Chipotle Mexican Grill (CMG) 10-K risk factor changes: FY2020 vs FY2019

Risks Related to [removed: our Business] [added: Our Growth] and [removed: Industry][added: Business Strategy]

Food safety is our top priority, and we dedicate [removed: substantial] [added: appropriate] resources to ensuring that our guests enjoy safe, high-quality food products.

Even with strong preventative controls and interventions, [removed: food safety incidents] [added: food-borne illnesses] continue to occur in the [removed: food service] [added: restaurant] industry because food safety risks cannot be completely eliminated in any [removed: restaurant, including as a result of possible failures by restaurant crew or suppliers to follow food safety policies and procedures.][added: restaurant.]

Although we [removed: test] [added: monitor] and audit [removed: these activities,] [added: all of our programs,] we cannot guarantee that [removed: all] [added: each and every individual] food [removed: items are] [added: item is] safely and properly maintained during [removed: transport or] distribution throughout the supply chain.

Regardless of the source or cause, any report of food-borne [removed: illnesses] [added: illness] such as E. coli, hepatitis A, norovirus or salmonella, and other food safety issues, including food tampering or contamination, at one of our restaurants could adversely affect our reputation and have a negative impact on our sales.

[removed: Even] [added: In addition,] instances of food-borne illness, food tampering or food contamination that occur solely at competitors’ restaurants could result in negative publicity about the [removed: food service] [added: restaurant] industry [removed: generally] and adversely impact our sales.

Social media has dramatically increased the rate at which negative publicity, including [removed: as it relates to] [added: actual or perceived] food safety incidents, can be disseminated before there is any meaningful opportunity to [added: investigate,] respond [removed: or] [added: and] address an issue.

[removed: Several highly publicized food safety incidents in our restaurants and our Food With Integrity business principles] [added: We] may [removed: make us] [added: be] more susceptible than our competitors to significant adverse consequences arising from food safety [removed: incidents.][added: incidents due to several highly publicized food safety events in our restaurants and failure to adhere to our food safety standards.]

From 2015 to 2017, illnesses caused by E. coli bacteria and norovirus were connected to a number of our restaurants and, in 2018, illnesses believed to be caused by [removed: *c.][added: *C. perfringens* bacteria were connected to the food in one of our restaurants.]

Because of consumer perceptions in the wake of these food safety incidents, any future food safety incidents associated with our restaurants—even incidents that [removed: may] [added: would] be considered minor at other restaurants—may have a more significant negative impact on our sales and our ability to regain guests.

In addition, we may be at a higher risk for food safety incidents than some competitors due to our greater use of fresh, unprocessed [removed: produce and meats,] [added: produce, handling of raw chicken,] our reliance on employees cooking with traditional methods rather than automation, and our avoidance of frozen ingredients.

The risk of illnesses associated with our food also may increase due to the growth of our delivery or catering businesses, in which our food is transported and/or served in transportation conditions that [removed: we cannot] [added: are not under our] control.

[removed: Information] [added: We rely heavily on information] technology [removed: system] [added: systems and] failures or [removed: interruptions] [added: interruptions in our IT systems] could harm our ability to effectively operate our business and/or result in the loss of guests or employees.

We rely heavily on information technology systems, including the point-of-sale and payment processing system in our restaurants, technologies supporting our [added: online ordering,] digital and delivery [removed: businesses,] [added: business,] technologies that [added: traceback ingredients to suppliers and growers and manage our supply chain, our rewards program, technologies that] facilitate [removed: e-commerce,] marketing [removed: programs,] [added: initiatives,] employee engagement and payroll processing, [removed: management of our supply chain,] and various other processes and transactions.

Our ability to effectively manage our business and coordinate the procurement, production, [removed: distribution] [added: distribution, safety] and sale of our products depends significantly on the availability, [removed: reliability, security] [added: reliability] and [removed: capacity] [added: security] of these systems.

If [removed: those] [added: any of our critical IT] systems were to become unreliable, unavailable, compromised or otherwise fail, and we were unable to recover in a timely manner, we could experience an interruption in our operations that could have a material adverse impact on our profitability.

[removed: Cyber security] [added: Cybersecurity] breaches or other privacy or data security incidents [removed: that expose] [added: could result in unauthorized access, theft, modification or destruction of] confidential guest, personal employee and other material, confidential information [added: that is stored in our systems or by third parties on our behalf, which] may adversely affect our business.

[removed: In recent years as] [added: As] our reliance on technology has [removed: increased, so have] [added: grown,] the scope and severity of risks posed to our systems from cyber [removed: threats.][added: threats has increased.]

The techniques and sophistication used to conduct cyber-attacks and breaches of information technology systems, as well as the sources and targets of these attacks, change frequently and are often not recognized until [removed: such] attacks are launched or have been in place for a period of time.

The majority of our restaurant sales are made by credit or debit [removed: cards.][added: cards, and we also maintain personal information regarding our employees and confidential information about our guests and suppliers.]

[removed: Some] [added: For example, some] of our guests [removed: also] have experienced account takeover fraud, in which guests use the same log in credentials on multiple websites and, when a third party [added: fraudulently] obtains those credentials, they can gain unauthorized access to their accounts and charge food orders to the credit card linked to the account (without accessing credit card data).

We may in the future become subject to other legal proceedings [added: or governmental investigations] for purportedly fraudulent transactions arising out of the actual or alleged theft of our consumers’ credit or debit card information or if consumer or employee information is obtained by unauthorized persons or used inappropriately.

Any such claim or proceeding, or any adverse publicity resulting from such an event, may have a material adverse effect on our business and [removed: the potential of incurring] [added: we may incur] significant remediation costs.

[removed: Security] [added: Cybersecurity] breaches also could result in a violation of applicable U.S. and international privacy and other laws, and subject us to private consumer, business partner, or securities litigation and governmental investigations and proceedings, any of which could result in our exposure to material civil or criminal liability.

For example, the European [removed: Union adopted a regulation that became effective in May 2018, called the] [added: Union’s] General Data Protection Regulation [removed: (“GDPR”), which] [added: (“GDPR”)] requires companies to meet [removed: new] [added: certain] requirements regarding the handling of personal data, including its use, protection and transfer and the ability of persons whose data is stored to correct or delete such data about themselves.

Additionally, the California Privacy Act of 2018 (“CCPA”), which became effective on January 1, 2020, provides a [removed: new] private right of action for data breaches and requires companies that process information on California residents to make new disclosures to consumers about their data collection, use and sharing [removed: practices and] [added: practices,] allow consumers to opt out of certain data sharing with third [removed: parties.][added: parties and the right for consumers to request deletion of]

We make significant investments in technology, third-party services and [added: internal] personnel to develop and implement systems and processes that are designed to anticipate cyber-attacks and to prevent or minimize breaches of our information technology systems or data loss, but these security measures cannot provide assurance that we will be successful in preventing such breaches or data loss.

The [removed: retail food] [added: restaurant] industry [removed: in which we operate] is highly competitive.

The [removed: retail food] [added: restaurant] industry [removed: in which we operate] is highly competitive with respect to [removed: taste,] [added: taste preferences,] price, food quality and selection, customer service, brand reputation, digital engagement, advertising levels and promotional initiatives, and the location, attractiveness and maintenance of restaurants.

We also compete with a number of non-traditional market participants, such as convenience stores, grocery stores, coffee [removed: shops and] [added: shops,] meal kit delivery [removed: services.][added: services, and “ghost” or dark kitchens, where meals are prepared at separate takeaway premises rather than a restaurant.]

Competition from [removed: delivery aggregators and other] food delivery services has also increased in recent years, particularly [removed: in urbanized areas,] [added: during COVID-19,] and is expected to continue to increase.

If consumer or dietary preferences change, if our marketing efforts are unsuccessful, or if our restaurants are unable to compete successfully with other [removed: retail food] [added: restaurant] outlets, our business could be adversely affected.

If we are unable to continue to maintain our distinctiveness and compete effectively, our business, financial condition and results of operations [removed: would] [added: could] be adversely affected.

We rely on our restaurant-level employees to consistently provide high-quality food and [added: positive] experiences to our guests.

Maintaining appropriate staffing in our existing restaurants and hiring and training staff for our new restaurants requires precise workforce [removed: planning.][added: planning, which has become more complex due to predictive scheduling (“fair workweek”) laws and “just cause” termination legislation.]

[removed: The low level of unemployment in the United States is resulting] [added: COVID-19 has also resulted] in aggressive competition for talent, wage inflation and pressure to improve benefits and workplace conditions to remain competitive.

[removed: A shortage of quality candidates who meet legal citizenship or work authorization requirements, our] [added: Our] failure to recruit and retain new restaurant crew members in a timely manner or higher employee turnover levels all could affect our ability to open new restaurants and grow sales at existing restaurants, and we may experience higher than projected labor costs.

[removed: Substantially] [added: We operate substantially] all of our restaurants [removed: operate] in leased facilities.

[removed: Locating] [added: It is becoming increasing challenging to locate] and [removed: securing suitable] [added: secure favorable] lease facilities for new restaurants [removed: is becoming increasing challenging] as competition for restaurant sites in our target markets is intense.

From time to time we [added: may] close or relocate a restaurant [added: if a current location becomes less profitable] as a result of adverse economic conditions [added: or local regulatory compliance] in [removed: an area if a current location becomes less profitable.][added: the area.]

Risks Related to the Nature of our Restaurant Business and Operating in the Restaurant Industry

Incidents may result from the failure of restaurant crew members or suppliers to follow our food safety policies and procedures, or from employees or guests entering our restaurant while ill and contaminating food ingredients or surfaces.

Our digital business, which accounted for almost half of revenues in 2020, is subject to risks.

The growth in digital orders is attributable to more guests dining at home due to COVID-19, our expanded partnerships with multiple third-party delivery services and our expansion of Chipotlanes, which is our drive through format for digital order pickups.

Depending on which ordering platform a digital order is placed - our platform or the platform of a third-party delivery service – the delivery fee we collect from the guest may be less than the actual delivery cost, which has a negative impact on our profitability.

In the fall of 2020, we implemented a menu price increase to partially offset higher delivery costs; however, our higher menu prices may cause some guests to shift their purchases to other restaurants offered on the platform.

As our digital business grows, we are increasingly reliant on third-party delivery companies, which maintain control over data regarding guests that use their platform and over the customer experience.

If a third-party delivery company driver fails to make timely deliveries or fails to deliver the complete order, our guests may attribute the bad customer experience to Chipotle and could stop ordering from us.

The delivery business has been consolidating and may continue to consolidate, and fewer third-party delivery companies may give them more leverage in negotiating the terms and pricing of contracts, which could negatively impact our profits from delivery orders.

As a result of our highly publicized food safety incidents in 2015 - 2018, negative social media posts about our business may generate a disproportionately negative response than would be the results at other companies without a similar history.

Use of social media platforms is an important element of our marketing efforts and became increasingly more important during the COVID-19 pandemic.

Risks Related to the COVID-19 Pandemic

The novel coronavirus (COVID-19) pandemic has adversely affected and could continue to adversely affect our financial results, operations and outlook for an extended period of time.

The novel coronavirus (COVID-19) pandemic, and restrictions imposed by federal, state and local governments in response to the outbreak, have disrupted and will continue to disrupt our business.

During 2020, individuals in many areas where we operate our

restaurants were required to practice social distancing, restricted from gathering in groups and/or mandated to “stay home” except for “essential” purposes.

In response to the COVID-19 outbreak and government restrictions, we were required to close some of our restaurants, close many of our dining rooms and offer only takeout and delivery, and/or implement modified work hours.

The mobility restrictions, fear of contracting the coronavirus and the sharp increase in unemployment caused by the closure of businesses in response to the COVID-19 outbreak, have adversely affected and will continue to adversely affect our guest traffic, which in turn adversely impacts our liquidity, financial condition or results of operations.

Even as and when the mobility restrictions are loosened or lifted, guests may still be reluctant to return to in-restaurant dining and the impact of lost wages due to COVID-19 related unemployment may dampen consumer spending for the foreseeable future.

Our restaurant operations have been and could continue to be disrupted by employees who are unable or unwilling to work, whether because of illness, quarantine, fear of contracting COVID-19 or caring for family members due to COVID-19 disruptions or illness.

Restaurant closures, limited service options or modified hours of operation due to staffing shortages could materially adversely affect our liquidity, financial condition or results of operations.

To protect the health and safety of our employees and guests, we provide face coverings for all restaurant employees, offer enhanced health and welfare benefits, provided temporary wage increases during the initial onset of the pandemic, provide 14 days of paid emergency leave for COVID-related concerns, paid discretionary bonuses to restaurant employees, purchased additional sanitation supplies and personal protective materials, implemented a tamper evident packaging seal for all digital orders, and created a new steward role to sanitize high-traffic restaurant areas.

These measures have increased our operating costs and adversely affected our liquidity.

The COVID-19 outbreak also has affected and may continue to adversely affect the ability of certain of our suppliers to fulfill their obligations to us, which may negatively affect our restaurant operations.

These suppliers include third parties that supply and/or prepare our ingredients, packaging, paper and cleaning products and other necessary operating materials, distribution centers, and logistics and transportation services providers.

If our suppliers are unable to fulfill their obligations to us, we could face shortages of food items or other supplies at our restaurants, and our operations and sales could be adversely impacted.

We also modified our plans for opening new restaurants and remodeling existing restaurants due to the COVID-19 outbreak.

To preserve liquidity, we delayed new restaurant construction and restaurant remodels that were scheduled to begin during the first half of the year, and we limited restaurant remodels to restaurants that do not have a digital make line or Chipotlane.

These changes may materially adversely affect our ability to grow our business, particularly if these construction projects are delayed for a significant amount of time.

We cannot predict how long the COVID-19 outbreak will last or if it will reoccur even after the vaccines are widely administered, when government restrictions and mandates will be imposed or lifted, or how quickly, if at all, guests will return to their pre-COVID-19 purchasing behaviors, so we cannot predict how long our results of operations and financial performance will be adversely impacted.

Risks Related to Labor and Supply Chain

The ongoing and long-term costs of these impacts related to climate change and other sustainability related issues could have a material adverse effect on our business and financial condition if not properly mitigated.

pork, would have a particularly adverse effect on our operating results.

Several jurisdictions also have implemented sick pay/paid time off legislation, which requires employers to provide paid time off to employees, and “just cause” termination legislation, which restricts companies’ ability to terminate employees unless they can prove “just cause” or a “bona fide economic reason” for the termination.

Labor unions have attempted, and likely will continue to attempt, to attract media attention to their organizing efforts in our restaurants, and their organizing efforts include claims that Chipotle mistreats or undervalues its employees.

Despite our efforts to provide more accurate information about our policies and practices, these messages may dissuade guests from patronizing our restaurants.

The COVID-19 pandemic has exacerbated staffing complexities for us and other restaurant operators, and during 2020 we were forced to temporarily close some restaurants or limit operating hours due to employee illnesses, fear of contracting COVID or caregiving responsibilities among our restaurant crew.

Risks Related to IT Systems, Cybersecurity and Data Privacy

In addition, as more business activities have shifted online and more people are working remotely, including as a result of COVID-19, we have experienced an increase in cybersecurity threats and attempts to breach our security networks.

personal information (subject to certain exceptions).

perfringens* bacteria were connected to the food in one of our restaurants.

Despite the implementation of protective measures, these technology systems and solutions could become vulnerable to damage, disability or failures due to theft, fire, power loss, telecommunications failure or other catastrophic events.

We also are in the process of implementing a new enterprise resource planning (ERP) system, which will significantly impact our financial reporting control environment.

If we fail to successfully implement the new system and effectively train our employees and update our processes, we could experience disruptions or delays in processing financial and business information.

Our increasing reliance on systems operated by third parties, including delivery aggregators and payment processors, also present the risks faced by the third-party’s business, including the operational, security and credit risks of those parties.

We also maintain certain personal information regarding our employees and confidential information about our guests and suppliers.

In April 2017, malware was detected in our payment processing network that was designed to access payment card data from cards used at point-of-sale devices at most of our restaurants.

We removed the malware from our systems and enhanced our security measures; however, we incurred significant costs and legal liabilities in connection with this incident.

See Note 13.

“Commitments and Contingencies” to our financial statements for a description of this incident.

The GDPR also confers a private right of action on certain individuals and associations.

As part of our marketing efforts, we rely on social media platforms to attract and retain guests.

New social media platforms are rapidly being developed, potentially making more traditional social media platforms obsolete.

As we continue to grow, it may be increasingly difficult to maintain our culture.

Our failure to effectively manage our growth could harm our business and operating results.

The increasing impact of and focus on sustainability and climate change could increase our costs, harm our reputation and adversely affect our financial results.

There has been increasing public focus by investors, environmental activists, the media and governmental and nongovernmental organizations on social and environmental sustainability matters, including packaging and waste, animal health and welfare, human rights, carbon footprints, deforestation and land use.

As a result, we have experienced increased pressure to make commitments relating to social and environmental sustainability, set science-based targets related to climate change and establish specific strategic initiatives relating to sustainability.

If we are not effective in addressing social and environmental sustainability matters, or set and meet achievable sustainability goals, consumer trust in our brand may suffer.

In addition, the costs to achieve our sustainability goals and the increased costs in our supply chain resulting from the impact of climate change, could have a material adverse effect on our business and financial condition.

“Commitments and Contingencies” to our financial statements for a description of potential liabilities in connection with these matters.

Our digital business, which has become an increasing significant part of our business, is subject to risks.

We have implemented technology, targeted advertising and promotions and remodeled our restaurants, including adding Chipotlanes, to accommodate the growth of our digital business.

If we do not continue to grow our digital business, it may be difficult for us to achieve our planned sales growth.

Additionally, our delivery partners are responsible for order fulfillment and errors or failures to make timely deliveries could cause guests to stop ordering from us.

Our anti-takeover provisions may delay or prevent a change in control of Chipotle, which could adversely affect the price of our common stock*.*

Our amended and restated certificate of incorporation and amended and restated bylaws contain some provisions that may make the acquisition of control of Chipotle without the approval of our Board of Directors more difficult, including provisions relating to the nomination, election and removal of directors, and limitations on actions by our shareholders.

Delaware law also imposes some restrictions on mergers and other business combinations between Chipotle and any holder of 15% or more of our outstanding common stock.

Any of these provisions may discourage a potential acquirer from proposing or completing a transaction that may have otherwise presented a premium to our shareholders, which could adversely affect the price of our common stock.

In [removed: several] [added: some] cases, we have minimum purchase obligations.

[removed: We’ve] [added: We have] tried to increase, where practical, the number of suppliers for our ingredients, which we believe can help mitigate pricing volatility, and we follow industry news, trade issues, exchange rates, foreign demand, weather, crises and other world events that may affect our ingredient prices.

We are [removed: also] exposed to interest rate risk through fluctuations of interest rates on our investments.

As of December 31, [removed: 2019,] [added: 2020,] we had [removed: $824.8 million] [added: $1.0 billion] in investments and interest-bearing cash accounts, including insurance-related restricted trust accounts classified in restricted cash, and [removed: $60.7] [added: $59.7] million in accounts with an earnings credit we classify as interest and other income, which combined earned a weighted average interest rate of [removed: 1.75%.][added: 0.20%.]

We also could experience shortages of key ingredients if our suppliers need to close or restrict operations due to the impact of the COVID-19 outbreak.

Chipotle Mexican Grill, Inc., a Delaware corporation, together with its subsidiaries [removed: (“Chipotle”, “we”, “us”,] [added: (“Chipotle,” “we,” “us,”] or “our”) [added: owns and] operates Chipotle Mexican Grill restaurants, which feature a relevant menu of burritos, burrito bowls (a burrito without the tortilla), tacos, and salads.

We [removed: are cultivating] [added: strive to cultivate] a better world by serving responsibly sourced, classically cooked, real food with wholesome ingredients [added: and] without artificial colors, flavors or preservatives.

Steve Ells, founder and [added: former] executive chairman, first opened Chipotle with a single restaurant in Denver, Colorado in 1993.

As of December 31, [removed: 2019,] [added: 2020,] we [added: owned and] operated [removed: 2,580] [added: 2,724] Chipotle restaurants throughout the United States, [removed: 39] [added: 40] international Chipotle restaurants, and [removed: three] [added: four] non-Chipotle restaurants.

Leveraging [removed: our digital-make line] [added: digital capabilities] to [added: drive productivity and] expand [removed: access] [added: access, convenience] and [removed: convenience;][added: engagement;]

Engaging with customers through our loyalty program; [added: and]

[removed: And running] [added: Running] successful restaurants with a strong culture that provides great [removed: food, hospitality, throughput,] [added: food with integrity while delivering exceptional in-restaurant] and [removed: economics.][added: digital experiences.]

[removed: *Food with Integrity.*] Serving high quality food while still charging reasonable prices is critical to ensuring guests enjoy wholesome food at a great value.

For example, some of our restaurants periodically serve conventionally raised chicken or beef due to supply constraints for our Responsibly Raised brand meats or stop [removed: serving one or more menu items due to additional supply constraints.]

We call these beans “transitional.” Some of the other produce items we serve are organically grown as [removed: well.][added: well as we continue our commitment to find high quality ingredients.]

[removed: Purchasing] [added: Quality Assurance] and Food Safety

[removed: *Close Relationships with Suppliers.*] Maintaining the high levels of quality and safety we [removed: expect] [added: demand] in our restaurants depends in part on our ability to acquire high-quality, fresh ingredients and other necessary supplies that meet our specifications from reliable suppliers.

Our [removed: 23] [added: 24] independently owned and operated regional distribution centers purchase from various suppliers we carefully select based on [removed: quality] [added: quality, price, availability,] and the suppliers’ understanding and adherence of our mission.

We’ve also sought to increase, where practical, the number of suppliers for our ingredients to help mitigate pricing volatility and [added: reduce our reliance on one or several suppliers, which could create] supply shortages.

Certain key ingredients [removed: (including] [added: (certain cuts of] beef, [removed: pork, chicken, beans, rice, sour cream, cheese,] [added: tomatoes, tortillas] and [removed: tortillas)] [added: adobo)] are purchased from a small number of suppliers.

[removed: *Quality Assurance and Food Safety.*] We are committed to serving [added: only] safe, high quality food.

supplier interventions (steps to [removed: avoid] [added: mitigate] food safety risks before ingredients reach Chipotle);

In addition, we have a team approach where our training, operations, culinary, legal and safety, security and risk management departments develop and implement operating standards for food quality, [added: food] preparation, [added: restaurant] cleanliness, employee health protocols, and safety in the restaurants.

Many of our competitors [added: also] offer dine-in, carry-out, online, catering, and delivery services.

We are subject to various federal, state and local laws and regulations that govern aspects of our business operations, [removed: including:][added: including those governing:]

employment [removed: practices,] [added: practices and working conditions,] such as [added: minimum] wage [added: rates, wage] and hour [removed: and fair work week regulations,] [added: practices,] requirements to provide meal and rest periods, [added: Fair Workweek legislation, employment of minors, anti-discrimination, anti-harassment, classification of employees, paid and] family [removed: leave mandates,] [added: leave,] workplace safety [removed: and] accommodations to certain employees, [removed: citizenship or work authorization requirements, insurance and workers’ compensation rules, and anti-discrimination] [added: immigration] and [removed: anti-harassment laws;][added: overtime pay, among others;]

environmental practices, [removed: including concerning] [added: such as] the discharge, storage, handling, release and disposal of hazardous or toxic substances, and regulations restricting the use of straws, utensils and the types of packaging we can use in our restaurants; [removed: and]

From time to [removed: time] [added: time,] we have taken action against other restaurants that we believe are misappropriating our trademarks, restaurant designs or advertising.

We maintain a website at www.chipotle.com, including an investor relations section at [removed: ir.chipotle.com in] [added: ir.chipotle.com, on] which we routinely post important information, such as webcasts of quarterly earnings calls and other investor events in which we participate or host, and any related materials.

Our Code of [added: Ethics and our Code of] Conduct [removed: is] [added: for Suppliers] also [added: are] available in this section of our website.

We manage our operations based on eight regions and have aggregated our operations to one reportable segment.

Our revenue is derived from sales by company-owned restaurants.

Utilizing a disciplined approach to creativity and innovation;

Food with Integrity

serving one or more menu items due to additional supply constraints.

Purchasing

Digital Business

Our digital platform continues to be a strategic driver of our growth.

In the past year, we significantly upgraded our capabilities by digitizing almost all of our restaurant digital-make lines, expanding our partnerships with third-party delivery services and building more Chipotlanes, which is our drive through format for customer pick-up of digital orders.

Digital sales, which includes delivery and customer pick-up, accounted for 46.2% of our total sales in 2020, compared to 10.9% of total sales in 2019.

Our strong digital platform gave us a competitive advantage during the COVID-19 pandemic, as more guests prefer to eat their meals at home and in-restaurant dining was prohibited or restricted.

We have made digital ordering convenient with enhancements to the Chipotle App and website, such as unlimited customization, contactless delivery, and group ordering.

Human Capital

As of December 31, 2020, Chipotle employed nearly 88,000 people worldwide.

In the United States, we employed 85,314 people in our restaurants and approximately 1,367 people in our Restaurant Support Centers (RSCs) and field support organizations; approximately 87,000 individuals are employed in the U.S. and approximately 1,000 are employed in Canada, France, Germany and

the United Kingdom.

We do not currently have any employees represented by unions.

We believe our efforts to manage our workforce have been effective, as evidenced by a strong culture and our employees’ demonstrated commitment to living our purpose and values.

Culture, Values & Diversity, Equity & Inclusion

As a people-first company rooted in values, our purpose of Cultivating a Better World extends beyond serving nutritious food using real ingredients.

It means hiring world-class individuals dedicated to investing in their future and partnering together to positively impact the communities they serve.

Most notably, it means fostering a culture that champions diversity, ensures equity, and celebrates inclusion.

As of December 31, 2020, more than 50% of our U.S.-based employee population is female and approximately 66% of our U.S based employee population is comprised of racial and ethnic minorities.

U.S. diversity statistics were as follows:

| | | | |

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

| | | | |

| Gender | | Race/Ethnicity | |

| Female | 54% | Hispanic or Latino | 38% |

| Male | 45% | White | 31% |

| Not Indicated | 1% | Black or African American | 18% |

| | | Asian | 5% |

| | | Two or More Races | 4% |

| | | Not Indicated/Specified | 3% |

| | | American Indian/Alaskan Native | 1% |

We provide opportunities for our employees to drive our Diversity, Equity & Inclusion (DE&I) strategy by creating programs that raise awareness, allowing courageous conversations and a more inclusive culture.

These programs empower our employee-driven Employee Resource Groups (ERGs) to challenge the organization to consider additional opportunities to Cultivate A Better World in the DE&I space.

Our current ERGs are as follows:

| | |

| --- | --- |

Creating innovation utilizing a stage-gate process;

*Relevant Menu.* Our restaurants feature a relevant menu of burritos, burrito bowls, tacos and salads.

In preparing our food, we employ classic cooking methods and use stoves and grills, pots and pans, cutting knives and other kitchen utensils, walk-in refrigerators stocked with a variety of fresh ingredients, herbs and spices, and dry goods such as rice.

Our restaurants do not have microwaves or freezers.

Our proteins include chicken, steak, carnitas (seasoned and braised pork), barbacoa (spicy braised and shredded beef), Sofritas (organic braised tofu) and vegetarian pinto and black beans.

We add our rice, which is tossed with lime juice, freshly chopped cilantro, and a pinch of salt, as well as freshly shredded cheese, sour cream, lettuce, and sautéed peppers and onions, to our entrees depending on each guest’s request.

We use various herbs, spices and seasonings to prepare our meats and vegetables.

We also serve tortilla chips that are fried twice a day in each restaurant and seasoned with fresh lime juice and salt, with sides of hand mashed guacamole, salsas, or queso.

In addition to sodas, fruit and tea drinks, and organic milk, most of our restaurants also offer a

selection of beer and margaritas.

Our food is prepared from scratch, some in our restaurants and some with the same fresh ingredients in larger batches in commissaries.

We respect our environment and insist on preparing, cooking, and serving nutritious food made from natural ingredients and animals that are raised or grown with care.

We spend time on farms and in the field to understand where our food comes from and how it is raised.

We concentrate on the sourcing of each ingredient, and this has become a cornerstone of our continuous effort to improve the food we serve.

Our food is made from ingredients that everyone can both recognize and pronounce.

We're all about simple, fresh food without the use of artificial colors or flavors typically found in fast food—just genuine real ingredients and their individual, delectable flavors.

In 2019, we increased the percentage of organic cilantro, rice and beans purchased as we continue our commitment to find high quality ingredients.

We work closely with our suppliers and seek to develop mutually beneficial long-term relationships with them.

We use a mix of forward, fixed, formula and range forward pricing protocols, and our distribution centers purchase within the pricing guidelines and protocols we have established with suppliers.

Guest Experience and Operations

Serving delicious food, with great service in a safe, quick, clean and happy environment is always our highest priority, and we take pride in making the Chipotle experience exceptional.

We invest in training to consistently deliver an outstanding guest experience, and in our facilities to improve the appearance of our restaurants and modernize tools.

We are also focused on making progress in throughput and getting our guests quality food quickly.

*Restaurant Team.* We believe creating an excellent guest experience starts with hiring great leaders and creating great teams.

Each restaurant typically has a General Manager or Restaurateur (a high-performing general manager), an Apprentice Manager (in a majority of our restaurants), two or three Service Managers, one or two Kitchen Managers and an average of 26 full and part-time crew members, though our busier restaurants tend to have slightly more employees.

We generally have two shifts at our restaurants, which simplifies scheduling and provides stability for our employees.

In addition to the employees serving our guests at each restaurant, we also have a field support system that includes Field Leaders and Team Directors, as well as Executive Team Directors who report to our Chief Restaurant Officer.

*Innovation*.

We are prioritizing the development of technological and other innovations, such as digital/mobile ordering platforms, digital order pick-up lanes we call “Chipotlanes”, delivery and catering, that allow our guests to engage with us in whatever fashion is most convenient for them.

By allowing our guests to order and receive their food in a variety of ways, we believe we can attract more guests and encourage them to choose us more frequently.

During 2019, we completed the installation of mobile order pick-up shelves as well as digital make lines in almost all of our restaurants which allows us to fulfill catering or digital/mobile orders without disrupting throughput on our main service line.

Additionally, we have enhanced our data capabilities to allow us to better identify individual guests and their unique frequency patterns, and to target our marketing and promotional efforts at the individual level.

We are also testing new menu items.

We have built a stage-gate process around innovation where we test, learn and iterate, so that when we roll out a new initiative, we are highly confident in the probability of success.

Marketing

Our marketing programs are designed to increase transactions and grow sales by driving culture, driving a difference, and ultimately driving purchases.

Our ultimate marketing mission is to make Chipotle not just a food brand, but also a purpose driven lifestyle brand that is more visible, more engaging, and more relevant.

In 2019, we made our brand more visible with culturally relevant marketing campaigns and initiatives.

This included the Behind the Foil advertising campaign which showcased our real ingredients, fresh food and the culinary skills of our team members in action.

We also launched a new loyalty program, Chipotle Rewards, that currently has more than 8 million members and provides us with customer information that can be used to incent behaviors and engage with our customers on a more personal level.

For information regarding legal proceedings, see Note [removed: 13.][added: 12.]

For the fiscal year ended December 31, [removed: 2019][added: 2020]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the [added: Exchange] Act).

As of June 30, [removed: 2019,] [added: 2020,] the aggregate market value of the registrant’s outstanding common equity held by non-affiliates was [removed: $14.301] [added: $20.941] billion, based on the closing price of the registrant’s common stock on June [removed: 28, 2019,] [added: 30, 2020,] the last trading day of the registrant’s most recently completed second fiscal quarter.

As of [removed: January 31, 2020,] [added: February 5, 2021,] there were [removed: 27,767,965] [added: 28,144,065] 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: 2020] [added: 2021] 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: 2019.][added: 2020.]

| Item 1B. | [Unresolved Staff Comments](#Item_1B) | [removed: 16] [added: 17] |

| Item 2. | [Properties](#Item_2) | [removed: 16] [added: 17] |

| Item 3. | [Legal Proceedings](#Item_3) | [removed: 16] [added: 17] |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#Item_5) | [removed: 17] [added: 18] |

| Item 6. | [Selected Financial Data](#Item_6) | [removed: 19] [added: 20] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#Item_7) | [removed: 20] [added: 21] |

| Item 7A. | [Quantitative and Qualitative Disclosure About Market Risk](#Item_7A) | [removed: 27] [added: 29] |

| Item 8. | [Financial Statements and Supplementary Data](#Item_8) | [removed: 28] [added: 30] |

| | [Index to Consolidated Financial Statements](#Index_to_Financial_Statements) | [removed: 28] [added: 30] |

| | [Report of Independent Registered Public Accounting Firm](#Report_of_Independent) | [removed: 29] [added: 31] |

Our actual future results and trends may differ materially depending on a variety of factors, including, but not limited to, the risks and uncertainties described in this report under the heading “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” so you should not place undue reliance on forward-looking statements.* *These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements, including: [added: the potential future impact of COVID-19 on our results of operations, supply chain or liquidity;] risks of food safety and food-borne illnesses and other health concerns about our food; risks associated with our reliance on certain information technology systems and potential failures or interruptions; privacy and cyber security risks related to our acceptance of electronic payments or electronic processing of confidential customer or employee information; the impact of competition, including from sources outside the restaurant industry; the increasingly competitive labor market and our ability to attract and retain qualified employees; the impact of federal, state or local government regulations relating to our employees, restaurant design and construction, or the sale of food or alcoholic beverages; our ability to achieve our planned growth, such as the availability of suitable new restaurant sites; and* *increases in ingredient and other operating costs due to our* *Food With Integrity philosophy, tariffs or trade restrictions and supply shortages.* *We are including this Cautionary Note to make applicable and take advantage of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 for forward-looking statements.

______________________

______________________

______________________

______________________

| | |

| | |

______________________

| | | | | |

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.

As of December 31, [removed: 2019,] [added: 2020,] there were [removed: 2,622] [added: 2,768] restaurants operated by Chipotle and our consolidated subsidiaries, [removed: 2,619] [added: 2,764] of which were Chipotle restaurants.

Our main office is located at 610 Newport Center Drive, [removed: Suite 1300,] Newport Beach, CA 92660 and our telephone number is (949) 524-4000.

For additional information regarding the lease terms and provisions, see Note [removed: 11.][added: 10.]

As of [removed: January 31, 2020,] [added: February 8, 2021,] there were approximately [removed: 864] [added: 935] shareholders of record.

The following graph compares the cumulative annual stockholders return on our common stock from December 31, [removed: 2014,] [added: 2015,] through December 31, [removed: 2019,] [added: 2020,] 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: 2014.][added: 2015.]

Description automatically [removed: generated](https://www.sec.gov/Archives/edgar/data/1058090/000105809020000010/cmg-20191231x10kg001.jpg)][added: generated](https://www.sec.gov/Archives/edgar/data/1058090/000105809021000010/cmg-20201231x10kg001.jpg)]

| Company/Index | Dec. 31, [removed: 2014 | | | Dec. 31,] 2015 | | | Dec. 30, 2016 | | | Dec. 30, 2017 | | | Dec. 30, 2018 | | | Dec. 30, 2019 | | [added: | Dec. 29, 2020 | |]

| Chipotle Mexican Grill, Inc. | $ | 100 | | $ | [removed: 70] [added: 79] | | $ | [removed: 55] [added: 60] | | $ | [removed: 42] [added: 90] | | $ | [removed: 63] [added: 174] | | $ | [removed: 122] [added: 289] |

*$100 invested on December 31, [removed: 2014] [added: 2015] in stock or index, including reinvestment of dividends.

“Financial Statements and Supplementary Data.” The data shown below [removed: are] [added: is] not necessarily indicative of results to be expected for any future period (dollar and share amounts in thousands, except per share data).

| | [added: 2020 | | |] 2019 | | | 2018 | | | 2017 | | | 2016 | | [removed: | 2015 | |]

| [removed: Revenue] [added: Total revenue] | [removed: $] | [added: 5,984,634 | | |] 5,586,369 | | [removed: $] | 4,864,985 | | [removed: $] | 4,476,412 | | [removed: $] | 3,904,384 | [removed: | $ | 4,501,223 |]

| Food, beverage and packaging costs | | [added: 1,932,766 | | |] 1,847,916 | | | 1,600,760 | | | 1,535,428 | | | 1,365,580 | [removed: | | 1,503,835 |]

| Labor costs | | [added: 1,593,013 | | |] 1,472,060 | | | 1,326,079 | | | 1,205,992 | | | 1,105,001 | [removed: | | 1,045,726 |]

| Occupancy costs | | [added: 387,762 | | |] 363,072 | | | 347,123 | | | 327,132 | | | 293,636 | [removed: | | 262,412 |]

| Other operating costs | | [added: 1,030,012 | | |] 760,831 | | | 680,031 | | | 651,644 | | | 641,953 | [removed: | | 514,963 |]

| General and administrative expenses | | [added: 466,291 | | |] 451,552 | | | 375,460 | | | 296,388 | | | 276,240 | [removed: | | 250,214 |]

| Depreciation and amortization | | [added: 238,534 | | |] 212,778 | | | 201,979 | | | 163,348 | | | 146,368 | [removed: | | 130,368 |]

| Pre-opening costs | | [added: 15,515 | | |] 11,108 | | | 8,546 | | | 12,341 | | | 17,162 | [removed: | | 16,922 |]

| Impairment, closure costs and asset disposals | | [added: 30,577 | | |] 23,094 | | | 66,639 | | | 13,345 | | | 23,877 | [removed: | | 13,194 |]

| Total operating expenses | | [added: 5,694,470 | | |] 5,142,411 | | | 4,606,617 | | | 4,205,618 | | | 3,869,817 | [removed: | | 3,737,634 |]

| Income from operations | | [added: 290,164 | | |] 443,958 | | | 258,368 | | | 270,794 | | | 34,567 | [removed: | | 763,589 |]

| Interest and other income, net | | [added: 3,617 | | |] 14,327 | | | 10,068 | | | 4,949 | | | 4,172 | [removed: | | 6,278 |]

| Income before income taxes | | [added: 293,781 | | |] 458,285 | | | 268,436 | | | 275,743 | | | 38,739 | [removed: | | 769,867 |]

| [removed: Provision] [added: Benefit/(provision)] for income taxes | | [added: 61,985 | | |] (108,127) | | | (91,883) | | | (99,490) | | | (15,801) | [removed: | | (294,265) |]

| Net income | $ | [removed: 350,158] [added: 355,766] | | $ | [removed: 176,553] [added: 350,158] | | $ | [removed: 176,253] [added: 176,553] | | $ | [removed: 22,938] [added: 176,253] | | $ | [removed: 475,602] [added: 22,938] |

| Basic | $ | [removed: 12.62] [added: 12.74] | | $ | [removed: 6.35] [added: 12.62] | | $ | [removed: 6.19] [added: 6.35] | | $ | [removed: 0.78] [added: 6.19] | | $ | [removed: 15.30] [added: 0.78] |

| Diluted | $ | [removed: 12.38] [added: 12.52] | | $ | [removed: 6.31] [added: 12.38] | | $ | [removed: 6.17] [added: 6.31] | | $ | [removed: 0.77] [added: 6.17] | | $ | [removed: 15.10] [added: 0.77] |

| Basic | | [added: 27,917 | | |] 27,740 | | | 27,823 | | | 28,491 | | | 29,265 | [removed: | | 31,092 |]

| Diluted | | [added: 28,416 | | |] 28,295 | | | 27,962 | | | 28,561 | | | 29,770 | [removed: | | 31,494 |]

| Total current assets | $ | [removed: 1,072,204] [added: 1,420,237] | | $ | [removed: 814,794] [added: 1,072,204] | | $ | [removed: 629,535] [added: 814,794] | | $ | [removed: 522,374] [added: 629,535] | | $ | [removed: 814,647] [added: 522,374] |

| Total assets | $ | [removed: 5,104,604] [added: 5,982,896] | | $ | [removed: 2,265,518] [added: 5,104,604] | | $ | [removed: 2,045,692] [added: 2,265,518] | | $ | [removed: 2,026,103] [added: 2,045,692] | | $ | [removed: 2,725,066] [added: 2,026,103] |

| Total current liabilities | $ | [removed: 666,593] [added: 822,199] | | $ | [removed: 449,990] [added: 666,593] | | $ | [removed: 323,893] [added: 449,990] | | $ | [removed: 281,793] [added: 323,893] | | $ | [removed: 279,942] [added: 281,793] |

| Total liabilities | $ | [removed: 3,421,578] [added: 3,962,761] | | $ | [removed: 824,179] [added: 3,421,578] | | $ | [removed: 681,247] [added: 824,179] | | $ | [removed: 623,610] [added: 681,247] | | $ | [removed: 597,092] [added: 623,610] |

| Total shareholders’ equity | $ | [removed: 1,683,026] [added: 2,020,135] | | $ | [removed: 1,441,339] [added: 1,683,026] | | $ | [removed: 1,364,445] [added: 1,441,339] | | $ | [removed: 1,402,493] [added: 1,364,445] | | $ | [removed: 2,127,974] [added: 1,402,493] |

“Financial Statements and Supplementary Data.” This section of the Form 10-K generally discusses [removed: 2019] [added: 2020] and [removed: 2018] [added: 2019] items and year-to-year comparisons of [removed: 2019] [added: 2020] to [removed: 2018.][added: 2019.]

Discussions of [removed: 2017] [added: 2018] items and year-to-year comparisons of [removed: 2018] [added: 2019] and [removed: 2017] [added: 2018] that are not included in this Form 10-K can be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 on our Annual Report on Form 10-K for the year ended December 31, [removed: 2018.][added: 2019.]

As of December 31, [removed: 2019,] [added: 2020,] we operated [removed: 2,580] [added: 2,724] Chipotle restaurants throughout the United States, [removed: 39] [added: 40] international Chipotle restaurants, and [removed: three] [added: four] non-Chipotle restaurants.

[removed: 2019] [added: 2020] Financial Highlights

[removed: Revenue] [added: Total revenue] increased [removed: 14.8%] [added: 7.1%] to [removed: $5.6] [added: $6.0] billion in [removed: 2019] [added: 2020] compared to [removed: $4.9] [added: $5.6] billion in [removed: 2018][added: 2019]

*Sales Trends.* Average restaurant sales were [removed: $2.2] [added: $2.223] million for the year ended December 31, [removed: 2019,] [added: 2020,] an increase from [removed: $2.0] [added: $2.205] million for the year ended December 31, [removed: 2018.][added: 2019.]

We define average restaurant sales as the average trailing 12-month [added: food and beverage] sales for restaurants in operation for at least 12 full calendar months.

Comparable restaurant sales increased [removed: 11.1%] [added: 1.8%] for the full year [removed: 2019, which included a 7% increase in comparable restaurant transactions.][added: 2020.]

On March 20, 2020, we temporarily suspended our stock repurchase program.

The total remaining dollar value of shares that may yet be purchased under our stock repurchase program is $115.0 million as of December 31, 2020.

![Chart, line chart

| S&P 500 | | 100 | | | 110 | | | 131 | | | 123 | | | 158 | | | 184 |

| S&P 500 Restaurants | | 100 | | | 101 | | | 124 | | | 134 | | | 163 | | | 188 |

| Food and beverage revenue | $ | 5,920,545 | | $ | 5,561,036 | | $ | 4,860,626 | | $ | 4,476,412 | | $ | 3,904,384 |

| Delivery service revenue | | 64,089 | | | 25,333 | | | 4,359 | | | \- | | | \- |

Overview of the Impact of COVID-19

The COVID-19 pandemic has adversely affected, and will continue to adversely affect, our operations and financial results for the foreseeable future.

In response to COVID-19, we temporarily closed some restaurants and dining rooms in our restaurants.

We continue to follow guidance from health officials in determining the appropriate restrictions to put in place for each restaurant.

As of December 31, 2020, the majority of our restaurants have been reopened for dine-in with restrictions, such as social distancing and mask requirements for all customers, to ensure the health and safety of our guests and employees.

Certain restaurants only offer take-out, digital order ahead and delivery services in accordance with local guidance and regulations.

For a further discussion of the impacts that COVID-19 has had on our financial results refer to the “Results of Operations.”

We remain in regular contact with our major suppliers and while to date we have not experienced significant disruptions in our supply chain, we could see future disruptions should the impacts of COVID-19 extend for a considerable amount of time.

Within our restaurants, we have taken a number of steps to enhance our robust food safety protocols including the creation of the steward role which is focused on sanitization in high-touch and high-traffic areas, providing masks for all employees, and having a tamper evident packaging seal for all digital orders.

To support our employees, we have eliminated non-essential travel, implemented work from home for our support centers, and significantly expanded employee benefits.

We remain focused on reducing non-essential controllable costs and judiciously spending on return generating projects to preserve liquidity.

We suspended our stock buyback program during the first quarter of 2020.

If our business continues to improve and the economy continues to stabilize, we may begin buying again in the first or second quarter of 2021.

Comparable restaurant sales increased 1.8%

Diluted earnings per share (“diluted EPS”) for 2020 increased to $12.52, which included an income tax benefit of $3.79, offset by a $2.00 after-tax impact from expenses related to legal, corporate restructuring, restaurant closure costs, and certain other costs, a 1.1% increase from $12.38 in 2019.

Total revenue was $6.0 billion in 2020, an increase of 7.1% from $5.6 billion in 2019.

The increase was attributable to new restaurant openings and increased comparable restaurant sales.

Digital sales, which includes delivery and customer pick-up, increased 174.1% year over year and accounted for 46.2% of 2020 sales, compared to 10.9% of 2019 sales.

The shift to digital sales accelerated in March 2020 as a result of the COVID-19 pandemic.

The increase was driven primarily by COVID-19 related impacts including increased delivery expenses, assistance and exclusion pay, elevated beef prices, increased incidence of steak, and fewer sales of high margin beverages.

The increase was partially offset by benefits from menu price increases, lower avocado pricing and improved labor efficiency realized from digital enhancements to the restaurants.

We expect to open approximately 200 new restaurants in 2021.

| Chipotle openings | 160 | | 139 | | 137 |

| Pizzeria Locale openings | 1 | | 1 | | \- |

| | 2020 | | | 2019 | | | 2018 | | | 2020/2019 | | 2019/2018 |

| Food and beverage revenue | $ | 5,920.5 | | $ | 5,561.0 | | $ | 4,860.6 | | 6.5% | | 14.4% |

| Delivery service revenue | | 64.1 | | | 25.3 | | | 4.4 | | 153.0% | | 475.8% |

| (1) Average restaurant sales refer to the average trailing 12-month food and beverage sales for restaurants in operation for at least 12 full calendar months. | | | | | | | | | | | | |

| | 2020 | | | 2019 | | | 2018 | | | 2020/2019 | | 2019/2018 |

Food, beverage and packaging costs decreased as a percentage of total revenue in 2020 primarily due to menu price increases taken in the second half of 2020, favorable avocado pricing and better waste control.

These benefits were partially offset by fewer sales of high margin beverages, COVID-19 related mix shifts, elevated beef pricing due to plant shutdowns in the summer of 2020, and higher dairy pricing.

| | 2020 | | | 2019 | | | 2018 | | | 2020/2019 | | 2019/2018 |

Labor costs increased as a percentage of total revenue in 2020 primarily due to COVID-19 related labor costs, which included assistance pay for restaurant employees and expansion of our emergency leave benefits to accommodate those directly affected by COVID-19.

The table below reflects shares of common stock we repurchased during the fourth quarter of 2019.

| | | | | | | | | | | | |

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

| | | | Total Number of Shares Purchased | | 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 Programs(2) | |

| October | | | 26,811 | | $ | 792.50 | | 26,811 | | $ | 86,414,406 |

| | *Purchased 10/1 through 10/31* | | | | | | | | | | |

| November | | | 22,684 | | $ | 749.33 | | 22,684 | | $ | 69,416,580 |

| | *Purchased 11/1 through 11/30* | | | | | | | | | | |

| December | | | \- | | $ | \- | | \- | | $ | 69,416,580 |

| | *Purchased 12/1 through 12/31* | | | | | | | | | | |

| Total | | | 49,495 | | $ | 772.71 | | 49,495 | | | |

__________________

(1)Shares were repurchased pursuant to the $100 million repurchase programs announced on February 6, 2019 and July 23, 2019.

(2)This column does not include an additional $100 million in authorized repurchases announced on February 4, 2020.

There is no expiration date for this program, and the authorization to repurchase shares will end when we have repurchased the maximum amount of shares authorized, or our Board of Directors have determined to discontinue such repurchases.

![A picture containing sky, map, text, outdoor

| S&P 500 | | 100 | | | 101 | | | 112 | | | 136 | | | 129 | | | 169 |

| S&P 500 Restaurants | | 100 | | | 125 | | | 129 | | | 162 | | | 179 | | | 222 |

Comparable sales increased 11.1%, which included a 7.0% increase in comparable restaurant transactions

Diluted earnings per share (“diluted EPS”) for 2019 increased to $12.38, which included corporate restructuring, restaurant closure costs, charges relate to settlements for several distinct legal matters and other costs of $54.3 million, compared to $6.31 diluted EPS for 2018, which included corporate restructuring, restaurant closure costs, litigation and other costs of $90.7 million.

We expect our full year 2020 comparable restaurant sales to be in the mid-single digit range.

Digital sales from out-of-restaurant orders, including delivery orders, increased 7.1% to 18.0% of revenue for the full year 2019, an increase from 10.9% of revenue for the full year 2018.

The decrease was primarily due to comparable restaurant sales increases, partially offset by higher food costs across many items and food expenses related to the launch of Chipotle Rewards, as well as wage inflation, and increased delivery expenses.

*Corporate Restructuring.* In 2018, we opened a new headquarters office in Newport Beach, California, consolidated certain corporate administrative functions into our existing office in Columbus, Ohio, closed a corporate office in New York, New York, and commenced the closure of our previous headquarters office in Denver, Colorado.

All affected employees were either offered an opportunity to continue in the new organization or were offered a severance package.

In total we recognized corporate restructuring activities of $56.8 million, of which $14.2 million was recognized during the full year 2019.

We do not expect any other material costs to be incurred in connection with the corporate restructuring.

For additional information, please see Note 5.

“Corporate Restructuring” in the notes to the consolidated financial statements included in Item 8.

“Financial Statements and Supplementary Data”.

*Restaurant Closures*.

In June 2018, we announced planned restaurant closures of approximately 55 to 65 restaurants beginning in the second quarter of 2018 and continuing over the next several quarters.

We have closed or relocated 51 Chipotle restaurants and five Pizzeria Locale restaurants in connection with this initiative.

In total we recognized restaurant exit costs of approximately $36.5 million, of which $0.8 million was recognized during the full year 2019.

We do not expect any other material costs to be incurred in connection with the planned restaurant closures.

For additional information, please see Note 6.

“Restaurant Closure Costs” in the notes to the consolidated financial statements.

We expect to open between 150 to 165 new restaurants in 2020, with a heavier weighting of openings towards the second half of the year.

| Openings | 140 | | 137 | | 183 |

| ShopHouse closures | \- | | \- | | (15) |

| [Report of Independent Registered Public Accounting Firm](#Report_of_Independent) | [removed: 29] [added: 31] |

| [Consolidated Balance Sheets as of December 31, [removed: 2019] [added: 2020] and [removed: 2018](#Consolidated_BS)] [added: 2019](#Consolidated_BS)] | [removed: 32] [added: 33] |

| [Consolidated Statements of Income and Consolidated Statements of Comprehensive Income for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#Consolidated_IS)] [added: 2018](#Consolidated_IS)] | [removed: 33] [added: 34] |

| [Consolidated Statements of Shareholders’ Equity for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#Consolidated_SOE)] [added: 2018](#Consolidated_SOE)] | [removed: 34] [added: 35] |

| [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2019, 2018] [added: 2020, 2019] and [removed: 2017](#Consolidated_SCF)] [added: 2018](#Consolidated_SCF)] | [removed: 35] [added: 36] |

| [Notes to Consolidated Financial Statements](#Notes_to_FS) | [removed: 36] [added: 37] |

| [Note 1 – Description of Business and Summary of Significant Accounting Policies](#Note_01) | [removed: 36] [added: 37] |

| [Note 5 – Corporate Restructuring Costs](#Note_05) | [removed: 44] [added: 45] |

| [Note [removed: 7] [added: 6] – Income [removed: Taxes](#Note_07)] [added: Taxes](#Note_06)] | [removed: 46] [added: 45] |

| [Note [removed: 8] [added: 7] – Shareholders’ [removed: Equity](#Note_08)] [added: Equity](#Note_07)] | 48 |

| [Note [removed: 9] [added: 8] – Stock-Based [removed: Compensation](#Note_09)] [added: Compensation](#Note_08)] | 48 |

| [Note [removed: 10] [added: 9] – Employee Benefit [removed: Plans](#Note_10)] [added: Plans](#Note_09)] | 51 |

| [Note [removed: 11] [added: 10] – [removed: Leases](#Note_11)] [added: Leases](#Note_10)] | [removed: 51] [added: 52] |

| [Note [removed: 12] [added: 11] – Earnings Per [removed: Share](#Note_12)] [added: Share](#Note_11)] | 53 |

| [Note [removed: 13] [added: 12] – Commitments and [removed: Contingencies](#Note_13)] [added: Contingencies](#Note_12)] | [removed: 53] [added: 54] |

| [Note [removed: 14] [added: 15] – Quarterly Financial Data [removed: (Unaudited)](#Note_14)] [added: (Unaudited)](#Note_15)] | 55 |

We have audited the accompanying consolidated balance sheets of Chipotle Mexican Grill, Inc. (the Company) as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] the related consolidated statements of income, comprehensive income, [removed: shareholders’] [added: shareholders'] equity and cash flows for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] 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) (PCAOB), the [removed: Company’s] [added: Company's] internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February [removed: 4, 2020] [added: 9, 2021] expressed an unqualified opinion thereon.

As discussed in Note [removed: 11] [added: 10] to the consolidated financial statements, the Company changed its method for accounting for leases in 2019.

Critical Audit [removed: Matters][added: Matter]

The critical audit [removed: matters] [added: matter] communicated below [removed: are matters] [added: is a matter] arising from the current period audit of the financial statements that [removed: were] [added: was] communicated or required to be communicated to the audit committee and that: (1) [removed: relate] [added: relates] to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, [removed: subjective,] [added: subjective] or complex judgments.

The communication of [added: the] critical audit [removed: matters] [added: matter] does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit [removed: matters] [added: matter] below, providing [added: a] separate [removed: opinions] [added: opinion] on the critical audit [removed: matters] [added: matter] or on the [removed: accounts] [added: account] or [removed: disclosures] [added: disclosure] to which [removed: they relate.][added: it relates.]

| *Description of the Matter* | | The Company incurred [removed: $92.1] [added: $84.5] million in stock-based compensation expense during the year ended December 31, [removed: 2019.] [added: 2020.] Approximately [removed: 227,000] [added: 229,000] of the Company’s [added: vested and] non-vested stock awards were subject to service and performance conditions during the year ended December 31, [removed: 2019.] [added: 2020.] As described in Notes 1 and [removed: 9 to] [added: 8 of] the consolidated financial statements, the Company estimates the grant date fair value of the stock awards and expenses the fair value of stock awards subject to service conditions over the respective vesting period. Stock-based compensation expense of stock awards subject to performance conditions is based on the estimated probability of achieving levels of performance associated with particular levels of payout. Additionally, at each reporting period, the Company evaluates the probable outcome of the performance conditions including consideration of significant assumptions and as applicable, recognizes the cumulative effect of the change in estimate in the period of the change. Auditing the grant date fair value and the appropriateness of the accounting treatment of the Company’s stock awards was complex and judgmental. In particular, the fair value estimate for stock awards subject to performance conditions is sensitive to significant assumptions including management’s internal estimates of the Company’s future performance. |

| *How We Addressed the Matter in Our Audit* | | We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over stock-based compensation. We tested controls over management’s review of the valuation model methodology and assumptions used with regards to the service and performance conditions. We also tested management's controls to validate that data used in the valuation model was complete and accurate. Our substantive audit procedures included, among others, testing the significant assumptions underlying the performance conditions (e.g., certain targets related to growth in comparable restaurant sales and average restaurant margin) and testing the completeness and accuracy of the underlying data. We evaluated management’s significant assumptions by comparing the assumptions to current market and economic trends, historical results of the Company’s business, and to other relevant factors. We additionally performed a sensitivity analysis of the significant assumptions to evaluate the change in the fair value of the stock awards subject to performance conditions resulting from changes in the assumptions. We also evaluated the adequacy of the Company’s stock-based compensation disclosures included in Notes 1 and [removed: 9] [added: 8 of the consolidated financial statements] in relation to these matters. |

| | [added: 2020 | | |] 2019 | | | 2018 | |

| Cash and cash equivalents | $ | [removed: 480,626] [added: 607,987] | | $ | [removed: 249,953] [added: 480,626] |

| Accounts receivable, net | | [removed: 80,545] [added: 104,500] | | | [removed: 62,312] [added: 80,545] |

| Inventory | | [removed: 26,096] [added: 26,445] | | | [removed: 21,555] [added: 26,096] |

| Prepaid expenses and other current assets | | [removed: 57,076] [added: 54,906] | | | [removed: 54,129] [added: 57,076] |

| Income tax receivable | | [removed: 27,705] [added: 282,783] | | | [removed: \-] [added: 27,705] |

| Investments | | [removed: 400,156] [added: 343,616] | | | [removed: 426,845] [added: 400,156] |

| Total current assets | | [removed: 1,072,204] [added: 1,420,237] | | | [removed: 814,794] [added: 1,072,204] |

| Leasehold improvements, property and equipment, net | | [removed: 1,458,690] [added: 1,584,311] | | | [removed: 1,379,254] [added: 1,458,690] |

| Restricted cash | | [removed: 27,855] [added: 27,849] | | | [removed: 30,199] [added: 27,855] |

| Operating lease assets | | [removed: 2,505,466] [added: 2,767,185] | | | [removed: \-] [added: 2,505,466] |

| Other assets | | [removed: 18,450] [added: 59,047] | | | [removed: 19,332] [added: 18,450] |

| Total assets | $ | [removed: 5,104,604] [added: 5,982,896] | | $ | [removed: 2,265,518] [added: 5,104,604] |

| Accounts payable | $ | [removed: 115,816] [added: 121,990] | | $ | [removed: 113,071] [added: 115,816] |

| Accrued payroll and benefits | | [removed: 126,600] [added: 203,054] | | | [removed: 113,467] [added: 126,600] |

| 1 | |

| [Note 13 - Debt](#Note_13) | 55 |

| [Note 14 – Related Party Transactions](#Note_14) | 55 |

February 9, 2021

| Long-term investments | | 102,328 | | | \- |

| Food and beverage revenue | $ | 5,920,545 | | $ | 5,561,036 | | $ | 4,860,626 |

| Delivery service revenue | | 64,089 | | | 25,333 | | | 4,359 |

| Net income | $ | 355,766 | | $ | 350,158 | | $ | 176,553 |

| Adoption of ASU No. 2016-13, Financial Instrument-Credit Losses (Topic 326) | \- | | | \- | | | \- | | \- | | | \- | | | (1,051) | | | \- | | | \- | | | (1,051) |

| Acquisition of treasury stock | \- | | | \- | | | \- | | 135 | | | (102,956) | | | \- | | | \- | | | \- | | | (102,956) |

| Net income | \- | | | \- | | | \- | | \- | | | \- | | | 355,766 | | | \- | | | \- | | | 355,766 |

| Balance, December 31, 2020 | 36,704 | | $ | 367 | | $ | 1,549,909 | | 8,703 | | $ | (2,802,075) | | $ | 3,276,163 | | $ | \- | | $ | (4,229) | | $ | 2,020,135 |

| Net income | $ | 355,766 | | $ | 350,158 | | $ | 176,553 |

| Depreciation and amortization | | 238,534 | | | 212,778 | | | 201,979 |

| Provision for credit losses | | 164 | | | 33 | | | 125 |

| Acquisitions of equity method investments | | (10,025) | | | \- | | | \- |

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

Allowance for Credit Losses

We closely monitor accounts receivable and held to maturity investment balances and estimate the allowance for credit losses.

Our estimate is based on historical collection experience, external market data and other factors, including those related to current market conditions and events.

Our credit losses associated with accounts receivable and held-to-maturity investments have not historically been material.

We adopted Accounting Standards Update (“ASU”) 2016-13 using the modified retrospective approach on January 1, 2020.

The allowance for credit losses was $1,588 as of December 31, 2020.

Beginning with the quarter ended September 30, 2020, we modified the presentation in our consolidated statements of income to disaggregate total revenue between food and beverage revenue and delivery service revenue.

Delivery service revenue is comprised of delivery and related service fees charged to customers on sales made through Chipotle’s app and website.

Food and beverage revenue primarily relates to the sale of food and beverages.

Prior year balances have been reclassified to conform with current year presentation.

Advertising and marketing costs include costs related to free food which a customer does not need to make a purchase to earn.

estimated fair value.

*Recently Issued Accounting Standards*

In December 2019, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2019-12, “Simplifying the Accounting for Income Taxes (Topic 740)”, which modifies certain technical guidelines for accounting for income taxes.

ASU 2019-12 is effective for reporting periods beginning after December 15, 2020, and early adoption is permitted.

The modified-retrospective approach requires an entity to recognize a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which this guidance is effective.

As of January 1, 2020, the adoption of this standard resulted in a net increase to the allowance for credit losses of $1,414, a decrease to our deferred income tax liability of $363, and a decrease to retained earnings of $1,051.

| Accrued employer payroll taxes, deferred pursuant to the CARES Act | | 70,812 | | | \- |

| | 2020 | | | 2019 | |

| | 2020 | | | 2019 | |

4. Fair Value of Financial Instruments

Fair value of investments is measured using Level 1 inputs (quoted prices for identical assets in active markets).

The fair value of these investments was less than the amortized cost by $117 as of December 31, 2020.

| | |

| [Note 6 – Restaurant Closure Costs](#Note_06) | 45 |

As explained below, auditing the Company’s valuation and accounting for leases was a critical audit matter.

| | | |

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

| | | Valuation and accounting for leases |

| *Description of the Matter* | | As described above and in Notes 1 and 11 to the consolidated financial statements, the Company adopted Accounting Standards Update (“ASU”) 2016-02, “*Leases* (Topic 842)” (“ASC 842”) on January 1, 2019. In conjunction with the adoption of ASC 842, the Company evaluated the overall accounting implications, including review of contracts and vendor agreements to determine whether such agreements contained a lease. The Company determined its material operating leases consist of approximately 2,500 restaurant locations and office space. On the adoption date, the Company recorded $2.4 billion in operating lease assets and $2.7 billion in current and long-term operating lease liabilities on its consolidated balance sheet for existing operating leases. The calculation of the Company’s operating lease assets and liabilities include an estimate of the present value of future lease payments. Management estimated the Company’s incremental borrowing rates used in its present value calculation which required subjectivity. The incremental borrowing rate is the rate of interest that the lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. Auditing management’s contract evaluation performed in conjunction with the adoption of ASC 842 was complex and required judgment to analyze the terms within the contracts and vendor agreements to determine whether we concurred with management’s evaluation. Additionally, during the inspection of contracts and vendor agreements and analysis of contractual terms, inquiries and discussions were held outside of the accounting department to support the evaluation. Further, auditing management’s assessment of its incremental borrowing rate is especially subjective and judgmental as the Company has no outstanding debt nor committed credit facilities, secured or otherwise that would have comparable collateral or similar terms as their underlying restaurant locations and office space. |

| *How We Addressed the Matter in Our Audit* | | We obtained an understanding, evaluated the design, and tested the operating effectiveness of management’s controls over the implementation of the ASC 842 process, including the Company’s controls with regards to the contract evaluation, and review of the methodology, inputs, and assumptions used to determine the incremental borrowing rate. Our substantive audit procedures included, among others, involving specialists to assist in evaluating management’s methodology and assumptions used to determine the Company’s incremental borrowing rate at the date of adoption of ASC 842. The considerations to determine the appropriateness of the Company’s incremental borrowing rate included the Company’s credit rating, current market environment for recent debt transactions, and market data available to support the adjustment required to reflect a collateralized borrowing rate. In addition, we obtained and inspected a sample of individual leases to test the completeness and accuracy of the lease inputs and terms used in the Company’s calculation and tested the computational accuracy. We additionally performed procedures to determine the completeness of the lease population used in the Company’s analysis. We tested a sample of contracts and vendor agreements to determine whether management appropriately evaluated whether such agreements contained a lease. These procedures included, among others, inspecting contracts and vendor agreements, analyzing contractual terms and performing inquiries within the organization outside of the accounting department. Additionally, our procedures included reviewing management’s lease questionnaires sent to relevant employees and cash disbursement listings to test that contracts which could contain lease provisions were considered in the lease population used in the Company’s analysis. We also evaluated the Company’s lease disclosures included in Notes 1 and 11 in relation to these matters. |

February 4, 2020

| Income tax payable | | \- | | | 5,129 |

| | | | | | | | | |

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

| Balance, December 31, 2016 | 35,833 | | $ | 358 | | $ | 1,238,875 | | 7,019 | | $ | (2,049,389) | | $ | 2,220,811 | | $ | (120) | | $ | (8,042) | | $ | 1,402,493 |

| Acquisition of treasury stock | \- | | | \- | | | \- | | 807 | | | (285,020) | | | \- | | | \- | | | \- | | | (285,020) |

| Net income | \- | | | \- | | | \- | | \- | | | \- | | | 176,253 | | | \- | | | \- | | | 176,253 |

| Bad debt allowance | | 33 | | | 125 | | | 214 |

| Deferred rent | | \- | | | 21,297 | | | 29,996 |

The allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable based on a specific review of account balances.

Account balances are charged against the allowance after all means of collection have been exhausted and the potential for recoverability is considered remote.

Certain key ingredients (beef, pork, chicken, beans, rice, sour cream, cheese, and tortillas) are purchased from a small number of suppliers.

During the first quarter of 2019, we launched Chipotle Rewards nationally.

which is based on the present value of estimated future cash flows.

In June 2016, the Financial Accounting Standards Board “FASB” issued Accounting Standards Update “ASU” 2016-13, Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”).

ASU 2016-13 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years.

We will adopt the standard prospectively on January 1, 2020.

This pronouncement requires lessees to recognize a liability for lease obligations, which represents the discounted obligation to make future lease payments, and a corresponding right-of-use asset on the consolidated balance sheets.

The guidance requires disclosure of key information about leasing arrangements that is intended to give financial statement users the ability to assess the amount, timing, and potential uncertainty of cash flows related to leases.

Our practical expedients were as follows:

| | | Implications as of January 1, 2019 |

| Practical expedient package | | We have not reassessed whether any expired or existing contracts are, or contain, leases. |

| | | We have not reassessed the lease classification for any expired or existing leases. |

| | | We have not reassessed initial direct costs for any expired or existing leases. |

| Hindsight practical expedient | | We have not elected the hindsight practical expedient, which permits the use of hindsight when determining lease term and impairment of operating lease assets. |

The impact on the consolidated balance sheet is as follows:

| | December 31, 2018 | | | Adjustments Due to the Adoption of Topic 842 | | | January 1, 2019 | |

| Assets | | | | | | | | |

| Current assets: | | | | | | | | |

| Cash and cash equivalents | $ | 249,953 | | $ | \- | | $ | 249,953 |

| Accounts receivable | | 62,312 | | | \- | | | 62,312 |

As of December 31, [removed: 2019,] [added: 2020,] we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer 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: 2019,] [added: 2020,] 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 reporting.

Management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (the “2013 framework”).

Based on that assessment, management concluded that, as of December 31, [removed: 2019,] [added: 2020,] our internal control over financial reporting was effective based on the criteria established in 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: 2019.][added: 2020.]

We have audited Chipotle Mexican Grill, Inc.’s internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Chipotle Mexican Grill, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2019,] [added: 2020,] based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets as of December 31, [removed: 2019] [added: 2020] and [removed: 2018,] [added: 2019,] the related consolidated statements of income, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2019,] [added: 2020,] and the related notes and our report dated February [removed: 4, 2020] [added: 9, 2021] expressed an unqualified opinion thereon.

February 9, 2021

February 4, 2020

Incorporated by reference from the definitive proxy statement for our [removed: 2020] [added: 2021] annual meeting of shareholders, which will be filed no later than 120 days after December 31, [removed: 2019.][added: 2020.]

Incorporated by reference from the definitive proxy statement for our [removed: 2020] [added: 2021] annual meeting of shareholders, which will be filed no later than 120 days after December 31, [removed: 2019.][added: 2020.]

The following table presents information regarding options and rights outstanding under our equity compensation plans as of December 31, [removed: 2019.][added: 2020.]

(2)Includes [removed: 2,320,929] [added: 2,114,279] shares remaining available under the Amended and Restated Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan, and [removed: 245,727] [added: 245,356] 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: 2019,] [added: 2020,] all of the shares available for grant under the Amended and Restated 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.

Additional information for this item is incorporated by reference from the definitive proxy statement for our [removed: 2020] [added: 2021] annual meeting of shareholders, which will be filed no later than 120 days after December 31, [removed: 2019.][added: 2020.]

| Equity Compensation Plans Approved by Security Holders | 939,823 | | $ | 533.71 | | 2,359,635 |

| Total | 939,823 | | $ | 533.71 | | 2,359,635 |

| Equity Compensation Plans Approved by Security Holders | 1,356,553 | | $ | 457.14 | | 2,566,656 |

| Total | 1,356,553 | | $ | 457.14 | | 2,566,656 |

Incorporated by reference from the definitive proxy statement for our [removed: 2020] [added: 2021] annual meeting of shareholders, which will be filed no later than 120 days after December 31, [removed: 2019.][added: 2020.]

Incorporated by reference from the definitive proxy statement for our 2021 annual meeting of shareholders, which will be filed no later than 120 days after December 31, 2020.

| 4.2 | [Description of Chipotle [removed: Securities](https://www.sec.gov/Archives/edgar/data/1058090/000105809020000010/cmg-20191231xex4_2.htm)] [added: Securities](http://www.sec.gov/Archives/edgar/data/1058090/000105809020000010/cmg-20191231xex4_2.htm)] | [removed: \-] [added: 10-K] | [removed: \-] [added: 001-32731] | [removed: \-] [added: February 5, 2020] | [removed: \-] [added: 4.2] | [removed: X] |

| [removed: 10.1†] [added: 10.5†] | [Amended and Restated Chipotle Mexican Grill, Inc. [removed: 2006] [added: 2011] Stock Incentive [removed: Plan](http://www.sec.gov/Archives/edgar/data/1058090/000119312511039010/dex102.htm)] [added: Plan](http://www.sec.gov/Archives/edgar/data/1058090/000119312518173614/d578721dex101.htm)] | [removed: 10-K] [added: 8-K] | 001-32731 | [removed: February 17, 2011] [added: May 24, 2018] | [removed: 10.2] [added: 10.1] | |

| [removed: 10.2†] [added: 10.12†] | [removed: [Stock Appreciation Rights Agreement] [added: [Retention Agreement, dated January 9, 2018,] between [removed: Steve Ells] [added: Scott Boatwright] and Chipotle Mexican Grill, [removed: Inc.](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000042/cmg-20180331xex10_1.htm)] [added: Inc.](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000042/cmg-20180331xex10_4.htm)] | 10-Q | 001-32731 | April 26, 2018 | [removed: 10.1] [added: 10.4] | |

| [removed: 10.3†] [added: 10.1†] | [Form of 2019 Performance Share Unit [removed: Agreement](https://www.sec.gov/Archives/edgar/data/1058090/000105809019000015/cmg-20190331xex10_1.htm)] [added: Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809019000015/cmg-20190331xex10_1.htm)] | 10-Q | 001-32731 | April 25, 2019 | 10.1 | |

| [removed: 10.4†] [added: 10.2†] | [Form of 2019 Transformation Performance Share Unit [removed: Agreement](https://www.sec.gov/Archives/edgar/data/1058090/000105809019000015/cmg-20190331xex10_2.htm)] [added: Agreement](https://www.sec.gov/Archives/edgar/data/1058090/000105809021000010/cmg-20201231xex10_2.htm)] (1) | [removed: 10-Q] [added: \-] | [removed: 001-32731] [added: \-] | [removed: April 25, 2019] [added: \-] | [removed: 10.2] [added: \-] | [added: X] |

| [removed: 10.5†] [added: 10.3†] | [Change in Control Severance Plan, effective June 1, [removed: 2019](https://www.sec.gov/Archives/edgar/data/1058090/000105809019000029/cmg-20190630xex10_1.htm)] [added: 2019](http://www.sec.gov/Archives/edgar/data/1058090/000105809019000029/cmg-20190630xex10_1.htm)] | 10-Q | 001-32731 | July 24, 2019 | 10.1 | |

| [removed: 10.6†] [added: 10.4†] | [Form of Participation [added: and Restrictive Covenant] Agreement for Change in Control Severance [removed: Plan](https://www.sec.gov/Archives/edgar/data/1058090/000105809019000029/cmg-20190630xex10_2.htm)] [added: Plan](http://www.sec.gov/Archives/edgar/data/1058090/000105809019000029/cmg-20190630xex10_2.htm)] | 10-Q | 001-32731 | July 24, 2019 | 10.2 | |

| [removed: 10.7†] [added: 10.17†] | [removed: [Amended and Restated Chipotle] [added: [Chipotle] Mexican Grill, Inc. [removed: 2011] [added: Employee] Stock [removed: Incentive Plan](http://www.sec.gov/Archives/edgar/data/1058090/000119312518173614/d578721dex101.htm)] [added: Purchase Plan](http://www.sec.gov/Archives/edgar/data/1058090/000119312512052969/d280751dex1011.htm)] | [removed: 8-K] [added: 10-K] | 001-32731 | [removed: May 24, 2018] [added: February 10, 2012] | [removed: 10.1] [added: 10.11] | |

| [removed: 10.8†] [added: 10.28†] | [Form of [removed: Board] [added: 2018] Restricted Stock Units [removed: Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000119312514274455/d760141dex101.htm)] [added: Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000042/cmg-20180331xex10_15.htm)] | 10-Q | 001-32731 | [removed: July 22, 2014] [added: April 26, 2018] | [removed: 10.1] [added: 10.15] | |

| [removed: 10.9†] [added: 10.6†] | [Form of Stock Appreciation Rights Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000119312512170975/d329098dex101.htm) | 10-Q | 001-32731 | April 20, 2012 | 10.1 | |

| [removed: 10.10†] [added: 10.7†] | [Form of 2014 Stock Appreciation Rights Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809017000009/cmg-20161231xex10_24.htm) | 10-K | 001-32731 | February 7, 2017 | 10.2.4 | |

| [removed: 10.11†] [added: 10.8†] | [Form of 2014 Performance-Based Stock Appreciation Rights Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809017000009/cmg-20161231xex10_25.htm) | 10-K | 001-32731 | February 7, 2017 | 10.2.5 | |

| [removed: 10.12†] [added: 10.9†] | [Form of 2016 Stock Appreciation Rights Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809016000069/cmg-20160331xex10_1.htm) | 10-Q | 001-32731 | April 27, 2016 | 10.1 | |

| [removed: 10.13†] [added: 10.22†] | [Form of [removed: 2017 Performance Share Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809017000033/cmg-20170630xex10_2.htm)] [added: 2018 CEO SOSARs Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000119312518108713/d755493dex102.htm)] | [removed: 10-Q] [added: 8-K/A] | 001-32731 | [removed: July 26, 2017] [added: April 3, 2018] | 10.2 | |

| [removed: 10.14†] [added: 10.10†] | [Retention Agreement, dated January 9, 2018, between Jack Hartung and Chipotle Mexican Grill, Inc.](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000004/cmg-20180112xex10_1.htm) | 8-K | 001-32731 | January 12, 2018 | 10.1 | |

| [removed: 10.15†] [added: 10.11†] | [Amended and Restated Registration Rights Agreement dated January 31, 2006 among Chipotle Mexican Grill, Inc., McDonald’s Corporation and certain shareholders](http://www.sec.gov/Archives/edgar/data/1058090/000104746906003640/a2168474zex-10_6.htm) | 10-K | 001-32731 | March 17, 2006 | 10.6 | |

| [removed: 10.17†] [added: 10.14†] | [Retention Agreement, dated January 9, 2018, between [removed: Scott Boatwright] [added: Curt Garner] and Chipotle Mexican Grill, [removed: Inc.](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000042/cmg-20180331xex10_4.htm)] [added: Inc.](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000042/cmg-20180331xex10_5.htm)] | 10-Q | 001-32731 | April 26, 2018 | [removed: 10.4] [added: 10.5] | |

| [removed: 10.18†] [added: 10.13†] | [Supplemental Deferred Investment Plan](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000047/cmg-20180630xex10_3.htm) | 10-Q | 001-32731 | July 27, 2018 | 10.3 | |

| [removed: 10.19†] [added: 10.26†] | [removed: [Retention Agreement,] [added: [Offer Letter,] dated [removed: January] [added: March] 9, 2018, between [removed: Curt Garner] [added: Christopher Brandt] and Chipotle Mexican Grill, [removed: Inc.](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000042/cmg-20180331xex10_5.htm)] [added: Inc.](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000042/cmg-20180331xex10_13.htm)] | 10-Q | 001-32731 | April 26, 2018 | [removed: 10.5] [added: 10.13] | |

| [removed: 10.20†] [added: 10.15†] | [Form of Director and Officer Indemnification Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000119312507060643/dex101.htm) | 8-K | 001-32731 | March 21, 2007 | 10.1 | |

| [removed: 10.21†] [added: 10.16†] | [Offer Letter, dated February 11, 2018, between Brian R. Niccol and Chipotle Mexican Grill, Inc.](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000022/cmg-20180214xex10_1.htm) | 8-K | 001-32731 | February 15, 2018 | 10.1 | |

| [removed: 10.23†] [added: 10.18†] | [Non-Plan Inducement SOSARs Agreement between Brian R. Niccol and Chipotle Mexican Grill, Inc.](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000027/cmg-20180306xex4_3.htm) | S-8 | 33-223467 | March 6, 2018 | 4.3 | |

| [removed: 10.24†] [added: 10.19†] | [Non-Plan Inducement RSUs Agreement between Brian R. Niccol and Chipotle Mexican Grill, Inc.](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000027/cmg-20180306xex4_4.htm) | S-8 | 33-223467 | March 6, 2018 | 4.4 | |

| [removed: 10.25] [added: 10.20] | [Investor Agreement dated December 14, 2016 between Chipotle Mexican Grill, Inc. and Pershing Square Capital Management, L.P.](http://www.sec.gov/Archives/edgar/data/1058090/000105809016000091/cmg-20161219xex10_1.htm) | 8-K | 001-32731 | December 19, 2016 | 10.1 | |

| [removed: 10.26] [added: 10.21] | [Registration Rights Agreement dated February 3, 2017, between Chipotle Mexican Grill, Inc. and Pershing Square Capital Management, L.P.](http://www.sec.gov/Archives/edgar/data/1058090/000105809017000009/cmg-20161231xex10_11.htm) | 10-K | 001-32731 | February 7, 2017 | 10.11 | |

| [removed: 10.27†] [added: 10.24†] | [Form of 2018 [removed: CEO] [added: Premium-priced] SOSARs [removed: Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000119312518108713/d755493dex102.htm)] [added: Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000119312518108713/d755493dex103.htm)] | 8-K/A | 001-32731 | April 3, 2018 | [removed: 10.2] [added: 10.3] | |

| [removed: 10.28†] [added: 10.23†] | [Executive Agreement dated May 29, 2017 between Chipotle Mexican Grill, Inc. and Scott Boatwright](http://www.sec.gov/Archives/edgar/data/1058090/000105809017000037/cmg-20170915xex10_1.htm) | 8-K | 001-32731 | September 15, 2017 | 10.1 | |

| [removed: 10.29†] [added: 10.27†] | [Form of 2018 [removed: Premium-priced SOSARs Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000119312518108713/d755493dex103.htm)] [added: Stock Appreciation Rights Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000042/cmg-20180331xex10_14.htm)] | [removed: 8-K/A] [added: 10-Q] | 001-32731 | April [removed: 3,] [added: 26,] 2018 | [removed: 10.3] [added: 10.14] | |

| [removed: 10.30†] [added: 10.25†] | [Executive Chairman Agreement dated November 28, 2017 between Chipotle Mexican Grill, Inc. and Steve Ells](http://www.sec.gov/Archives/edgar/data/1058090/000105809017000047/cmg-20171201xex10_1.htm) | 8-K | 001-32731 | December 1, 2017 | 10.1 | |

| [removed: 10.31†] [added: 10.30†] | [removed: [Offer Letter,] [added: [Amendment No. 1] dated March [removed: 9, 2018,] [added: 5, 2020 to the Executive Chairman Agreement dated November 28, 2017] between [removed: Christopher Brandt and] Chipotle Mexican Grill, [removed: Inc.](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000042/cmg-20180331xex10_13.htm)] [added: Inc. and Steve Ells](http://www.sec.gov/Archives/edgar/data/1058090/000105809020000020/cmg-20200331xex10_1.htm)] | 10-Q | 001-32731 | April [removed: 26, 2018] [added: 29, 2020] | [removed: 10.13] [added: 10.1] | |

| [removed: 10.32†] [added: 10.36†] | [Form of [removed: 2018] [added: 2020] Stock Appreciation Rights [removed: Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000042/cmg-20180331xex10_14.htm)] [added: Agreement](https://www.sec.gov/Archives/edgar/data/1058090/000105809021000010/cmg-20201231xex10_36.htm)] | [removed: 10-Q] [added: \-] | [removed: 001-32731] [added: \-] | [removed: April 26, 2018] [added: \-] | [removed: 10.14] [added: \-] | [added: X] |

| [removed: 10.33†] [added: 10.29†] | [Form of [removed: 2018] [added: 2019 Director] Restricted Stock [removed: Units Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000042/cmg-20180331xex10_15.htm)] [added: Unit Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809020000010/cmg-20191231xex10_34.htm)] | [removed: 10-Q] [added: 10-K] | 001-32731 | [removed: April 26, 2018] [added: February 5, 2020] | [removed: 10.15] [added: 10.34] | |

| [removed: 10.34] [added: 10.34†] | [Form of [removed: 2019 Director Restricted Stock Unit Agreement](https://www.sec.gov/Archives/edgar/data/1058090/000105809020000010/cmg-20191231xex10_34.htm)] [added: 2020 Performance Share Agreement](https://www.sec.gov/Archives/edgar/data/1058090/000105809021000010/cmg-20201231xex10_34.htm)] | \- | \- | \- | \- | X |

| 21.1 | [Subsidiaries of Chipotle Mexican Grill, [removed: Inc.](https://www.sec.gov/Archives/edgar/data/1058090/000105809020000010/cmg-20191231xex21_1.htm)] [added: Inc.](https://www.sec.gov/Archives/edgar/data/1058090/000105809021000010/cmg-20201231xex21_1.htm)] | \- | \- | \- | \- | X |

| 23.1 | [Consent of Ernst & Young LLP (as the independent registered public accounting firm of Chipotle Mexican Grill, [removed: Inc.)](https://www.sec.gov/Archives/edgar/data/1058090/000105809020000010/cmg-20191231xex23_1.htm)] [added: Inc.)](https://www.sec.gov/Archives/edgar/data/1058090/000105809021000010/cmg-20201231xex23_1.htm)] | \- | \- | \- | \- | X |

| 31.1 | [Certification of Chief Executive Officer of Chipotle Mexican Grill, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/1058090/000105809020000010/cmg-20191231xex31_1.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/1058090/000105809021000010/cmg-20201231xex31_1.htm)] | \- | \- | \- | \- | X |

| 31.2 | [Certification of Chief Financial Officer of Chipotle Mexican Grill, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/1058090/000105809020000010/cmg-20191231xex31_2.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/1058090/000105809021000010/cmg-20201231xex31_2.htm)] | \- | \- | \- | \- | X |

| 32.1 | [Certification of Chief Executive Officer and Chief Financial Officer of Chipotle Mexican Grill, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of [removed: 2002](https://www.sec.gov/Archives/edgar/data/1058090/000105809020000010/cmg-20191231xex32_1.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/1058090/000105809021000010/cmg-20201231xex32_1.htm)] | \- | \- | \- | \- | X |

| 10.31† | [Deferred Prosecution Agreement dated April 20, 2020 between Chipotle Mexican Grill, Inc. and the United States Attorney’s Office for the Central District of California and the United States Department of Justice’s Consumer Protection Branch](http://www.sec.gov/Archives/edgar/data/1058090/000119312520113342/d909015dex101.htm) | 8-K | 001-32731 | April 21, 2020 | 10.1 | |

| 10.32 | [364-Day Revolving Credit Agreement dated May 8, 2020, among Chipotle Mexican Grill, Inc. and JPMorgan Chase Bank, N.A., Administrative Agent, and other lenders party to the Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809020000023/cmg-20200508xex10_1.htm) | 8-K | 001-32731 | May 8, 2020 | 10.1 | |

| 10.33 | [Director Compensation Program and Stock Ownership Guidelines](https://www.sec.gov/Archives/edgar/data/1058090/000105809021000010/cmg-20201231xex10_33.htm) | \- | \- | \- | \- | X |

| 10.35† | [Form of 2020 Restricted Stock Units Agreement](https://www.sec.gov/Archives/edgar/data/1058090/000105809021000010/cmg-20201231xex10_35.htm) | \- | \- | \- | \- | X |

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

| 10.16 | [Board Pay Policies effective May 22, 2018](http://www.sec.gov/Archives/edgar/data/1058090/000119312518173614/d578721dex102.htm) | 8-K | 001-32731 | May 24, 2018 | 10.2 | |

| 10.22† | [Chipotle Mexican Grill, Inc. Employee Stock Purchase Plan](http://www.sec.gov/Archives/edgar/data/1058090/000119312512052969/d280751dex1011.htm) | 10-K | 001-32731 | February 10, 2012 | 10.11 | |

Date: February [removed: 4, 2020][added: 9, 2021]

| /s/ BRIAN NICCOL | | February [removed: 4, 2020] [added: 9, 2021] | | Chief Executive Officer [added: and Chairman of the Board of Directors] (principal executive officer) |

| /s/ JOHN R. HARTUNG | | February [removed: 4, 2020] [added: 9, 2021] | | Chief Financial Officer (principal financial and accounting officer) |

| /s/ ALBERT S. BALDOCCHI | | February [removed: 4, 2020] [added: 9, 2021] | | Director |

| /s/ PATRICIA FILI-KRUSHEL | | February [removed: 4, 2020] [added: 9, 2021] | | Director |

| /s/ NEIL W. FLANZRAICH | | February [removed: 4, 2020] [added: 9, 2021] | | Director |

| /s/ ROBIN S. HICKENLOOPER | | February [removed: 4, 2020] [added: 9, 2021] | | Director |

| /s/ ALI NAMVAR | | February [removed: 4, 2020] [added: 9, 2021] | | Director |

| [removed: Ali] [added: Ai] Namvar | | | | |

| /s/ SCOTT MAW | | February [removed: 4, 2020] [added: 9, 2021] | | Director |

| /s/ GREGG L. ENGLES | | February 9, 2021 | | Director |

| Gregg L. Engles | | | | |

| /s/ MARY A. WINSTON | | February 9, 2021 | | Director |

| Mary Winston | | | | |

| /s/ STEVE ELLS | | February 4, 2020 | | Chairman of the Board of Directors |

| Steve Ells | | | | |

| /s/ PAUL CAPPUCCIO | | February 4, 2020 | | Director |

| Paul Cappuccio | | | | |

| /s/ MATTHEW PAULL | | February 4, 2020 | | Director |

| Matthew Paull | | | | |