: 214,945] | | | $ | [removed: 126,845] [added: 178,981] | |

| Basic | | $ | [removed: 10.58] [added: 14.35] | | | $ | [removed: 8.82] [added: 10.58] | | | $ | [removed: 6.89] [added: 8.82] | | | $ | [removed: 5.73] [added: 6.89] | | | $ | [removed: 3.99] [added: 5.73] | |

| Diluted | | $ | [removed: 10.47] [added: 14.13] | | | $ | [removed: 8.75] [added: 10.47] | | | $ | [removed: 6.76] [added: 8.75] | | | $ | [removed: 5.64] [added: 6.76] | | | $ | [removed: 3.95] [added: 5.64] | |

| Basic | | | [removed: 30,957] [added: 31,038] | | | | [removed: 31,513] [added: 30,957] | | | | [removed: 31,217] [added: 31,513] | | | | [removed: 31,234] [added: 31,217] | | | | [removed: 31,766] [added: 31,234] | |

| Diluted | | | [removed: 31,281] [added: 31,512] | | | | [removed: 31,783] [added: 31,281] | | | | [removed: 31,775] [added: 31,783] | | | | [removed: 31,735] [added: 31,775] | | | | [removed: 32,102] [added: 31,735] | |

| Total current assets | | $ | [removed: 666,307] [added: 878,479] | | | $ | [removed: 546,607] [added: 666,307] | | | $ | [removed: 501,192] [added: 546,607] | | | $ | [removed: 406,221] [added: 501,192] | | | $ | [removed: 297,454] [added: 406,221] | |

| Total assets | | $ | [removed: 2,009,280] [added: 2,546,285] | | | $ | [removed: 1,668,667] [added: 2,009,280] | | | $ | [removed: 1,425,308] [added: 1,668,667] | | | $ | [removed: 1,121,605] [added: 1,425,308] | | | $ | [removed: 961,505] [added: 1,121,605] | |

| Total current liabilities | | $ | [removed: 199,228] [added: 245,710] | | | $ | [removed: 186,852] [added: 199,228] | | | $ | [removed: 157,453] [added: 186,852] | | | $ | [removed: 123,054] [added: 157,453] | | | $ | [removed: 102,153] [added: 123,054] | |

| Total liabilities | | $ | [removed: 470,992] [added: 533,916] | | | $ | [removed: 422,741] [added: 470,992] | | | $ | [removed: 381,082] [added: 422,741] | | | $ | [removed: 310,732] [added: 381,082] | | | $ | [removed: 258,044] [added: 310,732] | |

| Total shareholders’ equity | | $ | [removed: 1,538,288] [added: 2,012,369] | | | $ | [removed: 1,245,926] [added: 1,538,288] | | | $ | [removed: 1,044,226] [added: 1,245,926] | | | $ | [removed: 810,873] [added: 1,044,226] | | | $ | [removed: 703,461] [added: 810,873] | |

| | 2014 | | | | 2013 | | | | 2012 | | | | 2011 | | | | 2010 | | | |

| [Report of Independent Registered Public Accounting [removed: Firm](#tx629534_22)] [added: Firm](#tx861905_50)] | | | [removed: 40] [added: 42] | |

| [Consolidated Balance Sheet as of December 31, [removed: 2013] [added: 2014] and [removed: 2012](#tx629534_23)] [added: 2013](#tx861905_51)] | | | [removed: 41] [added: 43] | |

| [Consolidated Statement of Income and Comprehensive Income for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011](#tx629534_24)] [added: 2012](#tx861905_52)] | | | [removed: 42] [added: 44] | |

| [Consolidated Statement of Shareholders’ Equity for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011](#tx629534_25)] [added: 2012](#tx861905_53)] | | | [removed: 43] [added: 45] | |

| [Consolidated Statement of Cash Flows for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011](#tx629534_26)] [added: 2012](#tx861905_54)] | | | [removed: 44] [added: 46] | |

| [Notes to Consolidated Financial [removed: Statements](#tx629534_27)] [added: Statements](#tx861905_55)] | | | [removed: 45] [added: 47] | |

We have audited the accompanying consolidated balance sheets of Chipotle Mexican Grill, Inc. (the “Company”) as of December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: 2013,] and the related consolidated statements of income and comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2013.][added: 2014.]

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Chipotle Mexican Grill, Inc. at December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: 2013,] and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2013,] [added: 2014,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), Chipotle Mexican Grill, Inc.’s internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (1992] [added: (2013] framework) and our report dated February 4, [removed: 2014] [added: 2015] expressed an unqualified opinion thereon.

| | | [added: 2014 | | | |] 2013 | | | | 2012 | | |

| Cash and cash equivalents [added: at beginning of year] | | [removed: $] | 323,203 | | | [removed: $] | 322,553 | | [added: | | 401,243 | |]

| Accounts receivable, net of allowance for doubtful accounts of [removed: $1,190] [added: $1,199] and [removed: $1,187] [added: $1,190] as of December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: December 31, 2013,] respectively | | | [removed: 24,016] [added: 34,839] | | | | [removed: 16,800] [added: 24,016] | |

| Inventory | | | [removed: 13,044] [added: 15,332] | | | | [removed: 11,096] [added: 13,044] | |

| Current deferred tax asset | | | [removed: 13,212] [added: 18,968] | | | | [removed: 8,862] [added: 13,212] | |

| Prepaid expenses and other current assets | | | [removed: 34,204] [added: 34,795] | | | | [removed: 27,378] [added: 34,204] | |

| Income tax receivable | | | [removed: 3,657] [added: 16,488] | | | | [removed: 9,612] [added: 3,657] | |

| Investments | | | [removed: 254,971] [added: 338,592] | | | | [removed: 150,306] [added: 254,971] | |

| Total current assets | | | [removed: 666,307] [added: 878,479] | | | | [removed: 546,607] [added: 666,307] | |

| Leasehold improvements, property and equipment, net | | | [removed: 963,238] [added: 1,106,984] | | | | [removed: 866,703] [added: 963,238] | |

| Long term investments | | | [removed: 313,863] [added: 496,106] | | | | [removed: 190,868] [added: 313,863] | |

| Other assets | | | [removed: 43,933] [added: 42,777] | | | | [removed: 42,550] [added: 43,933] | |

| Total assets | | $ | [removed: 2,009,280] [added: 2,546,285] | | | $ | [removed: 1,668,667] [added: 2,009,280] | |

| Accounts payable | | $ | [removed: 59,022] [added: 69,613] | | | $ | [removed: 58,700] [added: 59,022] | |

| Accrued payroll and benefits | | | [removed: 67,195] [added: 73,894] | | | | [removed: 71,731] [added: 67,195] | |

| Accrued liabilities | | | [removed: 73,011] [added: 102,203] | | | | [removed: 56,421] [added: 73,011] | |

| Total current liabilities | | | [removed: 199,228] [added: 245,710] | | | | [removed: 186,852] [added: 199,228] | |

| Deferred rent | | | [removed: 192,739] [added: 219,414] | | | | [removed: 167,057] [added: 192,739] | |

| Deferred income tax liability | | | [removed: 55,434] [added: 40,529] | | | | [removed: 48,947] [added: 55,434] | |

| Other liabilities | | | [removed: 23,591] [added: 28,263] | | | | [removed: 19,885] [added: 23,591] | |

| Total liabilities | | | [removed: 470,992] [added: 533,916] | | | | [removed: 422,741] [added: 470,992] | |

| Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: December 31, 2013,] respectively | | | — | | | | — | |

| Common stock $0.01 par value, 230,000 shares authorized, and [removed: 35,245] [added: 35,394] and [removed: 34,912] [added: 35,245] shares issued as of December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: December 31, 2013,] respectively | | | [removed: 352] [added: 354] | | | | [removed: 349] [added: 352] | |

| Additional paid-in capital | | | [removed: 919,840] [added: 1,038,932] | | | | [removed: 816,612] [added: 919,840] | |

| Treasury stock, at cost, [removed: 4,212] [added: 4,367] and [removed: 3,819] [added: 4,212] common shares at December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: December 31, 2013,] respectively | | | [removed: (660,421] [added: (748,759] | ) | | | [removed: (521,518] [added: (660,421] | ) |

| Accumulated other comprehensive income | | | [removed: 1,620] [added: (429] | [added: )] | | | [removed: 1,024] [added: 1,620] | |

| Retained earnings | | | [removed: 1,276,897] [added: 1,722,271] | | | | [removed: 949,459] [added: 1,276,897] | |

| Total shareholders’ equity | | | [removed: 1,538,288] [added: 2,012,369] | | | | [removed: 1,245,926] [added: 1,538,288] | |

| Total liabilities and shareholders’ equity | | $ | [removed: 2,009,280] [added: 2,546,285] | | | $ | [removed: 1,668,667] [added: 2,009,280] | |

| | | [removed: 2013] [added: 2014] | | | | [removed: 2012] [added: 2013] | | | | [removed: 2011] [added: 2012] | | |

| Revenue | | $ | [removed: 3,214,591] [added: 4,108,269] | | | $ | [removed: 2,731,224] [added: 3,214,591] | | | $ | [removed: 2,269,548] [added: 2,731,224] | |

February 4, 2015

| | | 2014 | | | | 2013 | | |

| Cash and cash equivalents | | $ | 419,465 | | | $ | 323,203 | |

| Stock plan transactions and other | | | 149 | | | | 2 | | | | (193 | ) | | | | | | | | | | | | | | | | | | | (191 | ) |

| Net income | | | | | | | | | | | | | | | | | | | | | | | 445,374 | | | | | | | | 445,374 | |

| Balance, December 31, 2014 | | | 35,394 | | | $ | 354 | | | $ | 1,038,932 | | | | 4,367 | | | $ | (748,759 | ) | | $ | 1,722,271 | | | $ | (429 | ) | | $ | 2,012,369 | |

| Net income | | $ | 445,374 | | | $ | 327,438 | | | $ | 278,000 | |

| Depreciation and amortization | | | 110,474 | | | | 96,054 | | | | 84,130 | |

| Loss on disposal of assets | | | 6,976 | | | | 6,751 | | | | 5,027 | |

| Stock plan transactions and other financing activities | | | (66 | ) | | | 173 | | | | 348 | |

course of business.

In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2014-08, “Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360).” The pronouncement was issued to clarify the reporting for discontinued operations and disclosures for disposals of components of an entity.

The pronouncement is effective for reporting periods beginning after December 15, 2014.

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers (Topic 606).” The pronouncement was issued to clarify the principles for recognizing revenue and to develop a common revenue standard and disclosure requirements for U.S. GAAP and IFRS.

The pronouncement is effective for reporting periods beginning after December 15, 2016.

The expected adoption method of ASU 2014-09 is being evaluated by the Company and the adoption is not expected to have a significant impact on the Company’s consolidated financial position or results of operations.

In June 2014, the FASB issued ASU No. 2014-12, “Compensation—Stock Compensation (Topic 718).” The pronouncement was issued to clarify the accounting for share-based payments when the terms of an award provide that a performance target could be achieved after the requisite service period.

The pronouncement is effective for reporting periods beginning after December 15, 2015.

The adoption of ASU 2014-12 is not expected to have a significant impact on the Company’s consolidated financial position or results of operations.

| | | 2014 | | | | 2013 | | |

| | | | 1,720,660 | | | | 1,490,635 | |

| | | $ | 1,106,984 | | | $ | 963,238 | |

| | | 2014 | | | | 2013 | | |

| | | $ | 102,203 | | | $ | 73,011 | |

| | | 2014 | | | | 2013 | | | | 2012 | | |

| Other | | | (1.1 | ) | | | (0.5 | ) | | | 0.2 | |

The 2014 tax rate decreased due to a decrease in the state tax rate and filing the 2013 tax returns, which included a change in the estimate of usable employer credits.

| | | 2014 | | | | 2013 | | |

The Company recorded a gross increase in unrecognized tax benefits of $1,342 as the result of tax positions taken during the year ended December 31, 2014.

On February 3, 2015, the Company announced that its Board of Directors authorized the expenditure of up to an additional $100,000 to repurchase shares of common stock.

For the years ended

| | | 2014 | | | | | | | | 2013 | | | | | | | | 2012 | | | | | | |

| Outstanding as of December 31, 2014 | | | 2,087 | | | $ | 395.46 | | | | 4.9 | | | $ | 603,356 | |

| Vested and expected to vest as of December 31, 2014 | | | 2,039 | | | $ | 393.06 | | | | 4.9 | | | $ | 594,198 | |

| Exercisable as of December 31, 2014 | | | 482 | | | $ | 271.38 | | | | 3.2 | | | $ | 199,045 | |

During the years ended December 31, 2014, 2013, and 2012, the company granted SOSARs that include performance conditions, in amounts totaling 220, 191, and 191 shares, respectively.

As of December 31, 2014, 656 SOSARs that include performance conditions were outstanding, of which 341 awards had met the performance conditions.

In addition to time vesting described above, the shares vest upon achieving a targeted cumulative cash flow from operations.

| | | 2014 | | | | | | | | 2013 | | | | | | | | 2012 | | | | | | |

| | | 2014 | | | | 2013 | | | | 2012 | | |

February 4, 2014

| Balance, December 31, 2010 | | | 33,959 | | | | 340 | | | | 594,331 | | | | 2,885 | | | | (240,918 | ) | | | 456,514 | | | | 606 | | | $ | 810,873 | |

| Stock plan transactions | | | 398 | | | | 4 | | | | 570 | | | | | | | | | | | | | | | | | | | | 574 | |

| Net income | | | | | | | | | | | | | | | | | | | | | | | 214,945 | | | | | | | | 214,945 | |

| Acquisition of interests in equity method investment | | | — | | | | — | | | | (586 | ) |

| Proceeds from employee stock plan transactions | | | 316 | | | | 481 | | | | 574 | |

| Other financing payments | | | (143 | ) | | | (133 | ) | | | (120 | ) |

| Cash and cash equivalents at beginning of period | | | 322,553 | | | | 401,243 | | | | 224,838 | |

Certain amounts in prior periods have been reclassified to conform to the current year presentation.

During the first quarter of 2013, the Company reclassified amounts related to lease financing liabilities from deemed landlord financing to other liabilities, and from current portion of deemed landlord financing to accrued liabilities.

balances are held at three financial institutions and are not federally backed or federally insured.

Subsequent Events

The Company evaluated subsequent events and transactions for potential recognition or disclosure in the consolidated financial statements through the date of issuance.

Effective January 1, 2013, the Company adopted Accounting Standards Update (“ASU”) No. 2013-02, “Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income.” The adoption of ASU 2013-02 concerns presentation and disclosure only and did not have an impact on the Company’s consolidated financial position or results of operations.

| | | | 1,490,635 | | | | 1,311,620 | |

| | | $ | 963,238 | | | $ | 866,703 | |

| | | $ | 73,011 | | | $ | 56,421 | |

| Federal credits | | | (0.5 | ) | | | — | | | | (0.8 | ) |

| Prior period adjustments | | | (0.4 | ) | | | (0.1 | ) | | | 0.1 | |

| Valuation allowance | | | (58 | ) | | | (58 | ) |

There was no change in the amount of unrecognized tax benefits as a result of tax positions taken during the year or in prior periods or due to settlements with taxing authorities or lapses of applicable statutes of limitations.

During the first quarter of 2012, the Company increased its estimate of the number of non-vested stock awards subject to performance conditions that were probable of vesting, which resulted in a cumulative adjustment to expense of $5,578 ($3,397 net of tax and $0.11 impact to basic and diluted earnings per share for 2012).

| Outstanding as of December 31, 2013 | | | 1,690 | | | $ | 312.44 | | | | 5.1 | | | $ | 372,475 | |

| Vested and expected to vest as of December 31, 2013 | | | 1,647 | | | $ | 312.04 | | | | 5.1 | | | $ | 363,561 | |

| Exercisable as of December 31, 2013 | | | 258 | | | $ | 210.85 | | | | 3.8 | | | $ | 83,019 | |

The SOSARs granted during 2013 include 191 SOSARs that contain performance conditions.

Prior to the first quarter of 2012, the Deferred Plan was unfunded, with all earnings and losses recorded in general and administrative expenses in the consolidated statement of income and comprehensive income.

The total expense recognized related to the unfunded portion of the Deferred Plan including the matching contributions was $487 and $20 for the years ended December 31, 2012, and 2011, respectively.

In addition,

| 2014 | | $ | 185,866 | |

| 2015 | | | 189,474 | |

| 2016 | | | 189,514 | |

| 2017 | | | 190,256 | |

| 2018 | | | 193,243 | |

| Thereafter | | | 1,908,169 | |

_Shareholder Derivative Actions_

On July 12, 2012, Ralph B.

Richey filed a shareholder derivative action in the U.S. District Court for the District of Colorado alleging that the members of the Company’s Board of Directors breached their fiduciary duties in connection with employee work authorization compliance matters.

On September 21, 2012, Joanne Nelson filed a shareholder derivative action in the same court alleging that the members of the Company’s Board of Directors and the Company’s Chief Financial Officer breached their fiduciary duties, caused waste of corporate assets, and were unjustly enriched in connection with employee work authorization compliance matters, as well as in connection with the Company’s alleged failure to disclose material information about the Company’s business results and prospects, and in connection with compensation paid to some of the Company’s officers.

On October 4, 2012, Francis Schmitz filed a shareholder derivative action in the same court, making allegations substantially the same as those in the Nelson complaint.

As of December 31, [removed: 2013,] [added: 2014,] we carried out an evaluation, under the supervision and with the participation of our management, including our co-Chief Executive Officers and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

There were no changes during the fiscal quarter ended December 31, [removed: 2013] [added: 2014] in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial [removed: reporting_._][added: reporting.]

Management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework [removed: (1992).][added: (the “2013 framework”).]

Based on that assessment, management concluded that, as of December 31, [removed: 2013,] [added: 2014,] our internal control over financial reporting was effective based on the criteria established in [removed: Internal Control—Integrated Framework (1992).][added: the 2013 framework.]

Our independent registered public accounting firm, Ernst & Young LLP, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, [removed: 2013.][added: 2014.]

We have audited Chipotle Mexican Grill, Inc.’s [removed: (the “Company”)] internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission [removed: (1992] [added: (2013] framework) (the COSO criteria).

[removed: The Company’s] [added: Chipotle Mexican Grill, Inc.’s] management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control [removed: Over] [added: over] Financial Reporting.

In our opinion, Chipotle Mexican Grill, Inc. maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2013,] [added: 2014,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of Chipotle Mexican Grill, Inc. as of December 31, [removed: 2013] [added: 2014] and [removed: 2012,] [added: 2013,] and the related consolidated statements of income and comprehensive income, shareholders’ equity, and cash flows for each of the three years in the period ended December 31, [removed: 2013,] [added: 2014,] and our report dated February 4, [removed: 2014] [added: 2015] expressed an unqualified opinion thereon.

February 4, 2015

February 4, 2014

Incorporated by reference from the definitive proxy statement for our [removed: 2014] [added: 2015] annual meeting of shareholders, which will be filed no later than 120 days after December 31, [removed: 2013.][added: 2014.]

Incorporated by reference from the definitive proxy statement for our [removed: 2014] [added: 2015] annual meeting of shareholders, which will be filed no later than 120 days after December 31, [removed: 2013.][added: 2014.]

The following table presents information regarding options and rights outstanding under our equity compensation plans as of December 31, [removed: 2013.][added: 2014.]

| (1) | Includes shares issuable in connection with performance shares, which will be issued based on achievement of performance criteria associated with the awards, with the number of shares issuable dependent on our level of performance. The weighted-average exercise price in column (b) includes the weighted-average exercise price of [removed: stock options and] SOSARs only. |

| (2) | Includes [removed: 2,013,854] [added: 1,287,972] shares remaining available under the Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan, and [removed: 248,600] [added: 248,235] shares remaining available under the Chipotle Mexican Grill, Inc. Employee Stock Purchase Plan. In addition to being available for future issuance upon exercise of SOSARs or stock options that may be granted after December 31, [removed: 2013,] [added: 2014,] all of the shares available for grant under the Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan may instead be issued in the form of restricted stock, restricted stock units, performance shares or other equity-based awards. Each share underlying a full value award such as restricted stock, restricted stock units or performance shares counts as two shares used against the total number of securities authorized under the plan. |

Additional information for this item is incorporated by reference from the definitive proxy statement for our [removed: 2014] [added: 2015] annual meeting of shareholders, which will be filed no later than 120 days after December 31, [removed: 2013.][added: 2014.]

| Equity Compensation Plans Approved by Security Holders: | | | 2,157,461 | | | $ | 395.46 | | | | 1,536,207 | |

| Total | | | 2,157,461 | | | $ | 395.46 | | | | 1,536,207 | |

| Equity Compensation Plans Approved by Security Holders: | | | 1,760,851 | | | $ | 312.44 | | | | 2,262,454 | |

| Total | | | 1,760,851 | | | $ | 312.44 | | | | 2,262,454 | |

Incorporated by reference from the definitive proxy statement for our [removed: 2014] [added: 2015] annual meeting of shareholders, which will be filed no later than 120 days after December 31, [removed: 2013.][added: 2014.]

Incorporated by reference from the definitive proxy statement for our [removed: 2014] [added: 2015] annual meeting of shareholders, which will be filed no later than 120 days after December 31, [removed: 2013.][added: 2014.]

Date: February 4, [removed: 2014][added: 2015]

| /S/ STEVE ELLS Steve Ells | | February 4, [removed: 2014] [added: 2015] | | Co-Chief Executive Officer and Chairman of the Board of Directors (principal executive officer) |

| /S/ MONTGOMERY F. MORAN Montgomery F. Moran | | February 4, [removed: 2014] [added: 2015] | | Co-Chief Executive Officer (principal executive officer) |

| /S/ JOHN R. HARTUNG John R. Hartung | | February 4, [removed: 2014] [added: 2015] | | Chief Financial Officer (principal financial and accounting officer) |

| /S/ ALBERT S. BALDOCCHI Albert S. Baldocchi | | February 4, [removed: 2014] [added: 2015] | | Director |

| /S/ JOHN S. CHARLESWORTH John S. Charlesworth | | February 4, [removed: 2014] [added: 2015] | | Director |

| /S/ NEIL W. FLANZRAICH Neil W. Flanzraich | | February 4, [removed: 2014] [added: 2015] | | Director |

| /S/ PATRICK J. FLYNN Patrick J. Flynn | | February 4, [removed: 2014] [added: 2015] | | Director |

| /S/ DARLENE J. FRIEDMAN Darlene J. Friedman | | February 4, [removed: 2014] [added: 2015] | | Director |

| [removed: /s/] [added: /S/] KIMBAL MUSK Kimbal Musk | | February [removed: 3, 2014] [added: 4, 2015] | | Director |

| 101 | | The following financial statements, formatted in XBRL: (i) Consolidated Balance Sheet as of December 31, [removed: 2013] [added: 2014] and December 31, [removed: 2012,] [added: 2013,] (ii) Consolidated Statement of Income and Comprehensive Income for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011,] [added: 2012,] (iii) Consolidated Statement of Shareholders’ Equity for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011,] [added: 2012,] (iv) Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2013, 2012] [added: 2014, 2013] and [removed: 2011;] [added: 2012;] and (v) Notes to the Consolidated Financial Statements. |

| (11) | Incorporated by reference to Chipotle Mexican Grill, Inc.’s Quarterly Report on Form 10-Q for the quarter ended June 30, [removed: 2011,] [added: 2014,] filed with the Securities and Exchange Commission on July [removed: 21, 2011] [added: 22, 2014] (File No. 001-32731). |

| (14) | Incorporated by reference to Chipotle Mexican Grill, Inc.’s Quarterly Report on Form 10-Q for the quarter ended [removed: June 30, 2010,] [added: March 31, 2014,] filed with the Securities and Exchange Commission on [removed: July 27, 2010] [added: April 17, 2014] (File No. 001-32731). |

| | | |

| | | | | |

| Jeffrey B. Kindler | | | | Director |

| 10.1† | | Amended and Restated Chipotle Mexican Grill, Inc. 2006 Cash Incentive Plan.(5) |

| 10.2.1† | | Form of 2007 Stock Option Agreement.(7) |