Chipotle Mexican Grill (CMG) 10-K risk factor changes: FY2022 vs FY2021

If we are not able to hire, [removed: train, reward] [added: develop] and retain qualified restaurant employees and/or appropriately plan our workforce, our growth plan and profitability could be adversely affected.

In addition, our ability to continue to open new restaurants depends on us [removed: recruiting, training] [added: attracting, hiring, developing] and retaining high-quality employees to manage and work in our restaurants.

Maintaining appropriate staffing in our restaurants requires precise workforce planning, which [added: planning] has become more complex due to predictive scheduling [removed: (“fair] [added: laws (also called “fair] workweek” or “secure scheduling”) [removed: laws] and “just cause” termination legislation in certain geographic areas where we operate, and the [removed: impacts of the COVID-19 pandemic and the] so-called “great resignation” [removed: trend on relevant labor markets.][added: trend.]

The market for qualified talent continues to be competitive and we must [removed: provide increasingly] [added: ensure that we continue to offer] competitive wages, benefits and workplace conditions to retain qualified employees.

We have experienced and may continue to experience challenges in [removed: recruiting] [added: hiring] and retaining restaurant employees and in maintaining full restaurant staffing in various locations, which has resulted in longer wait times for guest orders, temporary closures of the digital make line and decreased employee satisfaction.

A shortage of qualified candidates who meet all legal work authorization requirements, [removed: our] failure to [removed: recruit] [added: hire] and retain new restaurant employees in a timely manner or higher than expected turnover levels could affect our ability to open new restaurants, grow sales at existing restaurants or meet our labor cost objectives.

Various federal, state and local employment and labor laws and regulations govern our relationships with our employees, and similar laws and regulations apply to our operations outside of the U.S. These laws and regulations relate to matters such as employment discrimination, wage and hour laws, [removed: predictive scheduling (“fair workweek”) and “just cause” termination laws,] requirements to provide and document meal and rest periods or other benefits, family leave mandates, requirements regarding working conditions and accommodations to certain employees, citizenship or work authorization and related requirements, insurance and workers’ compensation rules, healthcare laws and anti-discrimination and anti-harassment laws.

We incur [removed: significant] [added: substantial] costs to comply with these laws and regulations and non-compliance could expose us to significant liabilities.

For example, [removed: previously] a number of lawsuits [added: previously] have been filed against us alleging violations of federal and state laws regarding employee wages and payment of overtime, meal and rest breaks, employee classification, employee record-keeping and related practices with respect to our employees.

We incur legal costs to [removed: defend,] [added: defend these cases,] and we could incur losses from these and similar cases, and the amount of such losses or costs could be [removed: significant.][added: material.]

In addition, several jurisdictions, including New York City, Philadelphia, Chicago, Seattle, Oregon, San [removed: Francisco and] [added: Francisco,] San [removed: Jose,] [added: Jose and Berkeley] have implemented fair workweek or “secure scheduling” legislation, which impose complex requirements related to scheduling for certain restaurant and retail employees, and additional jurisdictions are considering similar legislation.

Several jurisdictions also have implemented sick [removed: pay/paid] [added: pay and 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 [added: or reduce employees’ hours] unless they can prove “just cause” or a “bona fide economic reason” for the [removed: termination.][added: termination or reduction in hours.]

For example, we previously reported [removed: that] [added: the settlement of] a complaint [removed: has been filed against us] alleging that we [removed: have] violated New York City’s Fair [removed: Work Week] [added: Workweek] law and Earned Safe and Sick Time [removed: Act at our restaurants in New York City.][added: Act.]

We also have been [removed: subject to] [added: and are undergoing] several audits of our compliance with employment law requirements in other [removed: cities.][added: cities, which could result in additional liabilities.]

[removed: Difficulties in hiring qualified employees and increases] [added: Increases] in the cost of labor could adversely impact our business and profitability.

If competitive [added: or inflationary] pressures or other factors prevent us from offsetting higher labor costs by increased menu prices, our profitability may decline.

However, even with strong preventative controls and interventions, food safety risks cannot be completely eliminated in [removed: any restaurant and incidents of food-borne illnesses continue to occur in the restaurant industry.][added: every restaurant.]

Incidents [added: of food-borne illnesses continue to occur in the restaurant industry and] may result from the failure of restaurant employees or suppliers to follow our food safety policies and procedures, or from employees or guests entering our restaurant while ill and contaminating ingredients or surfaces.

Any report, legitimate or [removed: otherwise,] [added: rumored,] of food-borne illness such as E. coli, hepatitis A, norovirus or salmonella, or other food safety issue, such as food tampering or contamination, at one of our restaurants could adversely affect our reputation and have a negative impact on our sales.

Social media has dramatically increased the speed with which negative publicity, including actual or perceived food safety incidents, is disseminated before there is any meaningful opportunity to investigate, respond [added: to] and address an issue.

We may be more susceptible than our competitors to [removed: incur] significant negative consequences from food safety incidents due to several highly publicized food safety [removed: events] [added: incidents involving E. coli, C. perfringens bacteria and norovirus] that [removed: previously occurred in] [added: were connected to a number of] our [removed: restaurants.][added: restaurants between 2015 to 2018.]

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

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

Our [removed: delivery] [added: digital] business, which accounted for a significant portion of our [removed: 2021] [added: 2022] total revenue, is subject to risks.

In [removed: 2021, 45.6%] [added: 2022, 39.4%] of our [removed: total] [added: food and beverage] revenue was derived from digital orders, which includes [added: third-party] delivery and customer pickup in-restaurant and through our Chipotlanes.

Approximately [removed: 21.5%] [added: 19%] of our [removed: 2021 total] [added: 2022 food and beverage] revenue consisted of delivery orders for which we are reliant on third-party delivery companies.

In [removed: 2021,] [added: 2022,] we implemented several menu price increases to partially offset the increases in [removed: higher] delivery, labor and other costs; however, our higher menu prices may cause some guests to shift their purchases to other restaurants offered on the platform.

The ordering and payment platforms used by these [removed: third-parties, or] [added: third parties,] our mobile app or [added: our] online ordering [removed: system,] [added: site has been and] could [added: again] be interrupted by technological failures, user errors, cyber-attacks or other factors, which could adversely impact sales through these channels and negatively impact our overall sales and reputation.

If the third-party delivery companies we utilize [removed: cease or curtail operations,] increase their [removed: fees,] [added: fees] or give greater priority or promotions on their platforms to [removed: our competitors,] [added: other restaurants,] our delivery business and our sales may be negatively impacted.

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

We continue to believe that our commitment to higher-quality and responsibly sourced ingredients resonates with guests and gives us a competitive advantage; however, [removed: more] [added: many of our] competitors [removed: have made and continue to] [added: also] make claims related to the quality of their ingredients and lack of artificial flavors, colors and preservatives.

Social media and internet-based communications, including video-sharing, social [removed: networking] [added: networking,] and [added: gaming and] messaging platforms, give users immediate access to a broad audience.

These platforms have dramatically increased the speed [added: and scale] of dissemination and accessibility of information, including negative publicity related to food safety incidents and negative guest and employee experiences.

As a result of our highly publicized food safety incidents in 2015 [removed: -] [added: –] 2018, negative social media posts about our business may generate a disproportionately negative response than would be experienced by other companies without a similar history.

New social media [added: and internet-based communication] platforms are developing rapidly, and we need to continuously innovate and evolve our [removed: social media] [added: marketing] strategies to maintain [added: our brand relevance and] broad appeal [removed: with guests and brand relevance.][added: to guests.]

We also continue to invest in other digital marketing initiatives to reach our guests and build their awareness of, engagement with, and loyalty to us, including our “Chipotle Rewards” [removed: national] loyalty program.

Other risks associated with our use of social media [added: and internet-based communication platforms] include association with influencers or online celebrities who become embroiled in controversy, [added: platforms and business partners who experience challenges,] improper disclosure of proprietary information, negative comments about us, exposure of personally identifiable information, fraud, hoaxes or malicious dissemination of false information.

Our success depends in large part on our ability to persuade consumers that food made with ingredients that were raised or grown according to our Food With Integrity principles is worth paying a higher price relative to prices of some of our competitors, particularly quick-service [removed: restaurant competitors.][added: restaurants.]

Under our Food With Integrity principles, for example, animals must be responsibly raised, and the milk in our sour cream, cheese and queso must come from cows that have not been treated with rBGH, [removed: which] practices [added: which] typically are more costly than conventional farming.

If we are not able to successfully persuade consumers that consuming food made [removed: consistent] [added: in accordance] with our Food With Integrity principles is better for them and the environment, or if consumers are not willing to pay the prices we charge, our sales could be adversely affected, which would negatively impact our results of operations.

In one instance, we permanently closed a restaurant due to lack of necessary staff after a prolonged recruiting effort.

We have experienced labor union efforts to organize groups of our employees from time to time and, if successful, those organizational efforts may decrease our operational flexibility and disrupt our normal operations, which could adversely affect our business.

Our liability exposure for these employment laws and regulations may be higher than our restaurant peers because we are one of the largest restaurant companies that owns and operates all our restaurants, while most of our restaurant peers franchise some or a significant portion of their operations.

In addition, state and local laws such as the recently passed California AB 257 (the “FAST Act”) may require wage increases and working hour and working condition standards that would restrict our flexibility to respond to market conditions and increase our costs without corresponding benefits.

Although the FAST Act is stayed pending a referendum in 2024, it is possible that ultimately it will be enforced, and that other jurisdictions will pass similar laws.

In addition, the issues regulated by privacy laws (such as advertising and marketing, children, biometric, employee, and health related information) have expanded, as have the number of city, state, federal and international governmental bodies and agencies that have recently passed or are currently considering privacy legislation or regulatory rulemaking.

Where not limited by preemption, many states have passed or are considering adopting stricter versions of federal privacy laws (e.g., state level statutes similar to the Telephone Consumer Protection Act of 1991 (“TCPA”), the Health Insurance Portability and Accountability Act, and the Children’s Online Privacy Protection Act of 1998 (“COPPA”)).

Private service providers also have implemented mandatory privacy requirements impacting businesses, like Chipotle, that wish to utilize services available on their platforms.

Taken together, Chipotle faces rapidly increasing compliance costs in order to modify its operations and business practices to comply with applicable laws, regulations and other requirements.

In 2022, a number of lawsuits were filed against us and governmental audits initiated alleging violations of federal and state employment laws, including wage and hour claims, and we could be involved in similar or even more significant litigation and legal proceedings in the future.

Risks Related to Environmental, Social and Governance Factors

If we are unable to achieve our social and environmental sustainability goals, our reputation and results of operations could be adversely affected.

In addition to financial performance, companies increasingly are being judged by their performance on a variety of environmental, social and governance (“ESG”) factors.

Investors, governmental agencies and self-regulatory organizations, including the SEC, the NYSE and the Financial Accounting Standards Board (the “FASB”), have increasingly focused on social and environmental sustainability achievements and disclosures, including with respect to climate change, energy use, packaging and waste, human rights, sustainable supply chain practices, animal health and welfare and water use.

Our mission is to Cultivate a Better World by serving responsibly sourced, classically-cooked, real food with wholesome ingredients without artificial colors, flavors or preservative.

We strive to be a leader in responsible and sustainable food production and, in November 2021, we announced that we had set science-based targets validated by the Science Based Targets initiative to reduce absolute Scope 1, 2 and 3 greenhouse gas emissions 50% by 2030 from a 2019 base year.

Execution of our mission and achievement of these goals are subject to risks and uncertainties, many of which are outside of our control and may prove to be more difficult and costly than we anticipate.

These risks and uncertainties include, but are not limited to, our ability to execute on our mission and achieve our ESG goals within currently projected costs and expected timeframes; unforeseen design, operational and technological difficulties; the outcome of research efforts and future technology developments; the success of our collaboration with our suppliers and other third parties; and competitive pressures.

There is no assurance that we will be able to successfully execute on our mission and fully achieve our ESG goals.

Failure to achieve our goals could damage our reputation and relationships with our guests, investors and other stakeholders, which could have an adverse effect on our business, results of operations and stock price.

We may be forced to source ingredients from new geographic regions, which could impact quality and increase costs.

The rapid increase in inflation during 2022 and widespread concern about a prolonged economic downturn may lead consumers to decrease their discretionary spending.

Risks Related to the COVID-19 Pandemic

The 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 COVID-19 pandemic has had and is likely to continue to have a significant impact on our business and results of operations.

During the peak of the pandemic in 2020 and during subsequent resurgences of the virus, government restrictions have required us to close some of our restaurants, close dining rooms and offer only takeout and delivery, impose social distancing, require proof of vaccinations and enforce the wearing of face coverings.

In addition, the COVID-19 pandemic has required and may continue to require us to make difficult decisions about COVID-19 protective measures, such as requiring employees and guests to be vaccinated and/or wear face coverings, which could impact our brand, employee satisfaction, hiring and retention, and the willingness of guests to frequent our restaurants.

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 impacted by COVID-19.

The so-called “great resignation” trend that began in 2021, in which U.S. employees voluntarily resigned from their jobs in large numbers, has further strained our ability to keep our restaurants fully staffed and negatively impacted employee satisfaction.

The COVID-19 outbreak also has impacted and is likely to continue to impact our supply chain, which could negatively impact our business.

These impacts could include but are not limited to disruptions in our ability to obtain ingredients, packaging and cleaning supplies due to labor shortages at our suppliers and service providers, transportation bottlenecks, or increases in raw material and commodity costs.

If our suppliers do not fulfill their obligations to us, we could face shortages of food items or other supplies at our restaurants, and our results of operations and sales could be adversely impacted.

We cannot predict the impact that resurgences of the COVID-19 virus and new variants of the virus will have on the overall economy and consumer behavior, or how long those impacts may last, so we cannot predict how long our results of operations and financial performance will be adversely impacted.

Additionally, while our employees are not currently covered by any collective bargaining agreements, union organizers have engaged in efforts to organize our employees and those of other restaurant companies.

If a significant portion of our employees were to unionize, our labor costs could increase, and it could negatively impact our culture, reduce our flexibility and disrupt our business.

In addition, our responses to any union organizing efforts could negatively impact our reputation and dissuade guests from patronizing our restaurants.

From 2015 to 2018, illnesses caused by E. coli and C. perfringens bacteria and norovirus were connected to a number of our restaurants.

The third-party delivery business is intensely competitive, with a number of players competing for market share, online traffic capital, and delivery drivers.

Failure to meet the GDPR requirements could result in penalties of up to 4% of annual worldwide revenue.

Further, the California Privacy Rights Act, which was passed in November 2020 and is fully effective on January 1, 2023, significantly modifies the CCPA.

These modifications will require us to incur additional costs and expenses in our effort to comply.

In July 2021, the European Commission finalized recommendations in relation to cross-border data transfers and published new versions of the Standard Contractual Clauses.

Together with the finalization of Brexit in April 2021, the new requirements will require us to incur additional costs and expenses in order to comply and may impact the transfer of personal data throughout our organization and to third parties.

In addition, many of the leading third-party tech platforms are moving away from third-party cookies, such as ours, and moving to their own required frameworks, which may hinder our ability to target our marketing efforts.

Along with newly developed laws and regulations, the frameworks of these tech platforms are subject to change, carry uncertain interpretations and may be inconsistent in application, which may lead to a decline in guest engagement or cause us to incur substantial costs or modifications to our operations or business practices to comply.

Full compliance with the DPA requires, among other things, Chipotle to conduct a root cause analysis of the historic food safety matters, maintain and annually update a comprehensive food safety plan and comply with applicable provisions of the FDCA.

In addition, further action by the DOJ may significantly and adversely affect our brand and reputation, especially in light of our highly publicized food safety incidents in 2015 – 2018.

For example, a number of lawsuits have been filed against us alleging violations of federal and state employment laws, including wage and hour claims, and in 2020 we signed a DPA with the U.S. Attorney’s Office for the Central District of California referred to earlier.

We could be involved in similar or even more significant litigation and legal proceedings in the future.

Substantially all of our restaurants operate in leased properties subject to long-term leases.

If we are unable to secure new leases on favorable terms, terminate unfavorable leases or renew or extend favorable leases, our profitability may suffer.

We operate substantially all of our restaurants in leased facilities.

It is becoming increasingly challenging to locate and secure favorable lease facilities for new restaurants as competition for restaurant sites in our target markets is intense.

Development and leasing costs are increasing, particularly for urban locations.

These factors could negatively impact our ability to manage our occupancy costs, which may adversely impact our profitability.

In addition, any of these factors may be exacerbated by economic factors, which may result in an increased demand for developers and contractors that could drive up our construction and leasing costs.

Also, as we open and operate more restaurants, our rate of expansion relative to the size of our existing restaurant base will decline, making it increasingly difficult to achieve levels of sales and profitability growth that we achieved in prior years.

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

We may incur significant lease termination expenses when we close or relocate a restaurant and are often obligated to continue to pay rent and other lease-related expenses after closing a restaurant.

We also may incur significant asset impairment and other charges in connection with closures and relocations.

If the lease termination cost is significant, we may decide to keep underperforming restaurants open.

Ongoing lease obligations at closed or underperforming restaurant locations could decrease our results of operations.

We work closely with our suppliers and use a mix of forward pricing protocols under which we agree with our supplier on fixed prices for deliveries at some time in the future, fixed pricing protocols under which we agree on a fixed price with our supplier for the duration of that protocol, formula pricing protocols under which the prices we pay are based on a specified formula related to the prices of the goods, such as spot [removed: prices,] [added: prices or based on changes in industry indices,] and range forward protocols under which we agree on a price range for the duration of that protocol.

We also could experience shortages of key ingredients if our suppliers need to close or restrict operations due to the impact of [removed: the] COVID-19 [removed: outbreak or,] due to industry-wide shipping and freight delays.

As of December 31, [removed: 2021,] [added: 2022,] we had [removed: $1.4] [added: $1.3] billion in cash and cash equivalents, current and long-term investments, and restricted cash, nearly all of which are interest bearing.

[removed: Over 25] [added: Nearly 30] years later, our devotion to seeking out high-quality ingredients, raised with respect for animals, farmers, and the environment, remains at the core of our commitment to Food With Integrity.

As of December 31, [removed: 2021,] [added: 2022,] we owned and operated [removed: 2,918] [added: 3,129] Chipotle restaurants throughout the United States, [removed: 44] [added: 53] international Chipotle restaurants, and [removed: four] [added: five] non-Chipotle restaurants.

Our revenue is derived from sales by [removed: company-owned] [added: our] restaurants.

In our Chipotle restaurants, we [removed: endeavor] [added: strive] to serve only meats that are raised in accordance with criteria we have established in an effort to improve sustainability and promote animal welfare, and without the use of non-therapeutic antibiotics or added growth hormones.

For more information about our sustainability and animal welfare [removed: initiatives] [added: initiatives,] see our biennial Sustainability Report and interim Update Report on our website www.chipotle.com/about-us/sustainability.

Our [removed: 25] [added: 26] independently owned and operated regional distribution centers purchase from various suppliers we carefully select based on quality, price, availability, and the suppliers’ understanding of and adherence to our [removed: mission.][added: mission and Food With Integrity standards.]

small grower [removed: support and training;][added: support;]

[removed: We] [added: In recent years we] have significantly upgraded our capabilities by digitizing [removed: almost all of] our restaurant kitchens, 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.

In the United States, we employed [removed: 94,992] [added: 102,219] people in our restaurants and [removed: 1,451] [added: 1,126] people in our Restaurant Support Centers and field support [removed: organizations; 96,443 individuals are employed in the U.S. and 1,217 are employed in Canada, France, Germany and the United Kingdom.][added: organizations.]

We [added: also] 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.

[removed: Culture, Values & Diversity,] [added: Diversity,] Equity & Inclusion

As of December 31, [removed: 2021, more than] [added: 2022, approximately] 50% of our U.S.-based employee population [removed: is] [added: was] female and approximately [removed: 68%] [added: 70%] of our [removed: U.S based] [added: U.S.-based] employee population [removed: is] [added: was] comprised of racial and ethnic minorities.

Our most recent EEO-1 consolidated report is posted on the Investors page of our website at www.ir.chipotle.com under Corporate Governance – Human Capital Information and additional details about the demographics of our employee population is included [added: there and] in our biennial Sustainability Report and interim Update Report on our website www.chipotle.com/about-us/sustainability*.*

[removed: The results] [added: In 2022, our review included 99%] of [added: our U.S. employee population, excluding only approximately 50 of our most senior management employees, and] the [removed: 2021 analysis] [added: results] did not identify preferential treatment to any class of employee; however, we identified several isolated discrepancies between actual compensation and our policies and we quickly made pay adjustments to close all identified gaps.

[removed: An expanded] [added: Our] Debt-Free Degree program that now provides Chipotle employees access to nearly 100 degrees at 10 universities, completely tuition debt free.

New Career [removed: Certificates] [added: Certificates, which] further enhances our Tuition Assistance benefits by providing on-demand [removed: Certificate] [added: certificate] programs to help Chipotle team members advance their careers in as little as eight weeks.

[removed: the preparation,] [added: preparation,] sale and labeling of food, including regulations of the Food and Drug Administration, which oversees the safety of the entire food system, including inspections and mandatory food recalls, menu labeling and nutritional content;

employment practices and working conditions, [removed: such as] [added: including] minimum wage rates, wage and hour practices, [removed: requirements to provide meal and rest periods, Fair Workweek] [added: fair workweek] and “just cause” legislation, employment of minors, [removed: anti-discrimination, anti-harassment,] [added: discrimination, harassment,] classification of employees, paid and family leave, workplace [removed: safety accommodations to certain employees,] [added: safety,] immigration and overtime [removed: pay,] among others;

[removed: compliance with] [added: public accommodations and safety conditions, including] the Americans with Disabilities Act and similar [added: state] laws that give civil rights protections to individuals with disabilities in the context of employment, public [removed: accommodations] [added: accommodations, online resources] and other areas;

environmental [removed: practices,] [added: matters,] such as [added: emissions and air quality, water consumption,] the discharge, storage, handling, [removed: release] [added: release,] and disposal of hazardous or toxic substances, and [removed: regulations] [added: local ordinances] restricting the [removed: use of straws, utensils and the] types of packaging we can use in our restaurants; [added: and]

building and zoning requirements, including state and local licensing and regulation governing the design and operation of facilities and land use; [removed: and]

Digital sales, which represent food and beverage revenue generated through the Chipotle website, Chipotle app or third-party delivery aggregators includes revenue deferrals associated with Chipotle Rewards, represented 39.4% of food and beverage revenue in 2022, compared to 45.0% of food and beverage revenue in 2021.

As of December 31, 2022, Chipotle employed 104,958 people worldwide, of which 103,345 individuals are employed in the U.S. and 1,613 are employed in Canada, France, Germany and the United Kingdom.

In 2022 only one restaurant voted to form a union, and we believe that our relationship with our employees is good.

Most notably, our diversity and inclusion strategy is to foster a culture that values and champions diversity, while leveraging the individual talents of all team members to grow our business and Cultivate a Better World.


Maintaining a diverse, equitable and inclusive work environment is critical to our business success.

Therefore, we have undertaken several actions to ensure that our diversity strategy is effective.

Since December 2021, we have been participating in Management Leadership for Tomorrow’s Black Equity at Work Certification Program, which establishes a comprehensive aggregate measurement system and provides a rigorous, results-oriented approach that accelerates progress toward Black equity internally, amongst our employees, and externally by supporting Black equity within our business partners and in the communities where we operate.

In addition to the Black Equity at Work Certification Program, in early 2023 we engaged an independent third-party consultant to conduct a Talent Management Equity Audit, which aims to identify where in the talent management cycle we may need to debias or create more equitable policies, practices, and procedures, identify potential blockers and new opportunities to creating and sustaining equity in talent management, and identify key strengths and pockets of risk.

We plan to disclose key results and action plans from these initiatives in our Sustainability Report.

We also retain an independent third-party compensation consultant each year to conduct a pay equity analysis of our U.S. workforce, including factors of pay (e.g., grade level, tenure in role, most recent promotion) and external market conditions (e.g., geographic location) to ensure consistency and equitable treatment amongst our employees.

Talent Development

We believe that our people and culture give us a competitive advantage in our business.

In 2022, we had approximately 22,000 internal promotions.

Additionally, 90% of all restaurant management roles were internal promotions including 100% of US Regional Vice President roles, 81% of Team Directors, and 74% of Field Leader positions.

We provide our employees various learning opportunities to ensure that we maintain a diverse pipeline of talent available to regularly promote employees to leadership positions, including the following:

Our Leadership Evolution and Development Program focuses on preparing a cross-functional cohort of mid-level managers for the future of work and leadership.

During the 9-month program, participants learn the critical capabilities of leading oneself, to leading others, to leading the business with topics designed to stretch capabilities and improve decision-making skills.

Our Executive Development Program, which focuses on developing eleven high potential Team Directors by providing them with opportunities to develop in areas such as leadership, marketing, business and finance, data and analytics, ESG and hospitality, as well as gain an in-depth understanding of various functions within the company.

Online executive coaching for mid- and senior level leaders throughout the organization.

Coordinated talent calibration across the organization to identify a diverse pipeline of emerging leaders, matching these leaders with the appropriate development programs to ensure we have a slate of ‘ready now’ internal talent for critical roles within the organization.

Development courses and programs that focus on creating an inclusive culture.

The financial, physical and mental wellness of our employees remains our top priority and we believe we have compelling compensation packages and incentive programs and a robust suite of benefit offerings that enables us to engage current team members and attract new team members:

Our commitment to pay equity is evidenced by our investment in our compensation packages, including competitive wages and industry leading incentive programs, such as our annual and quarterly bonus programs, that allow us to attract and retain the top talent in the industry.

In 2023, we launched a program that provides our medically enrolled employees and their families with a Health Pro who can help them navigate the complex healthcare environment, helping them understand how their health benefits cover their care, how to save money, as well as get expert, high-quality medical care.

data privacy and standards for the protection of personal information, including social security numbers, financial information (including credit card numbers), and health information, including state laws such as the California Privacy Rights Act (“CPRA”) and CCPA in California as well as new privacy-related legislation in Virginia, Colorado, Connecticut, Utah and a growing number of other states, and international laws such as GDPR in the European Union and the Personal Information Protection and Electronic Documents Act (“PIPEDA”) in Canada, and payment card industry standards and requirements;

health, sanitation, safety and fire standards and the sale of alcoholic beverages;

public company compliance, disclosure and governance matters, including accounting and tax regulations, SEC and NYSE disclosure requirements.

Digital sales, which includes delivery and customer pick-up, represented 45.6% of our total revenue in 2021, compared to 46.2% of total revenue in 2020.

As of December 31, 2021, Chipotle employed 97,660 people worldwide.

Currently, none of our employees are represented by unions.

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

| | | | |

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

| Gender | | Race/Ethnicity | |

| Female | 53% | Hispanic or Latino | 38% |

| Male | 46% | White | 30% |

| Not Indicated | 1% | Black or African American | 20% |

| | | Asian | 5% |

| | | Two or More Races | 4% |

| | | Not Indicated/Specified | 2% |

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

Talent Partnerships

We develop Talent Partnerships to amplify our purpose and vision for people and to foster talent curation, grow our employees and scale Chipotle.

We believe we have a compelling employee value proposition that enables us to engage current team members, as well as the communities we serve, via these partnerships.

Internally, we connect with employees who are enrolled in our debt-free degree programs and explore career pathways and internal opportunities in collaboration with leaders throughout the corporate Restaurant Support Centers and restaurant and field staff.

Externally, we are forging alliances with select organizations whose mission and values are aligned with ours, and who are also committed to growing their people and ensuring equity; Big Brothers Big Sisters of America, Job Corps and Paul Quinn College are amongst these partners.

We believe our overall talent strategy will allow us to effectively leverage existing talent to grow future leaders and mitigate turnover, while increasing employee engagement and driving business results.

The financial, physical and mental wellness of our employees remains our top priority.

During 2021, we conducted an independent pay equity analysis of our U.S. workforce to identify risks and pay gaps in our organization by gender and race/ethnicity to support our commitment to pay our employees equally across gender and race/ethnicity.

Our commitment to pay equity is evidenced by our investment in our compensation packages and robust suite of benefit offerings, such as:

Eligible Crew members who work at locations that meet team sales and output goals may qualify for a quarterly Crew Bonus (equivalent to one week’s worth of pay on average).

In addition to quarterly performance bonuses, full-time crew members with at least one continuous year of service may be eligible for an annual bonus.

In 2021, we paid out $6.7 million across these bonus programs.

Wages for hourly crew members increased over 15% in 2021, resulting in a national average hourly wage of greater than $15.00 per hour by the end of the year.

COVID-19 protective measures, such as requiring employees and/or guests to provide proof of vaccination, imposing social distancing, and requiring and enforcing the wearing of face coverings;

privacy and data security, laws governing the collection, maintenance and use of information regarding employees and guests and consumer credit protection and fraud;

licensing and regulation by health, alcoholic beverage, sanitation, food and other agencies.

For information regarding legal proceedings, see [Note [removed: 12.][added: 11.]

“Commitments and [removed: Contingencies”](#Note_12)] [added: Contingencies”](#Note_11)] in our consolidated financial statements included in Item 8.

For the fiscal year ended December 31, [removed: 2021][added: 2022]

| 610 Newport Center Drive, Suite [removed: 1400] [added: 1100] Newport Beach, CA | 92660 |

As of June 30, [removed: 2021,] [added: 2022,] the aggregate market value of the registrant’s outstanding common equity held by non-affiliates was [removed: $35.159] [added: $29.362] billion, based on the closing price of the registrant’s common stock on June 30, [removed: 2021,] [added: 2022,] the last trading day of the registrant’s most recently completed second fiscal quarter.

As of February [removed: 4, 2022,] [added: 6, 2023,] there were [removed: 28,031,948] [added: 27,621,847] 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: 2022] [added: 2023] 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: 2021.][added: 2022.]

| Item 1A. | [Risk Factors](#Item_1A) | [removed: 8] [added: 9] |

| Item 2. | [Properties](#Item_2) | [removed: 18] [added: 19] |

| Item 3. | [Legal Proceedings](#Item_3) | [removed: 18] [added: 19] |

| Item 4. | [Mine Safety Disclosures](#Item_4) | [removed: 18] [added: 19] |

| Item 5. | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](#Item_5) | [removed: 19] [added: 20] |

| Item 6. | [Reserved](#Item_6) | [removed: 21] [added: 22] |

| Item 7. | [Management’s Discussion and Analysis of Financial Condition and Results of Operations](#Item_7) | [removed: 21] [added: 22] |

| Item 7A. | [Quantitative and Qualitative Disclosure About Market Risk](#Item_7A) | [removed: 29] [added: 30] |

| Item 8. | [Financial Statements and Supplementary Data](#Item_8) | [removed: 30] [added: 31] |

| | [Report of Independent Registered Public Accounting Firm](#Report_of_Independent) (PCAOB ID: 42) | [removed: 30] [added: 31] |

| | [Consolidated Balance Sheets as of December 31, [removed: 2021] [added: 2022] and [removed: 2020](#Consolidated_BS)] [added: 2021](#Consolidated_BS)] | [removed: 32] [added: 33] |

| | [Consolidated Statements of Income and [removed: Consolidated Statements of] Comprehensive Income for the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#Consolidated_IS)] [added: 2020](#Consolidated_IS)] | [removed: 33] [added: 34] |

| | [Consolidated Statements of Shareholders’ Equity for the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#Consolidated_SOE)] [added: 2020](#Consolidated_SOE)] | [removed: 34] [added: 35] |

| | [Consolidated Statements of Cash Flows for the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019](#Consolidated_SCF)] [added: 2020](#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 4 – Fair Value of Financial Instruments](#Note_04) | [removed: 43] [added: 44] |

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

| | [Note 7 – Shareholders’ Equity](#Note_07) | [removed: 47] [added: 49] |

| | [Note 8 – Stock-Based [removed: Compensation](#Note_08)] [added: Compensation and Employee Benefit Plans](#Note_08)] | [removed: 48] [added: 49] |

| | [Note [removed: 10] [added: 9] – [removed: Leases](#Note_10)] [added: Leases](#Note_09)] | [removed: 51] [added: 53] |

| | [Note [removed: 11] [added: 10] – Earnings Per [removed: Share](#Note_11)] [added: Share](#Note_10)] | [removed: 53] [added: 54] |

| | [Note [removed: 12] [added: 11] – Commitments and [removed: Contingencies](#Note_12)] [added: Contingencies](#Note_11)] | [removed: 53] [added: 54] |

| | [Note [removed: 13] [added: 12] – [removed: Debt](#Note_13)] [added: Debt](#Note_12)] | [removed: 54] [added: 55] |

| | [Note [removed: 14] [added: 13] – Related Party [removed: Transactions](#Note_14)] [added: Transactions](#Note_13)] | [removed: 54] [added: 55] |

| Item 9. | [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](#Item_9) | [removed: 54] [added: 55] |

| Item 9A. | [Controls and Procedures](#Item_9A) | [removed: 54] [added: 55] |

| Item 9B. | [Other Information](#Item_9B) | [removed: 57] [added: 58] |

| Item 10. | [Directors, Executive Officers and Corporate Governance](#Item_10) | [removed: 57] [added: 58] |

| Item 11. | [Executive Compensation](#Item_11) | [removed: 57] [added: 58] |

| Item 12. | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](#Item_12) | [removed: 57] [added: 58] |

| Item 13. | [Certain Relationships and Related Transactions, and Director Independence](#Item_13) | [removed: 57] [added: 58] |

| Item 14. | [Principal Accounting Fees and Services](#Item_14) | [removed: 57] [added: 59] |

| Item 15. | [Exhibits, Financial Statement Schedules](#Item_15) | [removed: 58] [added: 60] |

| Item 16. | [Form 10-K Summary](#Item_16) | [removed: 60] [added: 62] |

| | [Note 5 – Equity Investments](#Note_05) | 46 |

| Item 9C. | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#Item_9C) | 58 |

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.

| | [Note 5 – Corporate Restructuring Costs](#Note_05) | 45 |

| | [Note 9 – Employee Benefit Plans](#Note_09) | 50 |

As of December 31, [removed: 2021,] [added: 2022,] there were [removed: 2,966] [added: 3,187] restaurants operated by Chipotle and our consolidated subsidiaries, [removed: 2,962] [added: 3,182] of which were Chipotle restaurants.

Our main office is located at 610 Newport Center Drive, [removed: Suite 1400,] Newport Beach, CA 92660 and our telephone number is (949) 524-4000.

“Description of Business and Summary of Significant Accounting Policies” and Note [removed: 10.][added: 9.]

As of February 7, [removed: 2022,] [added: 2023,] there were approximately [removed: 1,091] [added: 1,313] shareholders of record.

The table below reflects shares of common stock we repurchased during the fourth quarter of [removed: 2021.][added: 2022.]

(1) Shares were repurchased pursuant to repurchase programs announced on July [removed: 20, 2021 and October 21, 2021.][added: 26, 2022.]

(2) The December total includes an additional $200 million in authorized repurchases approved on December 7, [removed: 2021] [added: 2022] and announced February [removed: 8, 2022.][added: 7, 2023.]

The following graph compares the cumulative annual stockholders return on our common stock from December 31, [removed: 2016,] [added: 2017,] through December 31, [removed: 2021,] [added: 2022,] 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: 2016.][added: 2017.]

![Chart, line [removed: chart, scatter] chart

Description automatically [removed: generated](https://www.sec.gov/Archives/edgar/data/1058090/000105809022000011/cmg-20211231x10kg001.jpg)][added: generated](https://www.sec.gov/Archives/edgar/data/1058090/000105809023000010/cmg-20221231x10kg002.jpg)]

| Company/Index | [removed: 2016 | | |] 2017 | | | 2018 | | | 2019 | | | 2020 | | | 2021 | | [added: | 2022 | |]

*$100 invested on December 31, [removed: 2016,] [added: 2017,] in stock or index, including reinvestment of dividends.

Fiscal year ending December [removed: 31.][added: 31, 2022.]

Source data: [removed: S&P Capital IQ][added: FactSet]

“Financial Statements and Supplementary Data.” This section of the Form 10-K generally discusses [removed: 2021 and 2020] [added: 2022] items and year-to-year comparisons of [removed: 2021] [added: 2022] to [removed: 2020.][added: 2021.]

Discussions of [removed: 2019] [added: 2020] items and year-to-year comparisons of [removed: 2020] [added: 2021] and [removed: 2019] [added: 2020] 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: 2020.][added: 2021.]

As of December 31, [removed: 2021,] [added: 2022,] we operated [removed: 2,918] [added: 3,129] Chipotle restaurants throughout the United States, [removed: 44] [added: 53] international Chipotle restaurants, and [removed: four] [added: five] non-Chipotle restaurants.

[removed: We define average] [added: Comparable] restaurant sales [removed: as] [added: represent] the [removed: average trailing 12-month food and beverage sales] [added: change in period-over-period total revenue] for restaurants in operation for at least [removed: 12] [added: 13] full calendar months.

During the year ended December 31, [removed: 2021,] [added: 2022,] our restaurant operating costs (food, beverage and packaging; labor; occupancy; and other operating costs) were [removed: 77.4%] [added: 76.1%] of total revenue, a decrease from [removed: 82.6%] [added: 77.4%] during the year ended December 31, [removed: 2020.][added: 2021.]

The decrease was driven primarily by [removed: higher comparable restaurant sales,] [added: sales leverage and, to a lesser extent, lower delivery expenses associated with lower volume of delivery transactions,] partially offset by wage [removed: inflation,] [added: inflation and] higher commodity inflation primarily from [removed: freight and] [added: avocados, packaging, dairy,] beef [removed: and, to a lesser extent, increased delivery fees.][added: and chicken.]

*Restaurant Development.* [removed: For] [added: During] the [removed: full] year [removed: 2021,] [added: ended December 31, 2022,] we opened [removed: 215] [added: 236] new restaurants, which included [removed: 174] [added: 202] restaurants with a Chipotlane.

| Beginning of period | [removed: 2,768] [added: 2,966] | | [removed: 2,622] [added: 2,768] |

| Chipotle openings | [removed: 215] [added: 235] | | [removed: 160] [added: 215] |

| Pizzeria Locale openings | [removed: \-] [added: 1] | | [removed: 1] [added: \-] |

| Chipotle permanent closures | [removed: (10)] [added: (3)] | | [removed: (9)] [added: (10)] |

| Chipotle relocations | [removed: (7)] [added: (12)] | | [removed: (6)] [added: (7)] |

| Total restaurants at end of period | [removed: 2,966] [added: 3,187] | | [removed: 2,768] [added: 2,966] |

| | [removed: 2021] [added: 2022] | | | [removed: 2020] [added: 2021] | | | change |

| Food and beverage revenue | $ | [removed: 7,457.2] [added: 8,558.0] | | $ | [removed: 5,920.5] [added: 7,457.2] | | [removed: 26.0%] [added: 14.8%] |

| Delivery service revenue | | [removed: 89.9] [added: 76.7] | | | [removed: 64.1] [added: 89.9] | | [removed: 40.3%] [added: (14.7%)] |

| Total revenue | $ | [removed: 7,547.1] [added: 8,634.7] | | $ | [removed: 5,984.6] [added: 7,547.1] | | [removed: 26.1%] [added: 14.4%] |

| Average restaurant sales (1) | $ | [removed: 2.6] [added: 2.8] | | $ | [removed: 2.2] [added: 2.6] | | [removed: 18.8%] [added: 6.1%] |

| Comparable restaurant sales increase | | [removed: 19.3%] [added: 8.0%] | | | [removed: 1.8%] [added: 19.3%] | | |

The significant factors contributing to the total revenue increase for the year ended December 31, [removed: 2021] [added: 2022] compared to the year ended December 31, [removed: 2020,] [added: 2021,] were comparable restaurant sales increases and new restaurant openings.

[removed: Comparable] [added: Total revenue increased due to comparable] restaurant sales [removed: increased $1,128.2] [added: increase of $568.6] million and [removed: total revenue from] restaurants not yet in the comparable base [removed: contributed $434.1 million to the total revenue increase,] of [added: $519.4 million, of] which [removed: $201.9] [added: $210.5] million was due to restaurants opened in [removed: 2021.][added: 2022.]

| Food, beverage and packaging | $ | [removed: 2,308.6] [added: 2,602.2] | | $ | [removed: 1,932.8] [added: 2,308.6] | | [removed: 19.4%] [added: 12.7%] |

| As a percentage of total revenue | | [removed: 30.6%] [added: 30.1%] | | | [removed: 32.3%] [added: 30.6%] | | [removed: (1.7%)] [added: (0.5%)] |

Food, beverage and packaging costs decreased as a percentage of total revenue for the year ended December 31, [removed: 2021] [added: 2022] compared to the year ended December 31, [removed: 2020,] [added: 2021,] primarily due to [removed: sales leverage from] [added: the benefit of] menu price increases.

This decrease was partially offset by [removed: higher costs for freight and beef and,] [added: inflation across the menu, primarily related] to [removed: a lesser extent,] higher costs for [removed: avocados.][added: avocados, packaging, dairy, beef and chicken.]

| Labor costs | $ | [removed: 1,917.8] [added: 2,198.0] | | $ | [removed: 1,593.0] [added: 1,917.8] | | [removed: 20.4%] [added: 14.6%] |

| As a percentage of total revenue | | [removed: 25.4%] [added: 25.5%] | | | [removed: 26.6%] [added: 25.4%] | | [removed: (1.2%)] [added: 0.1%] |

[removed: Labor] [added: Other operating] costs decreased as a percentage of total revenue for the year ended December 31, [removed: 2021] [added: 2022] compared to the year ended December 31, [removed: 2020,] [added: 2021,] primarily due to [removed: sales leverage] [added: lower delivery expenses associated with lower volume of delivery transactions] and, to a lesser extent, [removed: lower COVID-19 related pay for restaurant employees.][added: sales leverage.]

| Occupancy costs | $ | [removed: 416.6] [added: 460.4] | | $ | [removed: 387.8] [added: 416.6] | | [removed: 7.4%] [added: 10.5%] |

| October | | | 45,448 | | $ | 1,512.59 | | 45,448 | | $ | 344,061,582 |

| November | | | 53,236 | | $ | 1,464.22 | | 53,236 | | $ | 266,112,344 |

| December | | | 35,071 | | $ | 1,487.43 | | 35,071 | | $ | 413,946,701 |

| Total | | | 133,755 | | $ | 1,486.74 | | 133,755 | | | |

| Chipotle Mexican Grill, Inc. | $ | 100 | | $ | 149 | | $ | 290 | | $ | 480 | | | 605 | | $ | 480 |

| S&P 500 | | 100 | | | 94 | | | 121 | | | 140 | | | 178 | | | 144 |

| S&P 500 Restaurants | | 100 | | | 108 | | | 132 | | | 152 | | | 184 | | | 166 |

2022 Financial Highlights, year-over-year:

Total revenue increased 14.4% to $8.6 billion

Comparable restaurant sales increased 8.0%

Diluted earnings per share was $32.04, a 39.9% increase from $22.90, which includes a $0.74 after-tax impact from expenses related to certain legal proceedings, expenses related to the 2018 performance share COVID-19 related modification, corporate restructuring costs, employee separation costs, restaurant asset impairment and closure costs, and other costs, partially offset by an unrealized gain on investments

*Sales Trends.* Comparable restaurant sales increased 8.0% for the year ended December 31, 2022.

The increase is primarily attributable to an increase in menu prices and, to a lesser extent, an increase in transactions, partially offset by a decrease in group size from the continued resurgence of our in-restaurant business.

In-restaurant sales increased 26.4% for the year ended December 31, 2022 compared to the year ended December 31, 2021.

The increase was primarily due to menu price increases, a shift in consumer behaviors related to COVID-19 from digital sales to in-restaurant sales across the country, and new restaurant openings.

In-restaurant sales represent food and beverage revenue generated on-premise and include revenue deferrals associated with Chipotle Rewards.

Digital sales represented 39.4% of food and beverage revenue for the year ended December 31, 2022, compared to 45.0% of food and beverage revenue for the year ended December 31, 2021.

The decrease in digital sales as a percentage of food and beverage revenue is primarily related to the increase of in-restaurant sales discussed above.

Digital sales represent food and beverage revenue generated through the Chipotle website, Chipotle app or third-party delivery aggregators and includes revenue deferrals associated with Chipotle Rewards.

We updated the definition of digital sales in the first quarter of 2022 to include revenue deferrals related to Chipotle Rewards.

We made this change to allow for a reconciliation to total food and beverage revenue as we now present in-restaurant sales.

We expect to open approximately 255-285 new restaurants in 2023 (including 10 to 15 relocations), which assumes utility, construction, permit and material supply delays do not worsen.

We expect that at least 80% of our new restaurants will include a Chipotlane.

*Cultivate Next Fund*.

In April 2022 we announced the formation of the Cultivate Next Fund, a venture that will make early-stage investments into strategically aligned companies that further our mission to Cultivate a Better World.

The venture fund has an initial size of $50.0 million and will be financed almost entirely by Chipotle.

As of December 31, 2022, we have made $11.0 million in investments through this fund.

| | 2022 | | 2021 |

| | 2022 | | | 2021 | | | change |

| | 2022 | | | 2021 | | | change |

| | 2022 | | | 2021 | | | change |

| | 2022 | | | 2021 | | | change |

These decreases were partially offset by higher costs across several expenses, most notably higher utilities primarily related to inflation in natural gas and electricity and higher maintenance costs.

| | 2022 | | | 2021 | | | change |

| As a percentage of total revenue | | 6.5% | | | 8.0% | | (1.5%) |

These decreases were partially offset by a $21.5 million increase in employee wages primarily due to headcount growth; $20.5 million increase in outside services expense related to corporate initiatives; and $12.5 million associated with the biennial All Managers’ Conference that was held in March 2022.

| | 2022 | | | 2021 | | | change |

Pre-opening costs

| | 2022 | | | 2021 | | | change |

| Pre-opening costs | $ | 29.6 | | $ | 21.3 | | 39.0% |

| October | | | 27,172 | | $ | 1,811.91 | | 27,172 | | $ | 160,558,269 |

| November | | | 29,834 | | $ | 1,767.37 | | 29,834 | | $ | 107,830,424 |

| December(2) | | | 39,518 | | $ | 1,694.41 | | 39,518 | | $ | 240,870,889 |

| Total | | | 96,524 | | $ | 1,750.04 | | 96,524 | | | |

| Chipotle Mexican Grill, Inc. | $ | 100 | | $ | 77 | | $ | 114 | | $ | 222 | | $ | 368 | | $ | 463 |

| S&P 500 | | 100 | | | 119 | | | 112 | | | 144 | | | 168 | | | 213 |

| S&P 500 Restaurants | | 100 | | | 123 | | | 133 | | | 162 | | | 187 | | | 226 |

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

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

Our restaurant operations have been and could continue to be disrupted by COVID-19 related employee absences or due to changes in the availability and cost of labor.

We remain in regular contact with our major suppliers and to date we have not experienced significant disruptions in our supply chain; however, we have experienced inflationary pressures in freight and the costs of some of our ingredients and temporary shortages in equipment and other goods, which could increase and/or spread to more categories as the impacts of COVID-19 continue across the global supply chain.

We anticipate the restaurant wage increases implemented in June 2021 and any future wage increases in the U.S. along with increased supply chain costs, primarily related to inflationary pressures that began in the latter half of 2021 will have an impact on restaurant operating costs in 2022.

However, these should be offset to some extent by benefits from pricing actions, leverage from revenue growth and supply chain initiatives.

2021 Financial Highlights

*Sales Trends.* Average restaurant sales were $2.641 million for the year ended December 31, 2021, an increase from $2.223 million for the year ended December 31, 2020.

Total revenue was $7.5 billion for the year ended December 31, 2021, an increase of 26.1% from $6.0 billion for the year ended December 31, 2020.

The increase was attributable to comparable restaurant sales and, to a lesser extent, new restaurant openings.

Comparable restaurant sales increased 19.3% for the year ended December 31, 2021, primarily due to a 10.3% increase in transactions and an 8.5% benefit from menu price increases implemented in late 2020 and during 2021.

Comparable restaurant sales represent the change in period-over-period sales or transactions for restaurants in operation for at least 13 full calendar months.

Digital sales, which includes delivery and customer pick-up, were $3.4 billion for the year ended December 31, 2021, and represented 45.6% of total revenue compared to 46.2% of total revenue for the year ended December 31, 2020.

Higher volumes of in-store transactions in 2021 contributed to the decrease in digital sales as a percentage of total revenue.

Order ahead sales were 50.9% and 49.9% of digital sales for the years ended December 31, 2021, and 2020, respectively.

During 2021, we completed several company initiatives which we believe contributed to sales growth.

These initiatives included the launch of cauliflower rice in January 2021, digital launch of quesadillas in March 2021 and smoked brisket in September 2021.

Additionally, in June 2021, we enhanced our loyalty program, Chipotle Rewards, by introducing new redemption options and personalized offers primarily targeted at new and at-risk customers.

*Diluted Earnings Per Share.* During the year ended December 31, 2021, our diluted earnings per share were $22.90, an 82.9% increase from $12.52 in 2020.

We expect to open approximately 235-250 new restaurants in 2022, including five to 10 relocations, of which we are targeting 80% with a Chipotlane.

| | 2021 | | 2020 |

| | (dollars in millions) | | | | | | |

This decrease was partially offset primarily by wage inflation from increasing restaurant wages to a $15.00 national average hourly wage for our restaurant employees implemented across all restaurants by June 30, 2021.

These decreases were partially offset by higher delivery and technology expense.

These increases were partially offset by a $17.1 million decrease in estimated loss contingencies related to legal matters in 2021 compared to 2020.

Impairment, Closure Costs, and Asset Disposals

| Impairment, closure costs, and asset disposals | $ | 19.3 | | $ | 30.6 | | (36.9%) |

Impairment, closure costs, and asset disposals decreased in dollar terms for the year ended December 31, 2021 compared to the year ended December 31, 2020, primarily due to a comparison against elevated impairments of operating lease assets and leasehold improvements in 2020.

These elevated impairments in 2020 were primarily the result of the COVID-19 pandemic negatively impacting our near-term restaurant level cash flow forecasts.

The effective income tax rate for the year ended December 31, 2021, was higher than the effective income tax rate for the year ended December 31, 2020, primarily due to comparing against the federal net operating loss for tax year 2020, which had a statutory federal income tax rate of 21%, that was carried back to tax years 2015-2017, which had a statutory federal income tax rate of 35%.

There is a further increase in the effective income tax rate due to the proportionality of the excess tax benefits from equity vesting and exercises relative to profit before tax in each respective year.

| Operating leases(1) | | $ | 5,066 | | $ | 366 | | $ | 785 | | $ | 752 | | $ | 3,163 |

| Purchase obligations(2) | | | 1,743 | | | 573 | | | 472 | | | 465 | | | 233 |

We have audited the accompanying consolidated balance sheets of Chipotle Mexican Grill, Inc. (the Company) as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] the related consolidated statements of [removed: income,] [added: income and] comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] 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: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] 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 Company's internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] 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: 11, 2022] [added: 8, 2023] expressed an unqualified opinion thereon.

| *Description of the Matter* | | The Company incurred [removed: $178.7] [added: $99.8] million in stock-based compensation expense during the year ended December 31, [removed: 2021.] [added: 2022.] Approximately [removed: 229,000] [added: 116,000] of the Company’s vested and non-vested stock awards were subject to service and performance conditions during the year ended December 31, [removed: 2021.] [added: 2022.] As described in Notes 1 and 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 [added: subject to service and performance conditions] was complex and judgmental. In particular, the fair value estimate for stock awards subject to [added: service and] 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 [removed: 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 [added: management’s internal estimates of] the [removed: valuation model] [added: Company’s future performance] 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 [removed: sales and] [added: sales,] average restaurant [removed: margin)] [added: margin,] and [added: cumulative restaurant cash flow dollars) 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 [removed: Company’s] [added: 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 8 of the consolidated financial statements in relation to these matters. |

| | [added: 2022 | | |] 2021 | | | 2020 | |

| Cash and cash equivalents | $ | [removed: 815,374] [added: 384,000] | | $ | [removed: 607,987] [added: 815,374] |

| Accounts receivable, net | | [removed: 99,599] [added: 106,880] | | | [removed: 104,500] [added: 99,599] |

| Inventory | | [removed: 32,826] [added: 35,668] | | | [removed: 26,445] [added: 32,826] |

| Prepaid expenses and other current assets | | [removed: 78,756] [added: 86,412] | | | [removed: 54,906] [added: 78,756] |

| Income tax receivable | | [removed: 94,064] [added: 47,741] | | | [removed: 282,783] [added: 94,064] |

| Investments | | [removed: 260,945] [added: 515,136] | | | [removed: 343,616] [added: 260,945] |

| Total current assets | | [removed: 1,381,564] [added: 1,175,837] | | | [removed: 1,420,237] [added: 1,381,564] |

| Leasehold improvements, property and equipment, net | | [removed: 1,769,278] [added: 1,951,147] | | | [removed: 1,584,311] [added: 1,769,278] |

| Long-term investments | | [removed: 274,311] [added: 388,055] | | | [removed: 102,328] [added: 274,311] |

| Restricted cash | | [removed: 30,856] [added: 24,966] | | | [removed: 27,849] [added: 30,856] |

| Operating lease assets | | [removed: 3,118,294] [added: 3,302,402] | | | [removed: 2,767,185] [added: 3,118,294] |

| Other assets | | [removed: 56,716] [added: 63,158] | | | [removed: 59,047] [added: 56,716] |

| Total assets | $ | [removed: 6,652,958] [added: 6,927,504] | | $ | [removed: 5,982,896] [added: 6,652,958] |

| Accounts payable | $ | [removed: 163,161] [added: 184,566] | | $ | [removed: 121,990] [added: 163,161] |

| Accrued payroll and benefits | | [removed: 162,405] [added: 170,456] | | | [removed: 203,054] [added: 162,405] |

| Accrued liabilities | | [removed: 173,052] [added: 147,539] | | | [removed: 164,649] [added: 173,052] |

| Unearned revenue | | [removed: 156,351] [added: 183,071] | | | [removed: 127,750] [added: 156,351] |

| Current operating lease liabilities | | [removed: 218,713] [added: 236,248] | | | [removed: 204,756] [added: 218,713] |

| Total current liabilities | | [removed: 873,682] [added: 921,880] | | | [removed: 822,199] [added: 873,682] |

| Commitments and contingencies (Note [removed: 12)] [added: 11)] | | | | | |

| Long-term operating lease liabilities | | [removed: 3,301,601] [added: 3,495,162] | | | [removed: 2,952,296] [added: 3,301,601] |

| Deferred income tax liabilities | | [removed: 141,765] [added: 98,623] | | | [removed: 149,422] [added: 141,765] |

| Other liabilities | | [removed: 38,536] [added: 43,816] | | | [removed: 38,844] [added: 38,536] |

| Total liabilities | | [removed: 4,355,584] [added: 4,559,481] | | | [removed: 3,962,761] [added: 4,355,584] |

| Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: December 31, 2021,] respectively | | \- | | | \- |

| Common stock, $0.01 par value, 230,000 shares authorized, [removed: 37,132] [added: 37,320] and [removed: 36,704] [added: 37,132] shares issued as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: December 31, 2021,] respectively | | [removed: 371] [added: 373] | | | [removed: 367] [added: 371] |

| Additional paid-in capital | | [removed: 1,729,312] [added: 1,829,304] | | | [removed: 1,549,909] [added: 1,729,312] |

| Treasury stock, at cost, [removed: 9,052] [added: 9,693] and [removed: 8,703] [added: 9,052] common shares as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: December 31, 2021,] respectively | | [removed: (3,356,102)] [added: (4,282,014)] | | | [removed: (2,802,075)] [added: (3,356,102)] |

| Accumulated other comprehensive loss | | [removed: (5,354)] [added: (7,888)] | | | [removed: (4,229)] [added: (5,354)] |

| Retained earnings | | [removed: 3,929,147] [added: 4,828,248] | | | [removed: 3,276,163] [added: 3,929,147] |

| Total shareholders' equity | | [removed: 2,297,374] [added: 2,368,023] | | | [removed: 2,020,135] [added: 2,297,374] |

| Total liabilities and shareholders' equity | $ | [removed: 6,652,958] [added: 6,927,504] | | $ | [removed: 5,982,896] [added: 6,652,958] |

CONSOLIDATED STATEMENTS OF [added: INCOME AND COMPREHENSIVE] INCOME

| | [removed: 2021] [added: 2022] | | | [removed: 2020] [added: 2021] | | | [removed: 2019] [added: 2020] | |

February 8, 2023

| | 2022 | | | 2021 | |

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

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

| Acquisition of treasury stock | \- | | | \- | | | \- | | 641 | | | (925,912) | | | \- | | | \- | | | (925,912) |

| Net income | \- | | | \- | | | \- | | \- | | | \- | | | 899,101 | | | \- | | | 899,101 |

| Balance, December 31, 2022 | 37,320 | | $ | 373 | | $ | 1,829,304 | | 9,693 | | $ | (4,282,014) | | $ | 4,828,248 | | $ | (7,888) | | $ | 2,368,023 |

| Net income | $ | 899,101 | | $ | 652,984 | | $ | 355,766 |

| Depreciation and amortization | | 286,826 | | | 254,657 | | | 238,534 |

Amounts receivable from credit card companies are also considered cash equivalents as they are both short term and highly liquid in nature.

We do not recognize a reserve for expected credit losses related to our U.S. Treasury security investments as management has concluded there is no risk of non-payment.

As of December 31, 2022 and 2021, our allowance for credit losses was $1,180 and $1,950, respectively.

Investments are accounted for under the equity method if we are able to exercise significant influence, but not control, over an investee.

Our share of the earnings or losses as reported by the investees is classified as income from equity investees on our consolidated statements of income and comprehensive income.

The investments are evaluated for impairment annually and when facts and circumstances indicate that the carrying value may not be recoverable.

If a decline in fair value is determined to be other-than-temporary, an impairment charge is recorded in interest income and other income, net on our consolidated statements of income and comprehensive income.

| | 2022 | | | 2021 | |

| | 2022 | | | 2021 | |

| | 2022 | | | 2021 | |

| | 2022 | | | 2021 | |

4.

We also have an investment in a convertible note receivable which is held at fair-value.

The following tables show our cash, cash equivalents, and debt investments by significant investment category as of December 31, 2022 and 2021:

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

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

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

| | December 31, 2022 | | | | | | | | | | | | | | | | | | | |

| | Adjusted cost | | | Unrealized Gains | | | Unrealized Losses | | | Fair Value | | | Cash and Cash Equivalents | | | Current Investments | | | Long-term Investments | |

| Cash | $ | 75,829 | | $ | \- | | $ | \- | | $ | 75,829 | | $ | 75,829 | | $ | \- | | $ | \- |

| Level 1(1) | | | | | | | | | | | | | | | | | | | | |

| Money market funds | | 232,477 | | | \- | | | \- | | | 232,477 | | | 232,477 | | | \- | | | \- |

| Time deposits | | 75,694 | | | \- | | | \- | | | 75,694 | | | 75,694 | | | \- | | | \- |

| U.S. Treasury securities | | 847,354 | | | 63 | | | 14,355 | | | 833,062 | | | \- | | | 515,136 | | | 332,218 |

| Subtotal | | 1,155,525 | | | 63 | | | 14,355 | | | 1,141,233 | | | 308,171 | | | 515,136 | | | 332,218 |

| Level 3 | | | | | | | | | | | | | | | | | | | | |

| Corporate debt security(2) | | 17,900 | | | \- | | | 700 | | | 17,200 | | | \- | | | \- | | | 17,900 |

| Note receivable(3) | | 4,860 | | | 222 | | | \- | | | 5,082 | | | \- | | | \- | | | 5,082 |

| Subtotal | | 22,760 | | | 222 | | | 700 | | | 22,282 | | | \- | | | \- | | | 22,982 |

| Total | $ | 1,254,114 | | $ | 285 | | $ | 15,055 | | $ | 1,239,344 | | $ | 384,000 | | $ | 515,136 | | $ | 355,200 |

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

February 11, 2022

| | | | | | | | | |

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

| | Year ended December 31, | | | | | | | |

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(in thousands)

| Unrealized gain on available-for-sale securities, net of income taxes | | \- | | | \- | | | 147 |

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

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

| Balance, December 31, 2018 | 35,973 | | $ | 360 | | $ | 1,374,154 | | 8,276 | | $ | (2,500,556) | | $ | 2,573,617 | | $ | (147) | | $ | (6,089) | | $ | 1,441,339 |

| Adoption of ASU No. 2016-02, Leases (Topic 842) | \- | | | \- | | | \- | | \- | | | \- | | | (2,327) | | | \- | | | \- | | | (2,327) |

| Acquisition of treasury stock | \- | | | \- | | | \- | | 292 | | | (198,563) | | | \- | | | \- | | | \- | | | (198,563) |

| Net income | \- | | | \- | | | \- | | \- | | | \- | | | 350,158 | | | \- | | | \- | | | 350,158 |

| Other comprehensive income (loss), net of income taxes | \- | | | \- | | | \- | | \- | | | \- | | | \- | | | \- | | | (1,125) | | | (1,125) |

*Recently Issued Accounting Standards*

In November 2021, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2021-10, “Disclosures by Business Entities about Government Assistance.” The ASU codifies new requirements to disclose information about the nature of certain government assistance received, the accounting policy used to account for the transactions, the location in the financial statements where such transactions were recorded and significant terms and conditions associated with such transactions.

The guidance is effective for annual periods beginning after December 15, 2021.

We do not expect the adoption of ASU No. 2021-10 to have a material impact to our consolidated financial statements.

*Recently Adopted Accounting Standards*

On January 1, 2021, we adopted ASU 2019-12, “Simplifying the Accounting for Income Taxes (Topic 740),” which modified certain technical guidelines for accounting for income taxes.

The adoption of ASU 2019-12 did not result in a material change to our consolidated financial statements.

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

3.

We designate the appropriate classification of our investments at the time of purchase based upon the intended holding period.

Held-to-Maturity Investments

*U.S. Treasury Securities*

As of December 31, 2021, we held $501,288 of U.S. Treasury securities with maturities of up to 24 months, of which $260,945 mature within one year.

As of December 31, 2020, we held $445,944 of U.S. Treasury securities with maturities of up to 16 months, of which $343,616 matured within one year.

Our investments in U.S. Treasury securities are held at amortized cost.

The fair value of our held-to-maturity U.S. Treasury security investments is measured using Level 1 inputs (quoted prices for identical assets in active markets).

For the years ended December 31, 2021 and 2020, the fair value of our securities were $500,172 and $445,828, respectively.

We recognize a reserve for expected credit losses when lifetime credit losses are expected by management.

As of December 31, 2021, management has concluded there is no risk of non-payment with respect to our U.S. Treasury security investments.

On September 30, 2021, we acquired a promissory note issued by a supplier in exchange for $18,000.

The promissory note has a principal balance of $18,000 and bears interest at a rate equal to the 3-month U.S. dollar London Interbank Offered Rate (“LIBOR”) plus a fixed interest spread.

Accrued interest is paid quarterly in arrears and principal is payable in accordance with an amortization schedule beginning on December 31, 2022.

The promissory note matures on September 30, 2028.

Our investment in the corporate debt security is held at amortized cost and approximates fair value as of December 31, 2021.

As of December 31, 2021, we maintained a reserve of $423 for expected credit losses associated with the investment.

| | | Carrying Value | | | | |

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) that are designed to ensure that information required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial [added: and Administrative] Officer, as appropriate, to allow timely decisions regarding required disclosure.

As of December 31, [removed: 2021,] [added: 2022,] we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial [added: and Administrative] Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

Based on the foregoing, our Chief Executive Officer and Chief Financial [added: and Administrative] Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this annual report.

There were no changes during the fiscal quarter ended December 31, [removed: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] 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: 2021.][added: 2022.]

We have audited Chipotle Mexican Grill, Inc.’s internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] 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 of the Company as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] the related consolidated statements of [removed: income,] [added: income and] comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] and the related notes and our report dated February [removed: 11, 2022] [added: 8, 2023] expressed an unqualified opinion thereon.

February 8, 2023

February 11, 2022

PART III

Not applicable.

PART III

Incorporated by reference from the definitive proxy statement for our [removed: 2022] [added: 2023] annual meeting of shareholders, which will be filed no later than 120 days after December 31, [removed: 2021.][added: 2022.]

Incorporated by reference from the definitive proxy statement for our [removed: 2022] [added: 2023] annual meeting of shareholders, which will be filed no later than 120 days after December 31, [removed: 2021.][added: 2022.]

Incorporated by reference from the definitive proxy statement for our [removed: 2022] [added: 2023] annual meeting of shareholders, which will be filed no later than 120 days after December 31, [removed: 2021.][added: 2022.]

| | | | | | | |

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

| | | | | | | |

| | (a)‎Number of Securities‎to be Issued Upon‎Exercise of Outstanding‎Options and Rights(1)‎ | | | (b)‎Weighted-Average‎Exercise Price of‎Outstanding Options and‎Rights(1)‎ | | (c)‎Number of Securities‎Remaining Available for‎Future Issuance Under‎Equity Compensation Plans‎(excluding securities‎reflected in column (a))(2)‎ |

| Equity Compensation Plans Approved by Security Holders | 479,281 | | $ | 1,053.84 | | 2,567,366 |

| Equity Compensation Plans Not Approved by Security Holders | None | | | N/A | | None |

| Total | 479,281 | | $ | 1,053.84 | | 2,567,366 |

__________________

(1) Includes shares issuable in connection with awards with performance and market conditions, which will be issued based on achievement of performance criteria associated with the awards, with the number of shares issuable dependent on our level of performance.

The weighted-average exercise price in column (b) includes the weighted-average exercise price of SOSARs only.

(2) Includes 2,317,950 shares remaining available under the Chipotle Mexican Grill, Inc. 2022 Stock Incentive Plan, and 249,416 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, 2022, all of the shares available for grant under the Chipotle Mexican Grill, Inc. 2022 Stock Incentive Plan, may instead be issued in the form of restricted stock, restricted stock units, performance shares or other equity-based awards.

Each share underlying a full value award such as restricted stock, restricted stock units or performance shares counts as two shares used against the total number of securities authorized under the plan.

Additional information for this item is incorporated by reference from the definitive proxy statement for our 2023 annual meeting of shareholders, which will be filed no later than 120 days after December 31, 2022.

Incorporated by reference from the definitive proxy statement for our [removed: 2022] [added: 2023] annual meeting of shareholders, which will be filed no later than 120 days after December 31, [removed: 2021.][added: 2022.]

Incorporated by reference from the definitive proxy statement for our 2023 annual meeting of shareholders, which will be filed no later than 120 days after December 31, 2022.

[removed: Consolidated] [added: The following consolidated] financial statements filed as part of this report are [removed: listed under] [added: included in Part II,] Item 8.

“Financial Statements and Supplementary [removed: Data.”][added: Data” of this 10-K:]

| 3.2 | [Chipotle Mexican Grill, Inc. Amended and Restated Bylaws](http://www.sec.gov/ix?doc=/Archives/edgar/data/0001058090/000119312521169329/d172677d8k.htm) | 8-K | 001-32731 | [removed: May 21, 2021] [added: December 9, 2022] | 3.1 | |

| 10.1† | [Form of 2019 [added: Transformation] Performance Share Unit [removed: Agreement](http://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_2.htm) (1)] | [removed: 10-Q] [added: 10-K] | 001-32731 | [removed: April 25, 2019] [added: February 10, 2020] | [removed: 10.1] [added: 10.2] | |

| [removed: 10.2†] [added: 10.24†] | [Form of [removed: 2019 Transformation] [added: 2021] Performance Share Unit [removed: Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809019000015/cmg-20190331xex10_2.htm) (1)] [added: Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809021000022/cmg-20210331xex10_2.htm)] | [removed: 10-K] [added: 10-Q] | 001-32731 | [removed: February 10, 2020] [added: April 29, 2021] | 10.2 | |

| [removed: 10.3†] [added: 10.2†] | [Change in Control Severance Plan, effective June 1, 2019](http://www.sec.gov/Archives/edgar/data/1058090/000105809019000029/cmg-20190630xex10_1.htm) | 10-Q | 001-32731 | July 24, 2019 | 10.1 | |

| [removed: 10.4†] [added: 10.3†] | [Form of Participation and Restrictive Covenant Agreement for Change in Control Severance Plan](http://www.sec.gov/Archives/edgar/data/1058090/000105809019000029/cmg-20190630xex10_2.htm) | 10-Q | 001-32731 | July 24, 2019 | 10.2 | |

| [removed: 10.5†] [added: 10.4†] | [Amended and Restated Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan](http://www.sec.gov/Archives/edgar/data/1058090/000119312518173614/d578721dex101.htm) | 8-K | 001-32731 | May 24, 2018 | 10.1 | |

| [removed: 10.6†] [added: 10.5†] | [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: 10.7†] [added: 10.6†] | [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: 10.8†] [added: 10.32†] | [removed: [Supplemental Deferred Investment Plan](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000047/cmg-20180630xex10_3.htm)] [added: [Chipotle Mexican Grill, Inc. Employee Stock Purchase Plan](http://www.sec.gov/Archives/edgar/data/1058090/000105809022000036/cmg-20220630xex10_3.htm)] | 10-Q | 001-32731 | July 27, [removed: 2018] [added: 2022] | 10.3 | |

| [removed: 10.9†] [added: 10.7†] | [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: 10.10†] [added: 10.8†] | [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: 10.11†] [added: 10.31†] | [Chipotle Mexican Grill, Inc. [removed: Employee] [added: 2022] Stock [removed: Purchase Plan](http://www.sec.gov/Archives/edgar/data/1058090/000119312512052969/d280751dex1011.htm)] [added: Incentive Plan](http://www.sec.gov/Archives/edgar/data/1058090/000105809022000036/cmg-20220630xex10_2.htm)] | [removed: 10-K] [added: 10-Q] | 001-32731 | [removed: February 10, 2012] [added: July 27, 2022] | [removed: 10.11] [added: 10.2] | |

| [removed: 10.12†] [added: 10.9†] | [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: 10.13†] [added: 10.10†] | [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: 10.14] [added: 10.11] | [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: 10.15] [added: 10.14†] | [removed: [Registration Rights] [added: [Executive Chairman] Agreement dated [removed: February 3, 2017,] [added: November 28, 2017] between Chipotle Mexican Grill, Inc. and [removed: Pershing Square Capital Management, L.P.](http://www.sec.gov/Archives/edgar/data/1058090/000105809017000009/cmg-20161231xex10_11.htm)] [added: Steve Ells](http://www.sec.gov/Archives/edgar/data/1058090/000105809017000047/cmg-20171201xex10_1.htm)] | [removed: 10-K] [added: 8-K] | 001-32731 | [removed: February 7,] [added: December 1,] 2017 | [removed: 10.11] [added: 10.1] | |

| [removed: 10.16†] [added: 10.12†] | [Form of 2018 CEO SOSARs Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000119312518108713/d755493dex102.htm) | 8-K/A | 001-32731 | April 3, 2018 | 10.2 | |

| [removed: 10.17†] [added: 10.18†] | [removed: [Executive] [added: [Amendment No. 1 dated March 5, 2020 to the Executive Chairman] Agreement dated [removed: May 29,] [added: November 28,] 2017 between Chipotle Mexican Grill, Inc. and [removed: Scott Boatwright](http://www.sec.gov/Archives/edgar/data/1058090/000105809017000037/cmg-20170915xex10_1.htm)] [added: Steve Ells](http://www.sec.gov/Archives/edgar/data/1058090/000105809020000020/cmg-20200331xex10_1.htm)] | [removed: 8-K] [added: 10-Q] | 001-32731 | [removed: September 15, 2017] [added: April 29, 2020] | 10.1 | |

| [removed: 10.18†] [added: 10.13†] | [Form of 2018 Premium-priced SOSARs Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000119312518108713/d755493dex103.htm) | 8-K/A | 001-32731 | April 3, 2018 | 10.3 | |

| [removed: 10.20†] [added: 10.15†] | [Offer Letter, dated March 9, 2018, between Christopher Brandt and Chipotle Mexican Grill, Inc.](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000042/cmg-20180331xex10_13.htm) | 10-Q | 001-32731 | April 26, 2018 | 10.13 | |

| [removed: 10.21†] [added: 10.16†] | [Form of 2018 Stock Appreciation Rights Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809018000042/cmg-20180331xex10_14.htm) | 10-Q | 001-32731 | April 26, 2018 | 10.14 | |

| [removed: 10.22†] [added: 10.17†] | [Form of 2021 Director Restricted Stock Unit Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809021000039/cmg-20210630xex10_2.htm) | 10-Q | 001-32731 | July 23, 2021 | 10.2 | |

| [removed: 10.24†] [added: 10.19†] | [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 | |

| [removed: 10.25] [added: 10.20] | [Revolving Credit Agreement dated April 13, 2021, 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/1058090/000119312521118604/d173359dex101.htm) | 8-K | 001-32731 | April 16, 2021 | 10.1 | |

| [removed: 10.26] [added: 10.30†] | [Director Compensation Program and Stock Ownership Guidelines [removed: (revised] [added: (Revised] May 18, [removed: 2021)](http://www.sec.gov/Archives/edgar/data/1058090/000105809021000039/cmg-20210630xex10_1.htm)] [added: 2022)](http://www.sec.gov/Archives/edgar/data/1058090/000105809022000036/cmg-20220630xex10_1.htm)] | 10-Q | 001-32731 | July [removed: 23, 2021] [added: 27, 2022] | 10.1 | |

| [removed: 10.27†] [added: 10.21†] | [Form of 2020 Performance Share Agreement](http://www.sec.gov/Archives/edgar/data/0001058090/000105809021000010/cmg-20201231xex10_34.htm) | 10-K | 001-32731 | February 10, 2021 | 10.34 | |

| [removed: 10.28†] [added: 10.22†] | [Form of 2020 Restricted Stock Units Agreement](http://www.sec.gov/Archives/edgar/data/0001058090/000105809021000010/cmg-20201231xex10_35.htm) | 10-K | 001-32731 | February 10, 2021 | 10.35 | |

| [removed: 10.29†] [added: 10.23†] | [Form of 2020 Stock Appreciation Rights Agreement](http://www.sec.gov/Archives/edgar/data/0001058090/000105809021000010/cmg-20201231xex10_36.htm) | 10-K | 001-32731 | February 10, 2021 | 10.36 | |

| [removed: 10.30†] [added: 10.25†] | [Form of [removed: 2021] [added: Amended and Restated 2018] Performance Share Unit [removed: Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809021000022/cmg-20210331xex10_2.htm)] [added: Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809021000022/cmg-20210331xex10_3.htm)] | 10-Q | 001-32731 | April 29, 2021 | [removed: 10.2] [added: 10.3] | |

| [removed: 10.31†] [added: 10.28†] | [Form of [removed: Amended and Restated 2018] [added: 2022] Performance Share [removed: Unit Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809021000022/cmg-20210331xex10_3.htm)] [added: Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809022000027/cmg-20220331xex10_3.htm)] | 10-Q | 001-32731 | April [removed: 29, 2021] [added: 28, 2022] | 10.3 | |

| 21.1 | [Subsidiaries of Chipotle Mexican Grill, [removed: Inc.](https://www.sec.gov/Archives/edgar/data/1058090/000105809022000011/cmg-20211231xex21_1.htm)] [added: Inc.](https://www.sec.gov/Archives/edgar/data/1058090/000105809023000010/cmg-20221231xex21_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/1058090/000105809022000011/cmg-20211231xex23_1.htm)] [added: Inc.)](https://www.sec.gov/Archives/edgar/data/1058090/000105809023000010/cmg-20221231xex23_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/1058090/000105809022000011/cmg-20211231xex31_1.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/1058090/000105809023000010/cmg-20221231xex31_1.htm)] | \- | \- | \- | \- | X |

| 31.2 | [Certification of Chief Financial [added: and Administrative] 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/1058090/000105809022000011/cmg-20211231xex31_2.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/1058090/000105809023000010/cmg-20221231xex31_2.htm)] | \- | \- | \- | \- | X |

| 32.1 | [Certification of Chief Executive Officer and Chief Financial [added: and Administrative] 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/1058090/000105809022000011/cmg-20211231xex32_1.htm)] [added: 2002](https://www.sec.gov/Archives/edgar/data/1058090/000105809023000010/cmg-20221231xex32_1.htm)] | \- | \- | \- | \- | X |

Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2022, 2021 and 2020;

Consolidated Balance Sheets as of December 31, 2022 and 2021;

Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020;

Consolidated Statements of Equity for the years ended December 31, 2022, 2021 and 2020;

Notes to Consolidated Financial Statements; and

Reports of Independent Registered Public Accounting Firm

| 10.26† | [Form of 2022 Restricted Stock Unit Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809022000027/cmg-20220331xex10_1.htm) | 10-Q | 001-32731 | April 28, 2022 | 10.1 | |

| 10.27† | [Form of 2022 Stock Appreciation Rights Agreement](http://www.sec.gov/Archives/edgar/data/1058090/000105809022000027/cmg-20220331xex10_2.htm) | 10-Q | 001-32731 | April 28, 2022 | 10.2 | |

| 10.29† | [Form of 2022 Stock Option Agreement (Canada)](http://www.sec.gov/Archives/edgar/data/1058090/000105809022000027/cmg-20220331xex10_4.htm) | 10-Q | 001-32731 | April 28, 2022 | 10.4 | |

| 10.33† | [Supplemental Deferred Investment Plan](https://www.sec.gov/Archives/edgar/data/1058090/000105809023000010/cmg-20221231xex10_33.htm) | | | | | X |

| 10.19† | [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 | |

| 10.23† | [Amendment No. 1 dated March 5, 2020 to the Executive Chairman Agreement dated November 28, 2017 between Chipotle Mexican Grill, Inc. and Steve Ells](http://www.sec.gov/Archives/edgar/data/1058090/000105809020000020/cmg-20200331xex10_1.htm) | 10-Q | 001-32731 | April 29, 2020 | 10.1 | |

| 24.1 | [Power of Attorney (included on signature page of this report)](#Power_of_Attorney) | \- | \- | \- | \- | X |

| Title: | Chief Financial [added: and Administrative] Officer |

Date: February [removed: 11, 2022][added: 8, 2023]

| /s/ BRIAN NICCOL | | February [removed: 11, 2022] [added: 8, 2023] | | Chief Executive Officer and Chairman of the Board of Directors (principal executive officer) |

| /s/ JOHN R. HARTUNG | | February [removed: 11, 2022] [added: 8, 2023] | | Chief Financial [added: and Administrative] Officer (principal financial and accounting officer) |

| /s/ ALBERT S. BALDOCCHI | | February [removed: 11, 2022] [added: 8, 2023] | | Director |

| /s/ MATTHEW A. CAREY | | February [removed: 11, 2022] [added: 8, 2023] | | Director |

| /s/ GREGG L. ENGLES | | February [removed: 11, 2022] [added: 8, 2023] | | Director |

| /s/ PATRICIA FILI-KRUSHEL | | February [removed: 11, 2022] [added: 8, 2023] | | Director |

| /s/ MAURICIO GUTIERREZ | | February [removed: 11, 2022] [added: 8, 2023] | | Director |

| /s/ ROBIN S. HICKENLOOPER | | February [removed: 11, 2022] [added: 8, 2023] | | Director |

| /s/ SCOTT MAW | | February [removed: 11, 2022] [added: 8, 2023] | | Director |

| /s/ MARY A. WINSTON | | February [removed: 11, 2022] [added: 8, 2023] | | Director |

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Brian Niccol and John Hartung, and each of them, his or her true and lawful attorneys-in-fact, each with full power of substitution, for him or her in any and all capacities, to sign any amendments to this report on Form 10-K and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact or their substitute or substitutes may do or cause to be done by virtue hereof.

| /s/ NEIL W. FLANZRAICH | | February 11, 2022 | | Director |

| Neil W. Flanzraich | | | | |

| /s/ ALI NAMVAR | | February 11, 2022 | | Director |

| Ai Namvar | | | | |