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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________

FORM 10-Q

______________________________

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-32731

______________________________

CHIPOTLE MEXICAN GRILL, INC.

(Exact name of registrant as specified in its charter)

______________________________

Delaware	84-1219301
(State or other jurisdiction of<br><br>incorporation or organization)	(IRS Employer<br><br>Identification No.)
610 Newport Center Drive, Suite 1100 Newport Beach, CA	92660
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s telephone number, including area code: (949) 524-4000

______________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.01 per share	CMG	New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

 Large accelerated filer	 Accelerated filer	 Non-accelerated filer	 Smaller reporting company	 Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

As of July 25, 2022, there were 27,764,647 shares of the registrant’s common stock, par value of $0.01 per share outstanding.

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	PART I
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income and Comprehensive Income	2
	Condensed Consolidated Statements of Shareholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
	Note 1 - Basis of Presentation and Update to Accounting Policies	5
	Note 2 - Recently Issued Accounting Standards	5
	Note 3 - Revenue Recognition	5
	Note 4 - Fair Value of Financial Instruments	6
	Note 5 - Shareholders' Equity	8
	Note 6 - Stock-Based Compensation	9
	Note 7 - Income Taxes	9
	Note 8 - Leases	10
	Note 9 - Earnings Per Share	10
	Note 10 - Commitments and Contingencies	10
	Note 11 - Debt	11
	Note 12 - Related Party Transactions	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4.	Controls and Procedures	18
	PART II
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	19
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19
Item 3	Defaults upon Senior Securities	19
Item 4	Mine Safety Disclosures	19
Item 5	Other Information	19
Item 6.	Exhibits	20
	Signatures	21

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PART I

ITEM 1. FINANCIAL STATEMENTS

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

		December 31,
		2021

Assets
Current assets:
Cash and cash equivalents	520,933	$	815,374
Accounts receivable, net	83,636		99,599
Inventory	29,456		32,826
Prepaid expenses and other current assets	73,716		78,756
Income tax receivable	97,874		94,064
Investments	240,684		260,945
Total current assets	1,046,299		1,381,564
Leasehold improvements, property and equipment, net	1,813,348		1,769,278
Long-term investments	359,911		274,311
Restricted cash	30,895		30,856
Operating lease assets	3,209,934		3,118,294
Other assets	63,010		56,716
Goodwill	21,939		21,939
Total assets	6,545,336	$	6,652,958
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	158,581	$	163,161
Accrued payroll and benefits	161,052		162,405
Accrued liabilities	148,614		173,052
Unearned revenue	132,446		156,351
Current operating lease liabilities	230,930		218,713
Total current liabilities	831,623		873,682
Commitments and contingencies (Note 10)
Long-term operating lease liabilities	3,393,423		3,301,601
Deferred income tax liabilities	126,239		141,765
Other liabilities	39,852		38,536
Total liabilities	4,391,137		4,355,584
Shareholders' equity:
Preferred stock, 0.01 par value, 600,000 shares authorized, no shares issued as of June 30, 2022 and December 31, 2021, respectively	-		-
Common stock, 0.01 par value, 230,000 shares authorized, 37,284 and 37,132 shares issued as of June 30, 2022 and December 31, 2021, respectively	373		371
Additional paid-in capital	1,782,303		1,729,312
Treasury stock, at cost, 9,480 and 9,052 common shares as of June 30, 2022 and December 31, 2021, respectively	(3,969,221)		(3,356,102)
Accumulated other comprehensive loss	(6,639)		(5,354)
Retained earnings	4,347,383		3,929,147
Total shareholders' equity	2,154,199		2,297,374
Total liabilities and shareholders' equity	6,545,336	$	6,652,958

All values are in US Dollars.

See accompanying notes to condensed consolidated financial statements.

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CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Food and beverage revenue	$	2,192,802	$	1,869,365	$	4,191,758	$	3,585,355
Delivery service revenue		20,537		23,173		42,120		48,758
Total revenue		2,213,339		1,892,538		4,233,878		3,634,113
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
Food, beverage and packaging		673,928		574,478		1,300,854		1,097,149
Labor		549,926		464,506		1,081,866		898,175
Occupancy		113,919		103,430		225,951		205,199
Other operating costs		317,481		287,242		648,176		581,952
General and administrative expenses		140,820		146,044		288,222		301,147
Depreciation and amortization		69,733		62,082		141,398		125,204
Pre-opening costs		5,253		4,965		10,601		8,386
Impairment, closure costs, and asset disposals		4,681		4,266		8,991		9,934
Total operating expenses		1,875,741		1,647,013		3,706,059		3,227,146
Income from operations		337,598		245,525		527,819		406,967
Interest and other income (expense), net		10,572		851		10,359		(1,317)
Income before income taxes		348,170		246,376		538,178		405,650
Provision for income taxes		(88,228)		(58,402)		(119,942)		(90,575)
Net income	$	259,942	$	187,974	$	418,236	$	315,075
Earnings per share:
Basic	$	9.32	$	6.68	$	14.95	$	11.20
Diluted	$	9.25	$	6.60	$	14.83	$	11.04
Weighted-average common shares outstanding:
Basic		27,905		28,134		27,974		28,130
Diluted		28,092		28,501		28,196		28,542
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments	$	(1,480)	$	305	$	(1,285)	$	42
Comprehensive income	$	258,462	$	188,279	$	416,951	$	315,117

See accompanying notes to condensed consolidated financial statements.

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CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)

	Common Stock					Treasury Stock
	Shares	Amount		Additional <br>‎Paid-In<br>‎Capital		Shares	Amount		Retained<br>‎Earnings		Accumulated Other Comprehensive Income (Loss)		Total
Balance, December 31, 2020	36,704	$	367	$	1,549,909	8,703	$	(2,802,075)	$	3,276,163	$	(4,229)	$	2,020,135
Stock-based compensation	-		-		55,960	-		-		-		-		55,960
Stock plan transactions and other	232		2		632	-		-		-		-		634
Acquisition of treasury stock	-		-		-	74		(106,036)		-		-		(106,036)
Net income	-		-		-	-		-		127,101		-		127,101
Other comprehensive income (loss), net of income tax	-		-		-	-		-		-		(263)		(263)
Balance, March 31, 2021	36,936	$	369	$	1,606,501	8,777	$	(2,908,111)	$	3,403,264	$	(4,492)	$	2,097,531
Stock-based compensation	-		-		47,670	-		-		-		-		47,670
Stock plan transactions and other	52		1		24	-		-		-		-		25
Acquisition of treasury stock	-		-		-	113		(159,347)		-		-		(159,347)
Net income	-		-		-	-		-		187,974		-		187,974
Other comprehensive income (loss), net of income tax	-		-		-	-		-		-		305		305
Balance, June 30, 2021	36,988	$	370	$	1,654,195	8,890	$	(3,067,458)	$	3,591,238	$	(4,187)	$	2,174,158
Balance, December 31, 2021	37,132	$	371	$	1,729,312	9,052	$	(3,356,102)	$	3,929,147	$	(5,354)	$	2,297,374
Stock-based compensation	-		-		24,077	-		-		-		-		24,077
Stock plan transactions and other	134		2		(61)	-		-		-		-		(59)
Acquisition of treasury stock	-		-		-	230		(345,921)		-		-		(345,921)
Net income	-		-		-	-		-		158,294		-		158,294
Other comprehensive income (loss), net of income tax	-		-		-	-		-		-		195		195
Balance, March 31, 2022	37,266	$	373	$	1,753,328	9,282	$	(3,702,023)	$	4,087,441	$	(5,159)	$	2,133,960
Stock-based compensation	-		-		29,142	-		-		-		-		29,142
Stock plan transactions and other	18		-		(167)	-		-		-		-		(167)
Acquisition of treasury stock	-		-		-	198		(267,198)		-		-		(267,198)
Net income	-		-		-	-		-		259,942		-		259,942
Other comprehensive income (loss), net of income tax	-		-		-	-		-		-		(1,480)		(1,480)
Balance, June 30, 2022	37,284	$	373	$	1,782,303	9,480	$	(3,969,221)	$	4,347,383	$	(6,639)	$	2,154,199

See accompanying notes to condensed consolidated financial statements.

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CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

	Six months ended
	June 30,
	2022		2021
Operating activities
Net income	$	418,236	$	315,075
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		141,398		125,204
Deferred income tax provision		(15,537)		(15,884)
Impairment, closure costs, and asset disposals		8,851		8,235
Provision for credit losses		(876)		(220)
Stock-based compensation expense		52,221		102,680
Other		(11,909)		2,467
Changes in operating assets and liabilities:
Accounts receivable		12,353		37,286
Inventory		3,320		1,309
Prepaid expenses and other current assets		948		(18,186)
Operating lease assets		112,505		105,485
Other assets		(3,014)		117
Accounts payable		(2,972)		12,525
Accrued payroll and benefits		(583)		21,068
Accrued liabilities		(22,293)		(20,102)
Unearned revenue		(20,062)		(11,487)
Income tax payable/receivable		(3,832)		(1,851)
Operating lease liabilities		(100,024)		(101,818)
Other long-term liabilities		958		955
Net cash provided by operating activities		569,688		562,858
Investing activities
Purchases of leasehold improvements, property and equipment		(196,495)		(212,123)
Purchases of investments		(195,242)		(190,920)
Maturities of investments		142,540		162,045
Proceeds from sale of equipment		-		2,885
Net cash used in investing activities		(249,197)		(238,113)
Financing activities
Acquisition of treasury stock		(521,910)		(203,151)
Tax withholding on stock-based compensation awards		(91,905)		(58,860)
Other financing activities		(588)		(2,208)
Net cash used in financing activities		(614,403)		(264,219)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(490)		(216)
Net change in cash, cash equivalents, and restricted cash		(294,402)		60,310
Cash, cash equivalents, and restricted cash at beginning of period		846,230		635,836
Cash, cash equivalents, and restricted cash at end of period	$	551,828	$	696,146
Supplemental disclosures of cash flow information
Income taxes paid	$	139,177	$	108,247
Purchases of leasehold improvements, property, and equipment accrued in accounts payable and accrued liabilities	$	61,072	$	50,403
Acquisition of treasury stock accrued in accounts payable and accrued liabilities	$	6,999	$	3,372

See accompanying notes to condensed consolidated financial statements.

‎

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CHIPOTLE MEXICAN GRILL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar and share amounts in thousands, unless otherwise specified)

(unaudited)

1. Basis of Presentation and Update to Accounting Policies

In this quarterly report on Form 10-Q, Chipotle Mexican Grill, Inc., a Delaware corporation, together with its subsidiaries, is collectively referred to as “Chipotle,” “we,” “us,” or “our.”

We develop and operate restaurants that serve a relevant menu of burritos, burrito bowls, quesadillas, tacos, and salads, made using fresh, high-quality ingredients. As of June 30, 2022, we operated 3,052 restaurants including 2,999 Chipotle restaurants within the United States, 49 international Chipotle restaurants, and four Pizzeria Locale restaurants. Pizzeria Locale is a fast casual pizza concept that is owned and operated by a consolidated entity that we are an investor in. We manage our U.S. operations based on eight regions and have aggregated our operations to one reportable segment.

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

We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission. In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of our financial position and results of operations. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The financial statements and related notes do not include all information and footnotes required by U.S. generally accepted accounting principles for annual reports. This quarterly report should be read in conjunction with the consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2021.

2. Recently Issued Accounting Standards

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. We are evaluating the impact of the transition from LIBOR to alternative reference rates but do not expect a significant impact to our consolidated financial statements.

We reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the condensed consolidated financial statements.

3. Revenue Recognition

Gift Cards

We sell gift cards, which do not have expiration dates and we do not deduct non-usage fees from outstanding gift card balances. Gift card balances are initially recorded as unearned revenue. We recognize revenue from gift cards when the gift card is redeemed by the customer. Historically, the majority of gift cards are redeemed within one year. In addition, a portion of gift cards are not expected to be redeemed and will be recognized as breakage over time in proportion to gift card redemptions (“gift card breakage rate”). The gift card breakage rate is based on company and program specific information, including historical redemption patterns, and expected remittance to government agencies under unclaimed property laws, if applicable. We evaluate our gift card breakage rate estimate annually, or more frequently as circumstances warrant, and apply that rate to gift card redemptions. Gift card liability balances are typically highest at the end of each calendar year following increased gift card sales during the holiday season; accordingly, revenue recognized from gift card liability balances is highest in the first quarter of each calendar year.

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The gift card liability included in unearned revenue on the condensed consolidated balance sheets was as follows:

	June 30,		December 31,
	2022		2021
Gift card liability	$	103,065	$	130,779

Revenue recognized from the redemption of gift cards that was included in unearned revenue at the beginning of the year was as follows:

	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Revenue recognized from gift card liability balance at the beginning of the year	$	10,939	$	8,628	$	48,374	$	39,494

Chipotle Rewards

We have a loyalty program called Chipotle Rewards. Eligible customers who enroll in the program generally earn points for every dollar spent. In June 2021, we enhanced Chipotle Rewards and introduced a new redemption feature we call the “Rewards Exchange” that provides loyalty members multiple redemption options. Previously, Chipotle Rewards points were automatically redeemed for a free entrée when the customer obtained the required number of points. The change in the Chipotle Rewards program did not have a material impact on our condensed consolidated financial statements.

We may also periodically offer promotions, which typically provide the customer with the opportunity to earn bonus points or other rewards. Earned rewards generally expire one month to two months after they are issued, and points generally expire if an account is inactive for a period of six months.

We defer revenue associated with the estimated selling price of points or rewards earned by customers as each point or reward is earned, net of points or rewards we do not expect to be redeemed. The estimated selling price of each point or reward earned is based on the estimated value of the product for which the reward is expected to be redeemed. Our estimate of points and rewards we expect to be redeemed is based on historical and other company specific data. The costs associated with rewards redeemed are primarily included in food, beverage, and packaging on our condensed consolidated statements of income and comprehensive income. We evaluate Chipotle Rewards point breakage annually, or more frequently as circumstances warrant.

We recognize loyalty revenue within food and beverage revenue on the condensed consolidated statements of income and comprehensive income when a customer redeems an earned reward. Deferred revenue associated with Chipotle Rewards is included in unearned revenue on our condensed consolidated balance sheets.

Changes in our Chipotle Rewards liability included in unearned revenue on the condensed consolidated balance sheets were as follows:

	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Chipotle Rewards liability, beginning balance	$	28,019	$	23,925	$	25,572	$	22,337
Revenue deferred		30,186		26,509		59,874		52,370
Revenue recognized		(28,824)		(25,382)		(56,065)		(49,655)
Chipotle Rewards liability, ending balance	$	29,381	$	25,052	$	29,381	$	25,052

4. Fair Value of Financial Instruments

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The carrying value of our cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate fair value because of their short-term nature.

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Our investments are comprised of U.S. Treasury securities, a corporate debt security, non-marketable equity securities, and an equity method investment. We also maintain a deferred compensation plan with related assets held in a rabbi trust. 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 June 30, 2022, we held $555,880 of U.S. Treasury securities with maturities of up to 28 months, of which $240,684 mature within one year. 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 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). As of June 30, 2022 and December 31, 2021, the fair value of our securities were $546,525 and $500,172, respectively. We recognize a reserve for expected credit losses when lifetime credit losses are expected by management. As of June 30, 2022, management has concluded there is no risk of non-payment with respect to our U.S. Treasury security investments.

Corporate Debt Security

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 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. We maintained a reserve for expected credit losses associated with the investment of $216 and $423 as of June 30, 2022 and December 31, 2021, respectively. We determined the fair value of the investment to be $17,000 and $18,000 as of June 30, 2022 and December 31, 2021, respectively. The fair value of the Corporate Debt Security is measured using Level 3 (unobservable) inputs. We determined the fair value using an internally-developed valuation model and unobservable inputs include credit and liquidity spreads and effective maturity.

Rabbi Trust

We maintain a rabbi trust to fund obligations under a deferred compensation plan. The rabbi trust is subject to creditor claims in the event of insolvency, but the assets held in the rabbi trust are not available for general corporate purposes. Amounts in the rabbi trust are invested in mutual funds, consistent with the investment choices selected by participants in their Deferred Plan accounts, which are designated as trading securities carried at fair value and are included in other assets on the condensed consolidated balance sheets. Fair value of rabbi trust investments in mutual funds is measured using Level 1 inputs. The fair value of the investments in the rabbi trust was $19,876 and $19,330 as of June 30, 2022 and December 31, 2021, respectively. We record trading gains and losses, along with the offsetting amount related to the increase or decrease in deferred compensation to reflect our exposure to liabilities for payment under the deferred plan in general and administrative expenses on the condensed consolidated statements of income and comprehensive income.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Assets recognized or disclosed at fair value on the condensed consolidated financial statements on a nonrecurring basis include items such as leasehold improvements, property and equipment, certain long-term investments, operating lease assets, other assets, and goodwill. These assets are measured at fair value whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable or if there has been an observable price change of a non-marketable equity security.

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The following table summarizes our restaurant and office assets measured at fair value by hierarchy level on a nonrecurring basis:

		Carrying Value
		June 30,
	Level	2022		2021
Leasehold improvements, property and equipment, net	3	$	415	$	893
Operating lease assets	3		477		2,839
Total		$	892	$	3,732

Fair value of these assets was measured using Level 3 inputs (unobservable inputs for the asset or liability). Unobservable inputs include the discount rate, projected restaurant revenues and expenses, and sublease income if we are closing the restaurant and intending to sublease the restaurant. During the three months ended June 30, 2022 and 2021, we recorded asset impairments related to restaurants and offices of $367 and $519, respectively. During the six months ended June 30, 2022 and 2021 we recorded asset impairments related to restaurants and offices of $1,098 and $3,228, respectively. Costs are recorded within impairment, closure costs, and asset disposals on the condensed consolidated statements of income and comprehensive income. Carrying value after the impairment charges approximates fair value.

Equity Method Investment

As of June 30, 2022, we owned 4,325 shares of a supplier's common stock of Tractor Beverages, Inc. (“Tractor”), a related party, representing ownership of approximately 10.3%, and have invested total cash consideration of $10,000. As we are a significant customer of Tractor and maintain board representation, we are accounting for our investment under the equity method. There were no impairment charges for the six months ended June 30, 2022 or 2021 associated with this equity method investment. In May 2022, an unrelated investor made an investment in Tractor. As a result of this transaction, in order to reflect the net effect of the Company’s investment, we recognized a gain of $3,305 related to our investment in common stock within interest and other income on the condensed consolidated statements of income and comprehensive income for the three and six months ended June 30, 2022. The investment in common stock is included within other assets on the condensed consolidated balance sheets with a carrying value of $12,511 and $9,251 as of June 30, 2022 and December 31, 2021, respectively. Refer to Note 12. “Related Party Transactions” for related party disclosures.

Non-Marketable Equity Securities

As of June 30, 2022, we own 766 shares of the Series C Preferred Stock of Nuro, Inc. (“Nuro”). Our investment represents a minority interest and we have determined that we do not have significant influence over Nuro. Nuro is a privately held company, and as such, the preferred shares comprising our investment are illiquid and fair value is not readily determinable. We have elected to measure our investment in the non-marketable equity securities of Nuro at cost, less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. As of June 30, 2022, we have recognized a cumulative gain of $5,968 related to our investment in Nuro. The investment is included within long-term investments on the condensed consolidated balance sheets with a carrying value of $15,968 as of June 30, 2022 and December 31, 2021.

As of June 30, 2022, we hold warrants (the “Tractor Warrants”) to purchase 3,772 shares of common stock of Tractor. Tractor is a privately held company, and as such, the Tractor Warrants represent non-marketable equity securities, which we have elected to measure at cost, less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. In May 2022, an unrelated investor made an investment in Tractor. We concluded that this investment represented an observable price change in an orderly transaction for a similar investment of the same issuer. Accordingly, we recognized a gain of $7,105 relating to the increase in fair value of our investment in the Tractor Warrants, within interest and other income on the condensed consolidated statements of income and comprehensive income for the three and six months ended June 30, 2022. The investment is included within long-term investments on the condensed consolidated balance sheets with a carrying value of $10,747 as of June 30, 2022.

5. Shareholders’ Equity

We have had a stock repurchase program in place since 2008. As of June 30, 2022, we had $319,668 authorized for repurchasing shares of our common stock, which includes the $300,000 additional authorization approved by our Board of Directors on May 17, 2022. Shares we repurchased are being held in treasury stock until they are reissued or retired at the discretion of our Board of Directors.

During the six months ended June 30, 2022, 60 shares of common stock at a total cost of $91,905 were netted and surrendered as payment for minimum statutory withholding obligations in connection with the vesting of outstanding stock awards. Shares surrendered by the participants in accordance with the applicable award agreements and plan are deemed repurchased by us but are not part of publicly announced share repurchase programs.

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6. Stock-Based Compensation

For the six months ended June 30, 2022, we granted stock only stock appreciation rights (“SOSARs”) on 84 shares of our common stock to eligible employees. The weighted-average grant date fair value of the SOSARs was $452.39 per share with a weighted-average exercise price of $1,574.58 per share. The SOSARs vest in two equal installments on the second and third anniversary of the grant date. For the three months ended June 30, 2022, 41 SOSARs were exercised, and 10 SOSARs were forfeited.

For the six months ended June 30, 2022, we granted restricted stock units (“RSUs”) on 28 shares of our common stock to eligible employees. The weighted-average grant date fair value of the RSUs was $1,563.51 per share. The RSUs generally vest in two equal installments on the second and third anniversary of the grant date. For the six months ended June 30, 2022, 22 RSUs vested and 6 RSUs were forfeited.

For the six months ended June 30, 2022, we awarded performance share units (“PSUs”) on 21 shares of our common stock at target performance to eligible employees. These PSUs are subject to service, market and performance vesting conditions. The weighted-average grant date fair value of the PSUs was $1,578.00 per share, and the quantity of shares that will vest range from 0% to 300% of the targeted number of shares. If the defined minimum targets are not met, then no shares will vest. Further, in no event may more than 100% of the target number of PSUs vest if our 3 year total shareholder return is below the 25^th^ percentile of the constituent companies comprising the S&P 500 on the day of grant. For the six months ended June 30, 2022, 55 PSUs vested, and 1 PSUs were forfeited.

On December 30, 2020, due to the impact that the novel coronavirus (COVID-19) pandemic had on the growth in comparable restaurant sales and restaurant margin relative to the trajectory of both of these performance factors prior to the pandemic, and also due to the significant shareholder value created over the three year performance period of the original award, the Compensation Committee of our Board of Directors modified the 2018 PSU award. This modification pertained to all seven recipients of this award, and resulted in an incremental compensation expense of $71,441, of which $5,284 was recognized during the six months ended June 30, 2022, compared to $47,827 recognized during the six months ended June 30, 2021. $3,107 remains unamortized as of June 30, 2022. The incremental compensation cost is calculated by multiplying the number of incremental shares generated through the modification by the stock price on the modification date. The stock price on the modification date of December 30, 2020 was $1,374.17.

Based on the terms of the modification, 29 PSUs vested on March 15, 2021, pursuant to the original performance condition of the 2018 PSU award. To receive all incremental shares generated through the modification, the recipients of this award must remain employed through December 31, 2022, and the incremental shares vest in four installments. The first two installments of the modification vested during 2021, which included the vesting of 33 PSU’s, and the third installment of the modification vested on June 30, 2022, which included the vesting of 8 PSUs. The unamortized expense associated with the one remaining installment will be recognized over the remaining requisite service period of six months.

The following table sets forth total stock-based compensation expense:

	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Stock-based compensation	$	29,142	$	47,670	$	53,219	$	103,630
Stock-based compensation, net of income taxes	$	24,924	$	42,722	$	45,474	$	93,187
Total capitalized stock-based compensation included in leasehold improvements, property and equipment, net on the condensed consolidated balance sheets	$	511	$	380	$	998	$	950
Excess tax benefit on stock-based compensation recognized in provision for income taxes on the condensed consolidated statements of income and comprehensive income	$	2,711	$	9,421	$	20,672	$	24,446

7. Income Taxes

The effective income tax rate for the three months ended June 30, 2022, was 25.3%, an increase from an effective income tax rate of 23.7% for the three months ended June 30, 2021. The increase in rate is primarily due to fewer tax benefits related to option exercises and equity vesting during the three months ended June 30, 2022 compared to the three months ended June 30, 2021.

The effective income tax rate was 22.3% for both the six months ended June 30, 2022 and the six months ended June 30, 2021. The increase in rate due to fewer tax benefits from option exercises and equity vesting during the six months ended June 30, 2022 compared to the six months ended June 30, 2021, was offset by a decrease in rate primarily from fewer nondeductible expenses and penalties in the current year.

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8. Leases

The significant majority of our operating leases consist of restaurant locations and office space. We determine if a contract contains a lease at inception. Our leases generally have remaining terms of 1-20 years and most include options to extend the leases for additional 5-year periods. Generally, the lease term is the minimum of the noncancelable period of the lease or the lease term inclusive of reasonably certain renewal periods up to a term of 20 years.

Supplemental disclosures of cash flow information related to leases were as follows:

	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Cash paid for operating lease liabilities	$	94,871	$	89,134	$	189,421	$	177,942
Operating lease assets obtained in exchange for operating lease liabilities	$	121,059	$	150,561	$	210,055	$	294,663
Derecognition of operating lease assets due to terminations or impairment	$	176	$	432	$	6,473	$	1,979

9. Earnings Per Share

The following table sets forth the computations of basic and diluted earnings per share:

	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Net income	$	259,942	$	187,974	$	418,236	$	315,075
Shares:
Weighted-average number of common shares outstanding (for basic calculation)		27,905		28,134		27,974		28,130
Dilutive stock awards		187		367		222		412
Weighted-average number of common shares outstanding (for diluted calculation)		28,092		28,501		28,196		28,542
Basic earnings per share	$	9.32	$	6.68	$	14.95	$	11.20
Diluted earnings per share	$	9.25	$	6.60	$	14.83	$	11.04

The following stock awards were excluded from the calculation of diluted earnings per share:

	Three months ended				Six months ended
	June 30,				June 30,
	2022		2021		2022		2021
Stock awards subject to performance conditions		64		76		59		73
Stock awards that were antidilutive		184		76		163		62
Total stock awards excluded from diluted earnings per share		248		152		222		135

10. Commitments and Contingencies

Purchase Obligations

We enter into various purchase obligations in the ordinary course of business, generally of a short-term nature. Those that are binding primarily relate to commitments for food purchases and supplies, amounts owed under contractor and subcontractor agreements, orders submitted for equipment for restaurants under construction, and marketing initiatives and corporate sponsorships.

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Litigation

New York Legal Proceedings

As reported in our previous SEC filings, on September 10, 2019, the New York City Department of Consumer and Worker Protection (“DCWP”) filed a complaint in the City of New York Office of Administrative Trials and Hearings alleging violations at five Chipotle restaurants of New York City’s Fair Work Week law (“FWW”) and Earned Safe and Sick Time Act (“ESTA”) between November 2017 and September 2019. On April 28, 2021, DCWP amended the complaint to cover purported violations of FWW and ESTA at substantially all Chipotle restaurants in New York City, through the date the amended complaint was filed. Chipotle and the DCWP have engaged in mediation proceedings, which are ongoing. In the event the parties are not able to resolve the matter, Chipotle intends to vigorously defend against the allegations. We have accrued a liability that represents the total estimated amount we expect to pay to settle this matter. We do not expect any additional losses above the amount accrued to be material to our consolidated financial statements.

Other

We are involved in various claims and legal actions, such as wage and hour, wrongful termination and other employment-related claims, slip and fall and other personal injury claims, advertising and consumer claims, and lease, construction and other commercial disputes, that arise in the ordinary course of business, some of which may be covered by insurance. The outcomes of these actions are not predictable, but we do not believe that the ultimate resolution of these actions will have a material adverse effect on our financial position, results of operations, liquidity, or capital resources. However, if there is a significant increase in the number of these claims, or if we incur greater liabilities than we currently anticipate under one or more claims, it could materially and adversely affect our business, financial condition, results of operations and cash flows.

Accrual for Estimated Liability

In relation to various legal matters, including those discussed above, as of June 30, 2022, we had an accrued legal liability balance of $31,125 included within accrued liabilities on the condensed consolidated balance sheet.

11. Debt

As of June 30, 2022, we had a 5-year $500,000 revolving credit facility which expires in April 2026, with JPMorgan Chase Bank as administrative agent. Borrowings on the credit facility bear interest at a rate equal to LIBOR plus 1.375%, which is subject to increase due to changes in our total leverage ratio as defined in the credit agreement. We are also obligated to pay a commitment fee of 0.175% per year for unused amounts under the credit facility, which also may increase due to changes in our total leverage ratio. Further, we are subject to certain covenants defined in the credit agreement, which include maintaining a total leverage ratio of less than 3.0x, maintaining a consolidated fixed charge coverage ratio of greater than 1.5x, and limiting us from incurring additional indebtedness in certain circumstances. We had no outstanding borrowings under the credit facility and are in compliance with all covenants as of June 30, 2022 and December 31, 2021.

12. Related Party Transactions

As of June 30, 2022, we owned approximately 10.3% of the common stock outstanding of Tractor. As we are a significant customer of Tractor and maintain board representation, we are accounting for our investment under the equity method. Accordingly, we have identified Tractor as a related party. We purchase product from the supplier for sale to customers in our restaurants. During the three months ended June 30, 2022 and June 30, 2021, purchases from the supplier were $9,313 and $7,401, respectively. During the six months ended June 30, 2022 and June 30, 2021, purchases from the supplier were $16,824 and $13,143, respectively.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this report, including the potential future impact of COVID-19 on our results of operations, supply chain or liquidity, the number of new restaurants we expect to open this year and our long-term opportunity to more than double the number of restaurants in North America, our expectation to generate positive cash flow for the foreseeable future, our plans for continuing stock buybacks and the period of time during which our cash and short-term investment will fund our operations are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We use words such as “anticipate,” “believe,” “could,” “should,” “estimate,” “expect,” “intend,” “may,” “predict,” “project,” “target,” “remain confident” and similar terms and phrases, including references to assumptions, to identify forward-looking statements. These forward-looking statements are based on information available to us as of the date any such statements are made, and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, uncertainty regarding the duration and severity of the ongoing COVID-19 pandemic, the resurgence of COVID-19 infections, the circulation of novel variants of COVID-19 and its ultimate impact on our business; the ability of our third-party suppliers and business partners to fulfill their responsibilities and commitments; risks of food safety incidents and food-borne illnesses; risks associated with our reliance on certain information technology systems and potential failures or interruptions; potential negative impacts of privacy or cyber security incidents, including through our digital app; material failures of our information technology systems; the impact of competition, including from sources outside the restaurant industry; the competitive labor market and changes in the availability and cost of labor and the impact of any union organizing efforts and our responses to such efforts; the financial impact of increasing our average hourly wage; the impact of federal, state or local government regulations relating to our employees, employment practices, restaurant design and construction, and the sale of food or alcoholic beverages; our ability to achieve our planned growth, such as the availability of suitable new restaurant sites and the equipment needed to fully outfit new restaurants; the uncertainty of our ability to achieve expected levels of comparable restaurant sales due to factors such as changes in consumers' perceptions of our brand, including as a result of actual or rumored food safety concerns or other negative publicity, decreased overall consumer spending, including as a result of increasing inflation, or the inability to increase menu prices or realize the benefits of menu price increases; risks associated with our digital business, including risks arising from our reliance on third party delivery services; risks relating to litigation, including possible governmental actions related to food safety incidents and potential class action litigation regarding employment laws, advertising claims or other matters; and the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2021, and in other reports filed with the SEC.

As of June 30, 2022, we operated 2,999 Chipotle restaurants throughout the United States, 49 international Chipotle restaurants, and four non-Chipotle restaurants. We manage our U.S. operations based on eight regions and have aggregated our operations to one reportable segment.

Throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” we commonly discuss the following key operating metrics which we believe will drive our financial results and long-term growth model. We believe these metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies:

Comparable restaurant sales

Restaurant operating costs as a percentage of total revenue

New restaurant openings

Second Quarter 2022 Financial Highlights, year-over-year:

Total revenue increased 17.0% to $2.2 billion

Comparable restaurant sales increased 10.1%

Diluted earnings per share was $9.25, a 40.2% increase from $6.60, which includes an $0.05 after-tax impact from expenses related to the 2018 performance share COVID-19 related modification, corporate restructuring costs, restaurant asset impairment and closure costs, certain legal proceedings, offset by an unrealized gain on an investments.

Sales Trends. Comparable restaurant sales increased 10.1% for the three months ended June 30, 2022. The increase is primarily attributable to an increase in menu prices and, to a lesser extent, an increase in overall transactions, partially offset by a decrease in group size from the continued resurgence of our in-restaurant business. We believe the strong recovery of in-restaurant sales, resilience in digital sales, as well as positive guest reception to our new menu items contributed to the revenue growth in the second quarter. Comparable restaurant sales and transactions represent the change in period-over-period sales or transactions for restaurants in operation for at least 13 full calendar months.

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In-restaurant sales increased 35.9% in the three months ended June 30, 2022, compared to the three months ended June 30, 2021. The increase was primarily due to the relaxation of COVID-19 related restrictions across the country. In-restaurant sales represent food and beverage revenue generated on-premise and include revenue deferrals associated with Chipotle Rewards.

Digital sales represented 39.0% of food and beverage revenue for the three months ended June 30, 2022, compared to 47.4% for the three months ended June 30, 2021. The decrease in digital sales as a percentage of food and beverage revenue is a result of 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.

Restaurant Operating Costs. During the three months ended June 30, 2022, our restaurant operating costs (food, beverage and packaging; labor; occupancy; and other operating costs) were 74.8% of total revenue, a decrease from 75.5% during the three months ended June 30, 2021. The decrease was primarily attributable to leverage from menu price increases and, to a lesser extent, lower delivery expense due to lower volumes of delivery transactions. These decreases were partially offset by higher food costs as a result of inflationary pressures and, to a lesser extent, higher labor expenses as a result of the wage increases implemented in June 2021.

Restaurant Development. For the three months ended June 30, 2022, we opened 42 new restaurants, which included 32 restaurants with a Chipotlane. The Chipotlane format continues to perform very well and is helping enhance guest access and convenience, as well as increase new restaurant sales, margins, and returns. We remain confident in the long-term opportunity to more than double the number of Chipotle restaurants in North America. We believe our strong financial position will allow us to build a robust new unit development pipeline.

Cultivate Next. In April 2022 we announced the formation of Cultivate Next, a new venture that will make early-stage investments into strategically aligned companies that further our mission to Cultivate a Better world. The new venture fund has an initial size of $50 million and will be financed almost entirely by Chipotle. As of June 30, 2022, we had not yet made any investments with the committed funds.

Restaurant Activity

The following table details restaurant unit data for the periods indicated.

	Three months ended		Six months ended
	June 30,		June 30,
	2022	2021	2022	2021
Beginning of period	3,014	2,803	2,966	2,768
Chipotle openings	42	56	93	96
Chipotle permanent closures	(1)	(5)	(2)	(10)
Chipotle relocations	(3)	(1)	(5)	(1)
Total restaurants at end of period	3,052	2,853	3,052	2,853

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Results of Operations

Our results of operations as a percentage of total revenue and period-over-period change are discussed in the following section.

Revenue

	Three months ended					Six months ended
	June 30,				Percentage	June 30,				Percentage
	2022		2021		change	2022		2021		change
	(dollars in millions)					(dollars in millions)
Food and beverage revenue	$	2,192.8	$	1,869.4	17.3%	$	4,191.8	$	3,585.4	16.9%
Delivery service revenue		20.5		23.2	(11.4%)		42.1		48.8	(13.6%)
Total revenue	$	2,213.3	$	1,892.5	17.0%	$	4,233.9	$	3,634.1	16.5%
Average restaurant sales ^(1)^	$	2.7	$	2.5	11.4%	$	2.7	$	2.5	11.4%
Comparable restaurant sales increase		10.1%		31.2%			9.5%		24.1%
^(1)^ Average restaurant sales refer to the average trailing 12-month food and beverage sales for restaurants in operation for at least 12 full calendar months.

The significant factors contributing to the total revenue increase for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, were comparable restaurant sales increases and new restaurant openings. Total revenue increased due to comparable restaurant sales increases of $182.1 million and restaurants not yet in the comparable base of $138.7 million, of which $39.9 million was due to restaurants opened in 2022.

The significant factors contributing to the total revenue increase for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, were comparable restaurant sales increases and new restaurant openings. Total revenue increased due to comparable restaurant sales increases of $332.5 million and restaurants not yet in the comparable base of $267.5 million, of which $52.4 million was due to restaurants opened in 2022.

Food, Beverage and Packaging Costs
	Three months ended					Six months ended
	June 30,				Percentage	June 30,				Percentage
	2022		2021		change	2022		2021		change
	(dollars in millions)					(dollars in millions)
Food, beverage and packaging	$	673.9	$	574.5	17.3%	$	1,300.9	$	1,097.1	18.6%
As a percentage of total revenue		30.4%		30.4%	0.0%		30.7%		30.2%	0.5%

Food, beverage and packaging costs remained flat as a percentage of total revenue for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, due to the benefit of menu price increases offset by inflation across the menu, primarily related to higher costs for avocados, packaging, dairy, beef and chicken.

Food, beverage and packaging costs increased as a percentage of total revenue for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, due to inflation across the menu, primarily related to higher costs for avocados, packaging, beef, chicken, and dairy, partially offset by the benefit of menu price increases.

Labor Costs

	Three months ended					Six months ended
	June 30,				Percentage	June 30,				Percentage
	2022		2021		change	2022		2021		change
	(dollars in millions)					(dollars in millions)
Labor costs	$	549.9	$	464.5	18.4%	$	1,081.9	$	898.2	20.5%
As a percentage of total revenue		24.8%		24.5%	0.3%		25.6%		24.7%	0.9%

Labor costs increased as a percentage of total revenue for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021, primarily due to restaurant wage increases implemented in June 2021. These increases were partially offset by leverage from menu price increases.

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Occupancy Costs

	Three months ended					Six months ended
	June 30,				Percentage	June 30,				Percentage
	2022		2021		change	2022		2021		change
	(dollars in millions)					(dollars in millions)
Occupancy costs	$	113.9	$	103.4	10.1%	$	226.0	$	205.2	10.1%
As a percentage of total revenue		5.1%		5.5%	(0.4%)		5.3%		5.6%	(0.3%)

Occupancy costs decreased as a percentage of total revenue for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021, primarily due to leverage from menu price increases, partially offset by increased rent expense associated with new restaurants.

Oher Operating Costs

	Three months ended					Six months ended
	June 30,				Percentage	June 30,				Percentage
	2022		2021		change	2022		2021		change
	(dollars in millions)					(dollars in millions)
Other operating costs	$	317.5	$	287.2	10.5%	$	648.2	$	582.0	11.4%
As a percentage of total revenue		14.3%		15.2%	(0.9%)		15.3%		16.0%	(0.7%)

Other operating costs include, among other items, marketing and promotional costs, delivery expense, bank and credit card processing fees, restaurant utilities, technology costs, and maintenance costs. Other operating costs decreased as a percentage of total revenue for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021, due to leverage from menu price increases and, to a lesser extent, lower delivery expenses associated with lower volume of delivery transactions. These decreases were partially offset by higher utilities primarily related to inflation in natural gas and electricity.

General and Administrative Expenses

	Three months ended					Six months ended
	June 30,				Percentage	June 30,				Percentage
	2022		2021		change	2022		2021		change
	(dollars in millions)					(dollars in millions)
General and administrative expense	$	140.8	$	146.0	(3.6%)	$	288.2	$	301.1	(4.3%)
As a percentage of total revenue		6.4%		7.7%	(1.3%)		6.8%		8.3%	(1.5%)

General and administrative expenses decreased in dollar terms for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, primarily due to an $18.0 million decrease in stock-based compensation, mostly attributable to the impact of the December 2020 modification of 2018 performance awards related to COVID-19 in the prior year. This decrease was partially offset by increases of: $5.1 million in employee wages primarily due to headcount growth; $4.4 million of outside services expense related to corporate initiatives; and $3.0 million in estimated loss contingencies related to legal matters.

General and administrative expenses decreased in dollar terms for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to a $49.2 million decrease in stock-based compensation, mostly attributable to the impact of the December 2020 modification of 2018 performance awards related to COVID-19 in the prior year. This decrease was partially offset by increases of: $16.4 million primarily associated with the biennial All Managers’ Conference that was held in March 2022; $9.5 million of outside services expense related to corporate initiatives; and $8.9 million in employee wages primarily due to headcount growth.

Depreciation and Amortization

	Three months ended					Six months ended
	June 30,				Percentage	June 30,				Percentage
	2022		2021		change	2022		2021		change
	(dollars in millions)					(dollars in millions)
Depreciation and amortization	$	69.7	$	62.1	12.3%	$	141.4	$	125.2	12.9%
As a percentage of total revenue		3.2%		3.3%	(0.1%)		3.3%		3.4%	(0.1%)

Depreciation and amortization decreased as a percentage of total revenue for the three and six months ended June 30, 2022 compared to the three and six months ended June 30, 2021, primarily due to leverage from menu price increases, partially offset by depreciation expense associated with new restaurants.

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Impairment, Closure Costs, and Asset Disposals

	Three months ended					Six months ended
	June 30,				Percentage	June 30,				Percentage
	2022		2021		change	2022		2021		change
	(dollars in millions)					(dollars in millions)
Impairment, closure costs, and asset disposals	$	4.7	$	4.3	9.7%	$	9.0	$	9.9	(9.5%)
As a percentage of total revenue		0.2%		0.2%	0.0%		0.2%		0.3%	(0.1%)

Impairment, closure costs, and asset disposals increased in dollar terms for the three months ended June 30, 2022 compared to the three months ended June 30, 2021, primarily due to higher charges related to the replacement of certain kitchen equipment and leasehold improvements.

Impairment, closure costs, and asset disposals decreased in dollar terms for the six months ended June 30, 2022 compared to the six months ended June 30, 2021, primarily due to a comparison against elevated impairments of operating lease assets and leasehold improvements. These elevated impairments were primarily the result of the COVID-19 pandemic negatively impacting our near-term restaurant level cash flow forecasts. The decrease in impairment, closure costs, and assets disposals is partially offset due to higher charges related to the replacement of leasehold improvements.

Provision for Income Taxes

	Three months ended					Six months ended
	June 30,				Percentage	June 30,				Percentage
	2022		2021		change	2022		2021		change
	(dollars in millions)					(dollars in millions)
Provision for income taxes	$	(88.2)	$	(58.4)	51.1%	$	(119.9)	$	(90.6)	32.4%
Effective income tax rate		25.3%		23.7%	n/m*		22.3%		22.3%	n/m*
*Not meaningful

The effective income tax rate for the three months ended June 30, 2022, was 25.3%, an increase from an effective income tax rate of 23.7% for the three months ended June 30, 2021. The increase is primarily due to a decrease in tax benefits related to option exercises and equity vesting.

The effective income tax rate was 22.3% for both the six months ended June 30, 2022 and 2021. The six months ended June 30, 2022, had fewer tax benefits from option exercises and equity vesting offset by a decrease primarily from fewer nondeductible expenses and penalties compared to the six months ended June 30, 2021.

Seasonality

Seasonal factors cause our profitability to fluctuate from quarter to quarter. Historically, our average daily restaurant sales and net income are lower in the first and fourth quarters due, in part, to the holiday season and because fewer people eat out during periods of inclement weather (the winter months) than during periods of mild or warm weather (the spring, summer and fall months). Other factors also have a seasonal effect on our results. For example, restaurants located near colleges and universities generally do more business during the academic year. Seasonal factors, however, might be moderated or outweighed by other factors that may influence our quarterly results, such as unexpected publicity impacting our business in a positive or negative way, worldwide health pandemics, fluctuations in food or packaging costs, or the timing of menu price increases or promotional activities and other marketing initiatives. The number of trading days in a quarter can also affect our results, although, on an overall annual basis, changes in trading days do not have a significant impact.

Our quarterly results are also affected by other factors such as the amount and timing of non-cash stock-based compensation expense and related tax rate impacts, litigation, settlement costs and related legal expenses, impairment charges and non-operating costs, timing of marketing or promotional expenses, the number and timing of new restaurants opened in a quarter, and closure of restaurants. New restaurants typically have higher operating costs following opening because of the expenses associated with their opening and operating inefficiencies in the months immediately following opening. Accordingly, results for a particular quarter are not necessarily indicative of results to be expected for any other quarter or for any year.

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Liquidity and Capital Resources

As of June 30, 2022, we had a cash and marketable investments balance of $1.1 billion, excluding restricted cash of $30.9 million and non-marketable investments of $44.7 million. After funding the current operations in our restaurants and support centers, the first planned use of our cash flow from operations is to provide capital for the continued investment in new restaurant construction. In addition to continuing to invest in our restaurant expansion, we expect to utilize cash flow from operations to: repurchase additional shares of our common stock subject to market conditions; invest in, maintain, and refurbish our existing restaurants; and for general corporate purposes. As of June 30, 2022, $319.7 million remained available for repurchases of shares of our common stock, which includes the $300.0 million additional authorization approved by our Board of Directors on May 17, 2022. Under the remaining repurchase authorizations, shares may be purchased from time to time in open market transactions, subject to market conditions. Additionally, as of June 30, 2022, we had $500.0 million of undrawn borrowing capacity under a line of credit facility.

We believe that cash from operations, together with our cash and investment balances, will be sufficient to meet ongoing capital expenditures, working capital requirements and other cash needs for the foreseeable future. Assuming no significant declines in comparable restaurant sales, we expect we will generate positive cash flow for the foreseeable future. Should our business deteriorate due to changing conditions, there are actions we can take to further conserve liquidity.

We have not required significant working capital because customers generally pay using cash or credit and debit cards and because our operations do not require significant receivables, nor do they require significant inventories due, in part, to our use of various fresh ingredients. In addition, we generally have the right to pay for the purchase of food, beverages and supplies sometime after the receipt of those items, within ten days, thereby reducing the need for incremental working capital to support our growth.

Cash Flows

Cash provided by operating activities was $569.7 million for the six months ended June 30, 2022, compared to $562.9 million for the six months ended June 30, 2021. The increase was primarily due to higher net earnings partially offset by changes in working capital, which included higher payments of accrued expenses, as well as lower net collections in accounts receivable versus the comparable period.

Cash used in investing activities was $249.2 million for the six months ended June 30, 2022, compared to $238.1 million for the six months ended June 30, 2021. The change was primarily associated with a $23.8 million increase in U.S. Treasury security purchases net of U.S. Treasury security maturities. The change was partially offset by decreased capital expenditures of $15.6 million, primarily related to elevated purchases of corporate assets in the comparable period.

Cash used in financing activities was $614.4 million for the six months ended June 30, 2022, compared to $264.2 million for the six months ended June 30, 2021. The change was primarily due to increased treasury stock repurchases of $318.8 million and, to a lesser extent, $33.0 million of elevated payments of tax withholdings related to stock compensation for the six months ended June 30, 2022.

Critical Accounting Estimates

Critical accounting estimates are those that we believe are both significant and that require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and we might obtain different estimates if we used different assumptions or factors. We had no significant changes to our critical accounting estimates as described in our annual report on Form 10-K for the year ended December 31, 2021.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Commodity Price Risks

We are exposed to commodity price risks. Many of the ingredients we use to prepare our food, as well as our packaging materials and utilities to run our restaurants, are ingredients or commodities that are affected by the price of other commodities, exchange rates, foreign demand, weather, seasonality, production, availability and other factors outside our control. 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 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. Generally, our pricing protocols with suppliers can remain in effect for periods ranging from one to 24 months, depending on the outlook for prices of the particular ingredient. In some cases, we have minimum purchase obligations. We have tried to increase, where practical, the number of suppliers for our ingredients, which we believe can help mitigate pricing volatility, and we follow industry news, trade issues, exchange rates, foreign demand, weather, crises and other world events that may affect our ingredient prices. Increases in ingredient prices could adversely affect our results if we choose for competitive or other reasons not to increase menu prices at the same rate at which ingredient costs increase, or if menu price increases result in customer resistance. We also could experience shortages of key ingredients if our suppliers need to close or restrict operations due to the impact of the COVID-19 outbreak or due to industry-wide shipping and freight delays.

Changing Interest Rates

We are exposed to interest rate risk through fluctuations of interest rates on our investments. As of June 30, 2022, we had $1.2 billion in cash and cash equivalents, current and long-term investments, and restricted cash, nearly all of which are interest bearing. Changes in interest rates affect the interest income we earn, and therefore impact our cash flows and results of operations.

Foreign Currency Exchange Risk

A portion of our operations consist of activities outside of the U.S. and we have currency risk on the transactions in other currencies and translation adjustments resulting from the conversion of our international financial results into the U.S. dollar. However, a substantial majority of our operations and investment activities are transacted in the U.S., and therefore our foreign currency risk is not material at this date.

ITEM 4. CONTROLS AND PROCEDURES

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 Officer, as appropriate, to allow timely decisions regarding required disclosure.

Evaluation of Disclosure Controls and Procedures

As of June 30, 2022, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There were no changes during the fiscal quarter ended June 30, 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.

PART II

ITEM 1. LEGAL PROCEEDINGS

For information regarding legal proceedings, see Note 10. “Commitments and Contingencies” in our condensed consolidated financial statements included in Item 1. “Financial Statements.”

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ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer

The table below reflects shares of common stock we repurchased during the second quarter of 2022.

		Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^(1)^	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
April		31,333	$	1,539.48	31,333	$	232,529,733
	Purchased 4/1 through 4/30
May		96,122	$	1,315.21	96,122	$	406,109,553
	Purchased 5/1 through 5/31
June		65,978	$	1,310.16	65,978	$	319,667,874
	Purchased 6/1 through 6/30
Total		193,433	$	1,349.81	193,433

(1) Shares were repurchased pursuant to repurchase programs announced on April 26, 2022.

(2) The June total includes an additional $300.0 million in authorized repurchases approved on May 17, 2022 and announced July 26, 2022. There is no expiration date for this program. The authorization to repurchase shares will end when we have repurchased the maximum amount of shares authorized, or we have determined to discontinue such repurchases.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

ITEM 5. OTHER INFORMATION

None.

‎

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ITEM 6. EXHIBITS

EXHIBIT INDEX

		Description of Exhibit Incorporated Herein by Reference
Exhibit Number	Exhibit Description	Form	File No.	Filing Date	Exhibit Number	Filed Herewith
10.1†	Director Compensation Program and Stock Ownership Guidelines (Revised May 18, 2022)	-	-	-	-	X
10.2†	Chipotle Mexican Grill, Inc. 2022 Stock Incentive Plan	-	-	-	-	X
10.3†	Chipotle Mexican Grill, Inc. Employee Stock Purchase Plan	-	-	-	-	X
31.1	Certification of Chief Executive Officer of Chipotle Mexican Grill, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	-	-	-	-	X
31.2	Certificate of Chief Financial Officer of Chipotle Mexican Grill, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	-	-	-	-	X
32.1	Certification of Chief Executive Officer and Chief Financial Officer of Chipotle Mexican Grill, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	-	-	-	-	X
101.INS	Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)	-	-	-	-	X
101.SCH	Inline XBRL Taxonomy Extension Schema Document	-	-	-	-	X
101.CAL	Inline XBRL Taxonomy Extension Calculation Linkbase Document	-	-	-	-	X
101.DEF	Inline XBRL Taxonomy Extension Definition Linkbase Document	-	-	-	-	X
101.LAB	Inline XBRL Taxonomy Extension Label Linkbase Document	-	-	-	-	X
101.PRE	Inline XBRL Taxonomy Extension Presentation Linkbase Document	-	-	-	-	X
104	Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101)	-	-	-	-	X

†- Management contracts and compensatory plans or arrangements required to be filed as exhibits.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CHIPOTLE MEXICAN GRILL, INC.
By:	/S/ JOHN R. HARTUNG
Name:	John R. Hartung
Title:	Chief Financial Officer (principal financial officer and duly authorized signatory for the registrant)

Date: July 27, 2022

		Exhibit 101

Exhibit 10.1

Chipotle Mexican Grill, Inc.

Director Compensation Program and Stock Ownership Guidelines

Effective May 18, 2022

Set forth below is the compensation program for non-employee directors of Chipotle Mexican Grill, Inc. Members of Chipotle’s Board of Directors who are employees of Chipotle do not receive compensation for their services as directors.


Retainer Type	Cash
Annual Director Retainer	110,000
Committee Chair Retainers:
Audit	42,500
Compensation	37,500
Nominating and Corporate Governance	30,000
Committee Member Retainers (excluding Committee Chair):
Audit	15,000
Compensation	15,000
Nominating and Corporate Governance	10,000
Lead Independent Director	50,000

All values are in US Dollars.

In addition to the above cash retainers, if a Committee holds more than eight (8) formal meetings during the compensation year (defined below), each Committee member (including the Chair) will receive a $2,000/meeting fee for each formal meeting in excess of eight (8) formal meetings in which the Committee member participates. To qualify as a “formal meeting,” the meeting must have been scheduled in advance, follow a defined agenda circulated in advance, be attended by a quorum of the Committee members, and be documented with minutes. A Committee member must attend at least 2/3rds of the meeting to qualify for the meeting fee.

Compensation Period and Payments

Director compensation will be paid based on the directors’ one-year term of service to align with each annual meeting of shareholders (i.e., from May 31 to May 31) (the “compensation year”).

All cash retainers will be paid in arrears, on a pro rata basis, at the end of November and May. No director may simultaneously receive a Committee Chair retainer and a Committee Member retainer for service on the Committee for which he or she serves as Chair.

The number of RSU’s granted to a director will be determined by dividing $175,000 by the Fair Market Value (as defined in the 2022 Stock Incentive Plan) of Chipotle common stock on the grant date, which (unless the Board determines otherwise) is the closing stock price on the grant

date. RSUs are granted to non-employee directors on the date of Chipotle’s annual meeting of shareholders meeting each year and vest 100% on the grant date.

Changes During a Compensation Year

If a director is elected to the Board on a date that is between annual meetings, the newly elected director will receive (i) a prorated RSU award, granted on the date that is three (3) business days after the date of election, and (ii) prorated cash compensation, which will be paid in accordance with the regular director pay schedule. Both the total grant value of the RSU and the amount of cash compensation will be prorated based on the date of the director’s election to the Board and the number of days elapsed since the annual meeting of shareholders that most recently occurred (e.g., if the annual meeting is on May 31 and a director joins on October 1, that director will receive 243/365th of the annual compensation amount).

If a director is appointed to or leaves a Committee, or assumes or relinquishes a Chair or Lead Independent Director position, on a date that is between annual meetings, his or her cash compensation will be prorated based on the effective date of the change in service and the number of days elapsed since the annual meeting of shareholders that most recently occurred.

Deferral Election

A director may elect to defer the receipt of cash compensation or defer the receipt of shares of common stock that otherwise would be issuable upon vesting of an RSU by submitting to Chipotle a deferral election in the form provided by Chipotle. The deferral form must be received by Chipotle before the end of the calendar year immediately prior to the compensation year in which the cash compensation or RSU relates (for example, the deferral election is due before December 31, 2019 for director compensation payable for the compensation year May 2022 – May 2023).

Expense Reimbursement

Directors will be reimbursed for reasonable expenses directly incurred in connection with their service as directors, including travel and lodging expenses for meetings. Reimbursement is subject to a director providing timely substantiation of expenses pursuant to Chipotle’s expense policy.

Stock Ownership Guidelines

Directors are expected to own, within five years after being elected to the Board, shares of Chipotle common stock having a total value of five (5) times the annual cash retainer payable to non-employee directors (excluding Committee, Chair and Lead Independent Director retainers).

The following forms of equity count towards the required stock ownership guidelines: | · | shares of Chipotle common stock owned outright (including shares received upon vesting of restricted stock units) | | --- | --- | | · | unvested restricted stock | | --- | --- | | · | unvested restricted stock units | | --- | --- | | · | any cash or restricted stock units that have been deferred | | --- | --- |

The following forms of equity do not count towards the required stock ownership guidelines: | · | shares of Chipotle common stock transferred to any individual, other than the director’s spouse | | --- | --- | | · | unvested and vested stock options | | --- | --- | | · | unvested and vested stock appreciation rights | | --- | --- | | · | unearned performance shares/units | | --- | --- |

		Exhibit 102

Exhibit 10.2

CHIPOTLE MEXICAN GRILL, INC. 2022 STOCK INCENTIVE PLAN

1.Purpose of the Plan

The purpose of the Chipotle Mexican Grill, Inc. 2022 Stock Incentive Plan as set forth herein (this “Plan”) is to attract and retain Employees, Consultants and Non-Employee Directors and to provide additional incentives for these persons consistent with the long-term success of the business of Chipotle Mexican Grill, Inc. (“Chipotle”) and its Subsidiaries. This Plan is subject to the approval of Chipotle’s shareholders at Chipotle’s 2022 annual shareholders’ meeting (or any adjournment thereof) and shall have no effect prior to that time. If this Plan is approved, no future grants shall be made under the Amended and Restated Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan (the “Prior Plan”).

2.Definitions

As used in the Plan or in any instrument governing the terms of any Incentive Award, the following definitions apply to the terms indicated below:

(a)“Board” or “Board of Directors” means the Board of Directors of Chipotle.

(b)“Business Combination” means a merger, consolidation, statutory share exchange, reorganization or similar form of corporate transaction.

(c)“Cause” means, when used in connection with the termination of a Participant’s employment with the Company, unless otherwise provided in the Participant’s award agreement with respect to an Incentive Award or employment agreement or other written agreement with respect to the termination of a Participant’s employment with the Company and which is in effect on the date the Incentive Award is granted to the Participant, the termination of the Participant’s employment with the Company on account of: (i) failure to competently perform statutory or reasonably assigned duties with the Company at a level that can be reasonably expected of a person with the Participant’s position, excluding a failure that the Participant could not be reasonably expected to realize would constitute such a failure (other than a failure resulting from Participant’s incapacity due to physical or mental illness), which failure is not cured, if curable, within twenty (20) days after written notice from the Company or, in the case of individuals subject to reporting obligations under Section 16 of the Exchange Act, the Board (which notice specifies in reasonable detail the grounds constituting Cause); (ii) the Participant’s willful misconduct or gross negligence which is materially injurious to the Company (financially, reputationally, or otherwise); (iii) a breach by the Participant of the Participant’s fiduciary duty or duty of loyalty to the Company; (iv) the Participant’s unauthorized use or disclosure of the Company’s confidential information or trade secrets; (v) the commission by the Participant of, or guilty plea or plea of no contest to, any felony or other serious crime involving fraud, dishonesty or moral turpitude; or (vi) the Participant’s material breach of his or her obligations under any written material Company policy, including any code of conduct that, if curable, is not cured within twenty (20) days after the Company or, in the case of individuals subject to reporting obligations under Section 16 of the Exchange Act, the Board notifies the

Participant of such breach (which notice specifies in reasonable detail the grounds constituting Cause). Any rights the Company may have hereunder in respect of the events giving rise to Cause shall be in addition to the rights the Company may have under any other agreement with the Participant or at law or in equity. If, subsequent to a Participant’s termination of employment prior to a Change in Control, it is discovered that such Participant’s employment could have been terminated for Cause, the Participant’s employment shall, at the election of the Committee, in its sole discretion, be deemed to have been terminated for Cause retroactively to the date the events giving rise to Cause occurred.

(d)“Change in Control” means the occurrence, in a single transaction or in a series of related transactions, of one or more of the following events:

(i)Any Person becoming the beneficial owner (within the meaning of Rule 13d-3 promulgated under the Exchange Act, a “Beneficial Owner”), directly or indirectly, of thirty-five percent (35%) or more of the combined voting power of Voting Securities; provided, however that a Change in Control shall not be deemed to occur by reason of an acquisition of Voting Securities (A) by Chipotle or any Subsidiary, (B) by an employee benefit plan (or a related trust) sponsored or maintained by Chipotle or any Subsidiary, (C) by any underwriter temporarily holding securities pursuant to an offering of such securities, (D) pursuant to a Business Combination that is not a Change in Control pursuant to sub-clause (iii) below, or (E) by any Person of Voting Securities from the Company, if a majority of the Incumbent Board approves in advance the acquisition of beneficial ownership of thirty-five percent (35%) or more of Voting Securities by such Person. Notwithstanding the foregoing, a Change in Control shall not be deemed to occur solely because any Person becomes the Beneficial Owner of thirty-five percent (35%) or more of the outstanding Voting Securities as a result of the acquisition of Voting Securities by the Company which, by reducing the number of Voting Securities deemed to be outstanding, increases the proportional number of shares Beneficially Owned by such Person, provided, however, that if a Change in Control would have occurred (but for the operation of this proviso) as a result of the acquisition of Voting Securities by the Company and at any time after such acquisition such Person becomes the Beneficial Owner of any additional Voting Securities following which such Person is the Beneficial Owner of thirty-five percent (35%) or more of the outstanding Voting Securities, a Change in Control shall occur;

(ii)The individuals who, as of the Effective Date are members of the Board of Directors (the “Incumbent Board”), cease for any reason to constitute at least a majority of the members of the Board of Directors; provided, however that if the election or appointment, or nomination for election by Chipotle’s common shareholders, of any new director was approved by a vote of at least two-thirds of the Incumbent Board, such new director shall, for purposes of the Plan, thereafter be considered as a member of the Incumbent Board; provided, further, however, that no individual shall be considered a member of the Incumbent Board if such individual initially assumed office as a result of an actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board of Directors (a “Proxy Contest”) including by reason of any agreement intended to avoid or settle any Proxy Contest; or

(iii)The consummation of:

(A)a Business Combination with or into the Company or in which securities of Chipotle are issued, unless such Business Combination is a Non-Control Transaction;

(B)a complete liquidation or dissolution of the Company; or

(C)the sale or other disposition of all or substantially all of the assets of the Company (on a consolidated basis) to any Person other than the Company or an employee benefit plan (or a related trust) sponsored or maintained by Chipotle or any Subsidiary or by a Person which, immediately thereafter, will have all its voting securities owned by the holders of the Voting Securities immediately prior thereto, in substantially the same proportions.

For purposes of the Plan, a “Non-Control Transaction” is Business Combination involving the Company where:

(x)the holders of Voting Securities immediately before such Business Combination own, directly or indirectly immediately following such Business Combination more than fifty percent of the combined voting power of the outstanding voting securities of the parent corporation resulting from, or the corporation issuing its voting securities as part of, such Business Combination (the “Surviving Corporation”) in substantially the same proportion as their ownership of the Voting Securities immediately before such Business Combination by reason of their prior ownership of Voting Securities;

(y)the individuals who were members of the Incumbent Board immediately prior to the execution of the agreement providing for such Business Combination constitute a majority of the members of the board of directors of the Surviving Corporation, or a corporation beneficially owning a majority of the voting securities of the Surviving Corporation; and

(z)no Person other than the Company or any employee benefit plan (or any trust forming a part thereof) maintained immediately prior to such Business Combination by the Company immediately following the time at which such transaction occurs, is a Beneficial Owner of thirty-five percent (35%) or more of the combined voting power of the Surviving Corporation’s voting securities outstanding immediately following such Business Combination.

Notwithstanding the foregoing, if a Change in Control constitutes a payment event with respect to any Incentive Award that provides for the deferral of compensation and is subject to Section 409A of the Code, the transaction or event described in (i), (ii), or (iii) above with respect to such Incentive Award must also constitute a “change in control event,” as defined in Treasury Regulation § 1.409A-3(i)(5) to the extent required by Section 409A of the Code. The Committee shall have full and final authority, which shall be exercised in its sole discretion, to determine conclusively whether a Change in Control has occurred for purposes of this Section 2(d), and the date of the occurrence of such Change in Control and any incidental matters relating thereto.

(e)“Chipotle” means Chipotle Mexican Grill, Inc., a Delaware corporation, and any successor thereto.

(f)“Code” means the Internal Revenue Code of 1986, as amended from time to time, and all regulations, interpretations and administrative guidance issued thereunder.

(g)“Committee” means the Compensation Committee of the Board of Directors or such other committee as the Board of Directors shall appoint from time to time to administer the Plan and to otherwise exercise and perform the authority and functions assigned to the Committee under the terms of the Plan.

(h)“Common Stock” means Chipotle’s Common Stock, $0.01 par value per share, or any other security into which the common stock shall be changed pursuant to the adjustment provisions of Section 8 of the Plan.

(i)“Company” means Chipotle and all of its Subsidiaries, collectively.

(j) “Consultant” means any consultant or advisor to Chipotle or any of its Subsidiaries who may be offered securities registrable on Form S-8 under the Securities Act or any available exemption from the Securities Act, as applicable.

(k)“Dividend Equivalent” means a right to receive the equivalent value (in cash or Common Stock) of dividends paid on Common Stock. Dividend Equivalents may be granted based on dividends declared on the Common Stock, to be credited as of dividend payment dates during the period between the date an Incentive Award is granted to a Participant and such date or dates as determined by the Committee. Such Dividend Equivalents shall be converted to cash or additional shares of Common Stock by such formula and at such time and subject to such limitations as may be determined by the Committee and set forth in the agreement evidencing the Incentive Award. Dividend Equivalents shall be subject to the same restrictions, vesting, and risk of forfeiture as the shares subject to the underlying Incentive Award. For the avoidance of doubt, Dividend Equivalents with respect to an Incentive Award that are based on dividends paid prior to the vesting of such Incentive Award shall only be paid out to the Participant to the extent that the vesting conditions are subsequently satisfied and such award vests and the shares of Common Stock underlying the Incentive Award are delivered to the Participant. No Dividend Equivalent shall be payable with respect to any Incentive Award unless specified by the Committee in the agreement evidencing the Incentive Award. Dividend Equivalents shall not be issued in tandem with Options or Stock Appreciation Rights.

(l)“Effective Date” means May 18, 2022, the date of Chipotle’s 2022 annual shareholders’ meeting (or any adjournment thereof).

(m)“Eligible Person” means any (i) Employee, (ii) Non-Employee Director or (iii) Consultant, including persons who have accepted offers of employment or consultancy from Chipotle or its Subsidiaries (and would satisfy the provisions of clauses (i) through (iii) above once such person begins employment with or providing services to Chipotle or its Subsidiaries).

(n)“Employee” means an individual who is on the payroll of Chipotle or one of its Subsidiaries and is classified on the employer’s human resource payroll system as a regular full-time or regular part-time employee.

(o)“Exchange Act” means the Securities Exchange Act of 1934, as amended.

(p)“Fair Market Value” or “FMV” means, as of any date, the value of a share of Common Stock as determined by the Committee, in its discretion, subject to the following:

(i) If, on such date, Common Stock is listed on the New York Stock Exchange (“NYSE”) (or such other national securities exchange as may at the time be the principal market for the Common Stock), then: the Fair Market Value of a share shall be the closing price of a share of Common Stock as quoted on such exchange, as reported in The Wall Street Journal or such other source as the Company deems reliable (or, if no such closing price is reported, the closing price on the last preceding date on which a sale of Common Stock occurred); provided, however, that the Committee may, in its discretion, determine the Fair Market Value of a share of Common Stock on the basis of the opening, closing, or average of the high and low sale prices of a share of Common Stock on such date or the preceding trading day, the actual sale price of a Share, any other reasonable basis using actual transactions involving shares of Common Stock as reported on an established U.S. national or regional securities exchange, or on any other basis consistent with the requirements of Section 409A of the Code.

(ii) If the Common Stock is not then listed and traded on the NYSE or other national securities exchange, Fair Market Value shall be what the Committee determines in good faith to be 100% of the fair market value of a share of Common Stock on that date, using such criteria as it shall determine, in its sole discretion, to be appropriate for valuation and consistent with the requirements of Section 409A of the Code.

(iii) The Committee may vary in its discretion the method of determining Fair Market Value as provided in this Section to the extent the Company determines such method is more practical for administrative purposes, such as for purposes of tax withholding.

(q)“Full Value Award” means any Incentive Award other than an Option or Stock Appreciation Right.

(r)“Good Reason” means, unless otherwise provided in any award agreement entered between the Company and the Participant with respect to an Incentive Award or employment agreement or other written agreement between the Participant and the Company with respect to the termination of a Participant’s employment with the Company and which is in effect on the date the Incentive Award is granted to the Participant, the Participant’s termination of employment on account of: (i) a material diminution in the Participant’s statutory and reasonably assigned duties that would be reasonably expected of a person with Participant’s position, other than a change in such duties of the Participant that results from becoming part of a larger organization following a Change in Control, (ii) a material decrease in the Participant’s base salary or annual bonus opportunity other than a decrease in base salary or annual bonus

opportunity of 10% or less that applies to all employees of the Company otherwise eligible to participate in the affected plan, or (iii) a relocation of the Participant’s primary work location more than thirty (30) miles from the Participant’s work location on the date of grant of the Participant’s Incentive Awards under the Plan, without the Participant’s prior written consent; provided that, within thirty (30) days following the occurrence of any of the events set forth herein, the Participant shall have delivered written notice to the Company of his or her intention to terminate his or her employment for Good Reason, which notice specifies in reasonable detail the circumstances claimed to give rise to the Participant’s right to terminate employment for Good Reason, and the Company shall not have cured such circumstances within thirty (30) days following the Company’s receipt of such notice and the Participant terminates employment within thirty (30) days following the expiration of the Company’s cure period.

(s)“Incentive Award” means an Option, Stock Appreciation Right or Other Stock-Based Award granted to a Participant pursuant to the terms of the Plan.

(t)“Non-Employee Director” means a member of the Board of Directors who is not an Employee.

(u)“Option” means an option to purchase shares of Common Stock granted to a Participant pursuant to Section 6.

(v)“Other Stock-Based Award” means an equity or equity-related award granted to a Participant pursuant to Section 7.

(w)“Participant” means an Eligible Person who has been granted an Incentive Award pursuant to the Plan and, following the death of any such Person, his or her successors, heirs, executors and administrators, as the case may be.

(x)“Performance-Based Compensation” means any Incentive Award that is granted subject to the achievement of Performance Goals.

(y)“Performance Goal” means the level of performance with respect to one or more Performance Measures that must be achieved during a Performance Period to earn a payment under an Incentive Award structured as Performance-Based Compensation.

(z)“Performance Measures” means the measures that may be used as part of a Performance Goal when granting Performance-Based Compensation. The Performance Measures that may be used to establish Performance Goals shall be based on attaining specific levels of performance (either alone or in any combination, and may be expressed with respect to the Chipotle (and/or one or more of its Subsidiaries, divisions or operating units or groups or any combination of the foregoing), and may include any of the following as the Committee may determine: revenue growth; cash flow; cash flow from operations; net income; net income before equity compensation expense; earnings per share, diluted or basic; earnings per share from continuing operations, diluted or basic; earnings before interest and taxes; earnings before interest, taxes, depreciation, and amortization; earnings from continuing operations; net asset turnover; inventory turnover; capital expenditures; income from operations; income from operations excluding non-cash related entries; income from operations excluding non-cash adjustments; income from operations before equity compensation expenses; income from

operations excluding equity compensation expense and lease expense; operating cash flow from operations; income before income taxes; gross or operating margin; restaurant-level operating margin; profit margin; assets; debt; working capital; return on equity; return on net assets; return on total assets; return on capital; return on investment; return on revenue; net or gross revenue; comparable restaurant sales; new restaurant openings; market share; economic value added; cost of capital; expense reduction levels; safety record; stock price; productivity; customer satisfaction; employee satisfaction; total shareholder return or any other criteria that the Committee determines in its sole discretion to be appropriate. For any Plan Year, Performance Measures may be determined on an absolute basis or relative to internal goals or relative to levels attained in years prior to such Plan Year or related to other companies or indices or as ratios expressing relationships between two or more Performance Measures. In establishing a Performance Measure or determining the achievement of a Performance Measure, the Committee may provide that achievement of the applicable Performance Measures may be amended or adjusted to include or exclude components of any Performance Measure, including, without limitation, foreign exchange gains and losses, asset write-downs, acquisitions and divestitures, change in fiscal year, unbudgeted capital expenditures, special charges such as restructuring or impairment charges, debt refinancing costs, extraordinary or noncash items, unusual, infrequently occurring, nonrecurring or one-time events affecting the Company or its financial statements or changes in law or accounting principles. Performance Measures shall be subject to such other special rules and conditions as the Committee may establish at any time.

(aa)“Performance Period” means the period of time during which the Performance Goals must be met in order to determine the degree of payout and/or vesting with respect to Performance-Based Compensation.

(bb)“Person” means a “person” as such term is used in Section 13(d) and 14(d) of the Exchange Act, including any “group” within the meaning of Section 13(d)(3) under the Exchange Act.

(cc)“Plan” means this Chipotle Mexican Grill, Inc. 2022 Stock Incentive Plan, as it may be amended from time to time.

(dd)“Qualifying Termination” means, unless otherwise provided in the Participant’s award agreement with respect to an Incentive Award or employment agreement or other written agreement with respect to the termination of a Participant’s employment with the Company and which is in effect on the date the Incentive Award is granted to the Participant, (i) with respect to a Participant that is an Employee who is an executive officer, such Participant’s termination of employment by the Company Without Cause or by such Participant for Good Reason, or (ii) with respect to a Participant who is a non-executive officer Employee, such Participant’s termination of employment by the Company Without Cause, in the case or either (i) or (ii), during the period commencing on a Change in Control and ending on the second anniversary of the Change in Control.

(ee)“Securities Act” means the Securities Act of 1933, as amended.

(ff)“Stock Appreciation Right” means a right granted to a Participant pursuant to Section 6. The Committee may grant Stock Appreciation Rights (i) in tandem with all or part of

any Option granted under the Plan or at any subsequent time during the term of such Option, (ii) in tandem with all or part of any Incentive Award (other than an Option) granted under the Plan or at any subsequent time during the term of such Award, or (iii) without regard to any Option or other Incentive Award in each case upon such terms and conditions as the Committee may establish in its sole discretion (subject to the terms of the Plan). Upon the exercise of a Stock Appreciation Right, the holder shall have the right to receive the excess of (a) the Fair Market Value of one Share on the date of exercise (or such amount less than such Fair Market Value as the Committee shall so determine at any time during a specified period before the date of exercise) over (b) the base price of the Stock Appreciation Right. The award agreement with respect to the Stock Appreciation Right shall specify whether payment on exercise of a Stock Appreciation Right shall be made in cash, in whole Shares or other property, or any combination thereof.

(gg)“Subsidiary” means any “subsidiary” within the meaning of Rule 405 under the Securities Act.

(hh)“Substitute Award” shall mean an award granted under this Plan upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction, including a merger, combination, consolidation or acquisition of property or stock; provided, however, that in no event shall the term “Substitute Award” be construed to refer to an award made in connection with the cancellation and repricing of an Option or Stock Appreciation Right.

(ii)“Voting Securities” means, at any time, Chipotle’s then outstanding voting securities.

(jj)“Without Cause” means a termination of a Participant’s employment with the Company other than: (i) a termination of employment by the Company for Cause, (ii) a termination of employment as a result of the Participant’s death or Disability or (iii) a voluntary resignation by the Participant for any reason, including retirement.

3.Stock Subject to the Plan

(a)In General

Subject to adjustment as provided in Section 8 and the following provisions of this Section 3, as of the Effective Date, the maximum number of shares of Common Stock that may be issued pursuant to Incentive Awards granted under the Plan, other than Substitute Awards, shall be 2,431,419, less one share for every one share subject to an Option or stock appreciation right granted under the Prior Plan after December 31, 2021 and prior to the Effective Date, and less two shares for every one (1) share subject to a Full Value Award granted under the Prior Plan after December 31, 2021 and prior to the Effective Date. Out of such aggregate, the maximum number of shares of Common Stock that may be covered by Options that are designated as “incentive stock options” within the meaning of Section 422 of the Code shall not exceed 2,372,000 shares of Common Stock, subject to adjustment as provided in Section 8. Shares of Common Stock issued under the Plan may be authorized and unissued shares, authorized and issued shares held in Chipotle’s treasury or otherwise acquired for purposes of the

Plan, at the discretion of the Committee. Any shares of Common Stock subject to Options or Stock Appreciation Rights shall be counted against the maximum share limitation of this Section 3(a) as one share of Common Stock for every share of Common Stock subject thereto. Any shares of Common Stock subject to Full Value Awards shall be counted against the maximum share limitation of this Section 3(a) as two shares of Common Stock for every share of Common Stock subject thereto.

Any shares of Common Stock related to Incentive Awards, whether granted under this Plan or the Prior Plan, that at any time on or after the December 31, 2021, terminate by expiration, forfeiture, cancellation, or otherwise without the issuance of such shares (including but not limited to settlement of an Incentive Award at less than the target number of shares), are settled in cash in lieu of shares of Common Stock, or are exchanged with the Committee’s permission, prior to the issuance of shares of Common Stock, for Incentive Awards not involving shares of Common Stock, shall be available again (or, with respect to awards granted under the Prior Plan, shall be added to the shares available) for grant under this Plan and shall be added back to the Plan based on the share deduction ratio used with respect to such Incentive Award. Shares of Common Stock covered by Substitute Awards shall not count as used under the Plan for purposes of this Section 3. In addition, shares of Common Stock related to Incentive Awards, whether granted under this Plan or the Prior Plan, that at any time after December 31, 2021 are used to pay the withholding taxes related to any outstanding Full Value Award shall be available again (or, with respect to full value awards granted under the Prior Plan, shall be added to the shares available) for grant under this Plan and shall be added back to the Plan based on the share deduction ratio used with respect to such Full Value Award (or full award granted under the Prior Plan). Notwithstanding the foregoing, the following shares of Common Stock may not again be made available for issuance as Incentive Awards under the Plan: (i) shares of Common Stock not issued or delivered as a result of the net settlement of an outstanding Option or Stock Appreciation Right, (ii) shares of Common Stock used to pay the exercise price or withholding taxes related to any outstanding Option or Stock Appreciation Right, or (iii) shares of Common Stock reacquired by the Company with the amount received upon exercise of an Option.

(b)Prohibition on Repricing

Other than pursuant to a change in capitalization in accordance with Section 8, the Committee shall not without the approval of Chipotle’s shareholders (i) lower the exercise price or base price per share of an Option or Stock Appreciation Right after it is granted, (ii) cancel an Option or Stock Appreciation Right when the exercise price or base price per share exceeds the Fair Market Value of one share in exchange for cash or another Incentive Award (other than in connection with a transaction pursuant to Section 8), or (iii) take any other action with respect to an Option or Stock Appreciation Right that would be treated as a repricing under the rules and regulations of the principal U.S. national securities exchange on which the shares of Common Stock are listed.

4.Administration of the Plan; Certain Restrictions on Incentive Awards

(a)General

The Plan shall be administered by a Committee of the Board of Directors designated by the Board of Directors consisting of two or more persons, at least two of whom are intended to qualify as Non-Employee Directors (within the meaning of Rule 16b-3 promulgated under Section 16 of the Exchange Act) and as “independent” within the meaning of the rules of any applicable stock exchange or similar regulatory authority. The Committee shall, consistent with the terms of the Plan, from time to time designate those Eligible Persons who shall be granted Incentive Awards under the Plan and the amount, type and other terms and conditions of such Incentive Awards. Except to the extent prohibited by applicable law or the applicable rules of a stock exchange on which Chipotle’s shares are traded, the Committee may (i) delegate all or any portion of its responsibilities and powers to any one or more members of the Board and (ii) delegate all or any part of its responsibilities and powers to any person or persons selected by it, provided that no such delegation may be made that would cause any Incentive Awards or other transactions under the Plan to fail to or cease to be exempt from Section 16(b) of the Exchange Act. Any such delegation may be revoked by the Committee at any time.

The Committee shall have full discretionary authority to administer the Plan, including discretionary authority to interpret and construe any and all provisions of the Plan and the terms of any Incentive Award (and any agreement evidencing any Incentive Award) granted thereunder and to adopt and amend from time to time such rules and regulations for the administration of the Plan as the Committee may deem necessary or appropriate (including without limitation the adoption or amendment of rules or regulations applicable to the grant, vesting or exercise of Incentive Awards issued to employees located outside the United States). Without limiting the generality of the foregoing, the employment of a Participant with the Company shall be deemed to have terminated for all purposes of the Plan if such person is employed by or provides services to a Person that is a Subsidiary of Chipotle and such Person ceases to be a Subsidiary of Chipotle, unless the Committee specifically determines otherwise in writing. Decisions of the Committee shall be final, binding and conclusive on all parties.

On or after the date of grant of an Incentive Award under the Plan, the Committee may (i) accelerate the date on which any such Incentive Award becomes vested, exercisable or transferable, as the case may be, (ii) extend the term of any such Incentive Award, including, without limitation, extending the period following a termination of a Participant’s employment with or services as a Non-Employee Director or Consultant of the Company during which any such Incentive Award may remain outstanding, (iii) waive any conditions to the vesting, exercisability or transferability, as the case may be, of any such Incentive Award, (iv) provide for the payment of dividends or Dividend Equivalents (subject to Section 2(k)) with respect to any such Incentive Award, or (v) otherwise amend an outstanding Incentive Award in whole or in part from time-to-time as the Committee determines, in its sole and absolute discretion, to be necessary or appropriate to conform the Incentive Award to, or otherwise satisfy any legal requirement (including without limitation the provisions of Section 409A of the Code), which amendments may be made retroactively or prospectively and without the approval or consent of the Participant to the extent permitted by applicable law; provided, that the Committee shall not

have any such authority to the extent that the grant or exercise of such authority would cause any tax to become due under Section 409A of the Code.

No member of the Committee shall be liable for any action, omission, or determination relating to the Plan, and Chipotle shall indemnify and hold harmless each member of the Committee and each other Non-Employee Director or employee of the Company to whom any duty or power relating to the administration or interpretation of the Plan has been delegated against any cost or expense (including counsel fees) or liability (including any sum paid in settlement of a claim with the approval of the Committee) arising out of any action, omission or determination relating to the Plan, unless, in either case, such action, omission or determination was taken or made by such member, director or employee in bad faith and without reasonable belief that it was in the best interests of the Company.

(b)Non-Employee Director Compensation Limit

Notwithstanding any other provision of the Plan to the contrary, the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of all Incentive Awards granted to any Non-Employee Director during any single calendar year, plus the total cash and other compensation paid to such Non-Employee Director for director services rendered for such calendar year, shall not exceed $750,000; provided, however, that the limitation described in this Section shall be determined without regard to amounts paid to a Non-Employee Director during any period in which such individual was an Employee or Consultant (other than grants of awards paid for service in their capacity as a Non-Employee Director), and any severance and other payments, such as consulting fees, paid to a Non-Employee Director for such director’s prior or current service to Chipotle or any Subsidiary other than serving as a director, shall not be taken into account in applying the limit provided above. For the avoidance of doubt, any compensation that is deferred shall be counted toward this limit for the year in which it was first earned, and not when paid or settled if later.

5.Eligibility

The Persons who shall be eligible to receive Incentive Awards pursuant to the Plan shall be those Eligible Persons whom the Committee shall select from time to time. All Incentive Awards granted under the Plan shall be evidenced by a separate agreement setting forth the terms of such Incentive Award.

6.Options and Stock Appreciation Rights

The Committee may from time to time grant Options or Stock Appreciation Rights, subject to the following terms and conditions:

(a)Exercise or Base Price

The exercise price or base price per share of Common Stock covered by any Option or Stock Appreciation Right shall be not less than 100% of the Fair Market Value of a share of Common Stock on the date on which such Option or Stock Appreciation Right is granted. Notwithstanding the foregoing, an Option or Stock Appreciation Right may be granted with an exercise price or base price lower than 100% of the Fair Market Value on the date of grant of

such Option or Stock Appreciation Right if such Option or Stock Appreciation Right is granted as a Substitute Award and the exercise price or base price is determined in a manner consistent with the provisions of Sections 409A and, if applicable, 424(a) of the Code. The agreement evidencing the award of each Option shall clearly identify such Option as either an “incentive stock option” within the meaning of Section 422 of the Code or as not an incentive stock option.

(b)Term and Exercise of Options and Stock Appreciation Rights

(1)Each Option or Stock Appreciation Right shall become vested and exercisable on such date or dates, during such period and for such number of shares of Common Stock as shall be determined by the Committee on or after the date such Option or Stock Appreciation Right is granted (including without limitation in accordance with terms and conditions relating to the vesting or exercisability of an Option or Stock Appreciation Right set forth in any employment, severance, change in control or similar agreement entered into by the Company with a Participant); provided, however that no Option or Stock Appreciation Right shall be exercisable after the expiration of ten years from the date such Option or Stock Appreciation Right is granted; and, provided, further, that each Option or Stock Appreciation Right shall be subject to earlier termination, expiration or cancellation as provided in the Plan or in the agreement evidencing such Option or Stock Appreciation Right.

(2)Each Option or Stock Appreciation Right may be exercised in whole or in part; provided, however that the Committee (or its delegate) may impose a minimum size for a partial exercise of an Option or Stock Appreciation Right in its discretion from time to time. The partial exercise of an Option or Stock Appreciation Right shall not cause the expiration, termination or cancellation of the remaining portion thereof.

(3)An Option or Stock Appreciation Right shall be exercised by such methods and procedures as the Committee determines from time to time, including without limitation through net physical settlement or other method of cashless exercise. With respect to any Participant who is a member of the Board or an officer (as defined under SEC Rule 16a-1), a tender of shares of Common Stock or, a cashless or net exercise shall be a subsequent transaction approved as part of the original grant of an Option or Stock Appreciation Right for purposes of the exemption under Rule 16b-3 of the Exchange Act.

(4)Options and Stock Appreciation Rights may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of a Participant, only by the Participant; provided, however that the Committee may permit Options or Stock Appreciation Rights to be pledged, assigned, hypothecated, transferred, or disposed of, on a general or specific basis, subject to such conditions and limitations as the Committee may determine, except that Options and Stock Appreciation Right may not be sold for consideration or transferred for value (provided further that donative transfers described in Section A.1.(a)(5) of the general instructions to Form S-8 shall not be deemed transfers for value for purposes of this section).

(5)If the exercise of the Option or Stock Appreciation Right following the termination of the Participant’s employment or service (other than upon the Participant’s death

or disability) would be prohibited at any time solely because the issuance of shares of Common Stock would violate the registration requirements under the Securities Act, or any other requirements of applicable law, then the Option or Stock Appreciation Right shall terminate on the earlier of (i) the expiration of the term of the Option and (ii) the expiration of a period of thirty (30) days after the termination of the Participant’s employment or service during which the exercise of the Option or Stock Appreciation Right would not be in violation of such registration requirements or other applicable requirements.

(6)Notwithstanding the foregoing, the Committee may, in its sole discretion, implement a provision in existing and future grants of Options and Stock Appreciation Rights providing that if, on the last day that an Option or Stock Appreciation Right may be exercised, the Participant has not then exercised such Option or Stock Appreciation Right, such Option or Stock Appreciation Right shall be deemed to have been exercised by the Participant on such last day and the Company shall make the appropriate payment to such Participant after applying required tax withholding. The Committee may delegate this authority to one or more of the Company’s officers, who may implement this provision by including it in grant agreements or including it in the Plan’s administrative rules, provided that such officers may not implement it in Incentive Awards to persons who are Non-Employee Directors or executive officers otherwise subject to reporting obligations under Section 16 of the Exchange Act.

(c)Effect of Termination of Employment or other Relationship

The agreement evidencing the award of each Option or Stock Appreciation Right shall specify the consequences with respect to such Option or Stock Appreciation Right of the termination of the employment, service as a Non-Employee Director or other relationship between the Company and the Participant holding the Option or Stock Appreciation Right, provided, however, that except as expressly provided to the contrary in the agreement evidencing the award of a particular Option or Stock Appreciation Right, where continued vesting or exercisability of an Option or Stock Appreciation Right terminates in connection with the termination of a Participant’s employment relationship with the Company, such Participant’s employment relationship with the Company will be deemed, for purposes of such Option or Stock Appreciation Right, to continue so long as Participant serves as either an employee of the Company or as a member of the Board or Consultant Notwithstanding the foregoing sentence, a Participant’s employment will be deemed to terminate immediately upon such Participant’s termination for Cause, regardless of whether Participant remains on the Board or as a Consultant following such termination.

(d)Effect of Qualifying Termination

If a Participant experiences a Qualifying Termination or a Non-Employee Director’s service on the Board terminates in connection with or as a result of a Change in Control, each Option or Stock Appreciation Right outstanding immediately prior to such Qualifying Termination or termination of a Non-Employee Director’s service shall become fully and immediately vested and exercisable as of such Qualifying Termination or termination of a Non-Employee Director’s service and shall remain exercisable until its expiration, termination or cancellation pursuant to the terms of the Plan and the agreement evidencing such Option or Stock Appreciation Right, with the attainment level of any performance-based vesting conditions

determined in accordance with the agreement evidencing such Option or Stock Appreciation Right.

(e)Special Rules for Incentive Stock Options

(1)The aggregate Fair Market Value of shares of Common Stock with respect to which “incentive stock options” (within the meaning of Section 422 of the Code) are exercisable for the first time by a Participant during any calendar year under the Plan and any other stock option plan of Chipotle (or any “subsidiary”, as such term is defined in Section 424 of the Code, of Chipotle) shall not exceed $100,000. Such Fair Market Value shall be determined as of the date on which each such incentive stock option is granted. In the event that the aggregate Fair Market Value of shares of Common Stock with respect to such incentive stock options exceeds $100,000, then incentive stock options granted hereunder to such Participant shall, to the extent and in the order required by regulations promulgated under the Code (or any other authority having the force of regulations) (“Regulations”), automatically be deemed to be non-qualified stock options, but all other terms and provisions of such incentive stock options shall remain unchanged. In the absence of such Regulations (and authority), or in the event such Regulations (or authority) require or permit a designation of the options which shall cease to constitute incentive stock options, incentive stock options granted hereunder shall, to the extent of such excess and in the order in which they were granted, automatically be deemed to be non-qualified stock options, but all other terms and provisions of such incentive stock options shall remain unchanged.

(2)No incentive stock option may be granted to an individual if, at the time of the proposed grant, such individual owns stock possessing more than ten percent of the total combined voting power of all classes of stock of Chipotle or any of its “subsidiaries” (within the meaning of Section 424 of the Code), unless (i) the exercise price of such incentive stock option is at least one hundred and ten percent of the Fair Market Value of a share of Common Stock at the time such incentive stock option is granted and (ii) such incentive stock option is not exercisable after the expiration of five years from the date such incentive stock option is granted.

7.Other Stock-Based Awards

(a)Authorization of Other Stock-Based Awards

The Committee may grant equity-based or equity-related awards not otherwise described herein in such amounts and subject to such terms and conditions as the Committee shall determine. Without limiting the generality of the preceding sentence, each such Other Stock-Based Award may (i) involve the transfer of actual shares of Common Stock to Participants, either at the time of grant or thereafter, or payment in cash or otherwise of amounts based on the value of shares of Common Stock, (ii) be subject to performance-based and/or service-based conditions, (iii) be in the form of phantom stock, restricted stock, restricted stock units, performance shares, or share-denominated performance units, and (iv) be designed to comply with applicable laws of jurisdictions other than the United States.

(b)Effect of Qualifying Termination; Other Termination Provisions

Except as may be expressly provided to the contrary by the Committee in an agreement evidencing the grant of an Other Stock-Based Award or any employment, severance, change in control or similar agreement entered into with a Participant, if a Participant experiences a Qualifying Termination or a Non-Employee Director’s service on the Board terminates in connection with or as a result of a Change in Control, each Other Stock-Based Award outstanding immediately prior to such Qualifying Termination or termination of Non-Employee Director’s service shall become fully and immediately vested and, if applicable, exercisable as of such Qualifying Termination or termination and shall remain exercisable until its expiration, termination or cancellation pursuant to the terms of the Plan and the agreement evidencing such Other Stock-Based Award, with the attainment level of any performance-based vesting conditions determined in accordance with the agreement evidencing such Other Stock-Based Award.

Furthermore, except as expressly provided to the contrary in the agreement evidencing the award of a particular Other Stock-Based Award, where continued vesting or exercisability of an Other Stock-Based Award terminates in connection with the termination of a Participant’s employment relationship with the Company, such Participant’s employment relationship with the Company will be deemed, for purposes of such Other Stock-Based Award, to continue so long as Participant serves as either an employee of the Company or as a member of the Board or Consultant. Notwithstanding the foregoing sentence, a Participant’s employment will be deemed to terminate immediately upon such Participant’s termination for Cause, regardless of whether Participant remains on the Board or as a Consultant following such termination.

8.Capitalization Events and Corporate Transactions

(a)Capitalization Adjustments

In the event of any equity restructuring (within the meaning of Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation, or any successor or replacement accounting standard) that causes the per share value of shares of Common Stock to change, such as a stock dividend, stock split, spinoff, rights offering or recapitalization through an extraordinary cash dividend, the number and class of securities available under this Plan, the terms of each outstanding Option and Stock Appreciation Right (including the number and class of securities subject to each outstanding Option and Stock Appreciation Right and the exercise price or base price per share), and the terms of each outstanding Other Stock-Based Award (including the number and class of securities subject thereto) shall be appropriately adjusted by the Committee, such adjustments to be made in the case of outstanding Options and Stock Appreciation Rights without an increase in the aggregate exercise price or base price and in accordance with Section 409A of the Code. In the event of any other change in corporate capitalization, including a merger, consolidation, reorganization, or partial or complete liquidation of the Company, such equitable adjustments described in the foregoing sentence may be made as determined to be appropriate and equitable by the Committee to prevent dilution or enlargement of rights of participants. Moreover, in the event of any such transaction or event, or in the event of a Change in Control, the Committee may provide in substitution for any or all outstanding Incentive Awards such alternative consideration (including

cash), if any, as it, in good faith, may determine to be equitable in the circumstances and shall require in connection therewith the surrender of all Incentive Awards so replaced in a manner that complies with Section 409A of the Code. In the event of any of the foregoing, the decision of the Committee regarding any such adjustment shall be final, binding and conclusive.

(b)Change in Control

In the event of a Change in Control, the Committee shall, in its discretion, have the power to:

(i)provide that (A) some or all outstanding Options and Stock Appreciation Rights shall become exercisable in full or in part, either immediately or upon a subsequent termination of employment, (B) the vesting period applicable to some or all outstanding Incentive Awards shall lapse in full or in part, either immediately or upon a subsequent termination of employment, (C) the Performance Period applicable to some or all outstanding Incentive Awards shall lapse in full or in part, and (D) the Performance Goals applicable to some or all outstanding awards shall be deemed to be satisfied at the target or any other level;

(ii)require that shares of stock of the corporation resulting from such Change in Control, or a parent corporation thereof, or other property be substituted for some or all of the shares of Common Stock subject to an outstanding Incentive Award, with an appropriate and equitable adjustment to such award as shall be determined by the Committee in accordance with Section 8(a); and/or

(iii)require outstanding Incentive Awards, in whole or in part, to be surrendered to the Company by the holder, and to be immediately cancelled by the Company, and to provide for the holder to receive (A) a cash payment or other property in an amount equal to (1) in the case of an Option or a Stock Appreciation Right, the aggregate number of shares of Common Stock then subject to the portion of such Option or Stock Appreciation Right surrendered multiplied by the excess, if any, of the Fair Market Value of a share of Common Stock as of the date of the Change in Control, over the exercise price or base price per share of Common Stock subject to such Option or Stock Appreciation Right, (2) in the case of an Other Stock-Based Award denominated in shares of Common Stock, the aggregate number of shares of Common Stock then subject to the portion of such award surrendered to the extent the Performance Measures applicable to such award have been satisfied or are deemed satisfied pursuant to Section 8(b)(i), multiplied by the Fair Market Value of a share of Common Stock as of the date of the Change in Control, and (3) in the case of Performance-Based Compensation denominated in cash, the value of the Performance-Based Compensation then subject to the portion of such award surrendered to the extent the Performance Measures applicable to such award have been satisfied or are deemed satisfied pursuant to Section 8(b)(i); (B) shares of capital stock of the corporation resulting from or succeeding to the business of the Company pursuant to such Change in Control, or a parent corporation thereof, having a fair market value not less than the amount determined under clause (A) above; or (C) a combination of the payment of cash or other property pursuant to clause (A) above and the issuance of shares pursuant to clause (B) above; or

(iv)a combination of the foregoing, which may vary among Participants.

(c)No Other Rights

Except as expressly provided in the Plan or the agreement evidencing the grant of an Option or Other Stock-Based Award, no Participant shall have any rights by reason of any subdivision or consolidation of shares of stock of any class, the payment of any dividend, any increase or decrease in the number of shares of stock of any class or any dissolution, liquidation, merger or consolidation of Chipotle or any other corporation. Except as expressly provided in the Plan or the agreement evidencing the grant of an Option or Other Stock-Based Award, no issuance by Chipotle of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number of shares or amount of other property subject to any Incentive Award.

(d)Code Section 409A

(i)To the extent applicable and notwithstanding any other provision of the Plan, the Company intends to administer, operate and interpret the Plan and all Incentive Awards granted thereunder in a manner that complies with Section 409A of the Code, however, Chipotle and its Subsidiaries (including their respective employees, officers, directors or agents) shall not have any liability to any Participant (or any other person) that is related to a Section 409A violation, nor will the Company indemnify or otherwise reimburse Participant (or any other person) for any liability incurred as a result of a violation of Section 409A of the Code.

(ii)Notwithstanding any provision in Section 13 of the Plan to the contrary, in the event that the Committee determines that any amounts payable hereunder will be taxable to a Participant under Section 409A of the Code prior to the payment and/or delivery to such Participant of such amount, the Company may (A) adopt such amendments to the Plan and related agreement, and appropriate policies and procedures, including amendments and policies with retroactive effect, that the Committee determines necessary or appropriate to preserve the intended tax treatment of the benefits provided by the Plan and awards hereunder and/or (B) take such other actions as the Committee determines necessary or appropriate to comply with the requirements of Section 409A of the Code. No action shall be taken under this Plan which shall cause an award to fail to comply with Section 409A of the Code, to the extent applicable to such Award.

(iii)With respect to any Incentive Award that is considered “deferred compensation” subject to Section 409A of the Code, references in the Plan to “termination of employment” (and substantially similar phrases) shall mean “separation from service” within the meaning of Section 409A of the Code. For purposes of Section 409A of the Code, each of the payments that may be made in respect of any Incentive Award granted under the Plan are designated as separate payments.

(iv)Notwithstanding any payment provision in the Plan or an agreement evidencing an Incentive Award to the contrary, if a Participant is a “specified employee” within the meaning of Section 409A(a)(2)(B)(i) of the Code, no payments in respect of any Incentive Awards that are “deferred compensation” subject to Section 409A of the Code and which would otherwise be payable upon the Participant’s “separation from service” (as defined in Section 409A of the Code), to the extent necessary to avoid the imposition of taxes under Section 409A

of the Code, shall be made to such Participant prior to the date that is six months after the date of such Participant’s “separation from service” or, if earlier, the Participant’s date of death. Following any applicable six-month delay, all such delayed payments will be paid in a single lump sum, without interest, on the earliest date permitted under Section 409A of the Code that is also a business day.

9.Rights as a Shareholder

No person shall have any rights as a shareholder with respect to any shares of Common Stock covered by or relating to any Incentive Award granted pursuant to the Plan unless and until such person becomes a shareholder of record with respect to such shares. Except as otherwise expressly provided in Section 8 hereof, no adjustment of any Incentive Award shall be made for dividends or other rights for which the record date occurs prior to the date on which such person becomes the shareholder of record. Notwithstanding any other provisions of this Section 9, dividends shall be subject to the same restrictions, and risk of forfeiture, including but not limited to meeting vesting requirements and achieving applicable Performance Goals, as the underlying Incentive Award and such other restrictions as the Committee may determine.

10.No Special Employment Rights; No Right to Incentive Award

(a)Nothing contained in the Plan or any Incentive Award shall confer upon any Participant any right with respect to the continuation of his employment by or service to the Company or interfere in any way with the right of the Company at any time to terminate such employment or service or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of an Incentive Award.

(b)No person shall have any claim or right to receive an Incentive Award hereunder. The Committee’s granting of an Incentive Award to a Participant at any time shall neither require the Committee to grant an Incentive Award to such Participant or any other Participant or other person at any time nor preclude the Committee from making subsequent grants to such Participant or any other Participant or other person.

11.Securities Matters

(a)Chipotle shall be under no obligation to effect the registration pursuant to the Securities Act of any shares of Common Stock to be issued hereunder or to effect similar compliance under any state laws. Notwithstanding anything herein to the contrary, Chipotle shall not be obligated to cause to be issued or delivered any certificates evidencing shares of Common Stock pursuant to the Plan unless and until Chipotle is advised by its counsel that the issuance and delivery of such certificates is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Common Stock are traded. The Committee may require, as a condition to the issuance and delivery of certificates evidencing shares of Common Stock pursuant to the terms hereof, that the recipient of such shares make such covenants, agreements and representations, and that such certificates bear such legends, as the Committee deems necessary or desirable.

(b)The exercise of any Option granted hereunder shall only be effective at such time as counsel to Chipotle shall have determined that the issuance and delivery of shares of Common

Stock pursuant to such exercise is in compliance with all applicable laws, regulations of governmental authority and the requirements of any securities exchange on which shares of Common Stock are traded. Chipotle may, in its discretion, defer the effectiveness of an exercise of an Option hereunder or the issuance or transfer of shares of Common Stock pursuant to any Incentive Award pending or to ensure compliance under federal or state securities laws or the rules or regulations of any exchange on which the Shares are then listed for trading. Chipotle shall inform the Participant in writing of its decision to defer the effectiveness of the exercise of an Option or the issuance or transfer of shares of Common Stock pursuant to any Incentive Award. During the period that the effectiveness of the exercise of an Option has been deferred, the Participant may, by written notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto.

12.Withholding Taxes

(a)Cash Remittance

Whenever shares of Common Stock are to be issued upon the exercise of an Option or the grant or vesting of an Incentive Award, Chipotle shall have the right to require the Participant to remit to Chipotle in cash an amount sufficient to satisfy federal, state and local (or other) withholding tax requirements, attributable to such exercise, grant or vesting prior to the delivery of any certificate or certificates for such shares or the effectiveness of the lapse of such restrictions. In addition, upon the exercise or settlement of any Incentive Award in cash, Chipotle shall have the right to withhold from any cash payment required to be made pursuant thereto an amount sufficient to satisfy the federal, state and local withholding tax requirements, if any, attributable to such exercise or settlement.

(b)Stock Remittance

At the election of the Participant, subject to the approval of the Committee, when shares of Common Stock are to be issued upon the exercise, grant or vesting of an Incentive Award, the Participant may tender to Chipotle a number of shares of Common Stock (subject to any minimum holding period as the Committee may determine) having a fair market value at the tender date determined by the Committee to be sufficient to satisfy the minimum federal, state and local (or other) withholding tax requirements, if any, attributable to such exercise, grant or vesting but not greater than such minimum withholding obligations (or, if permitted by the Company, such other withholding rate as will not cause adverse accounting consequences under the accounting rules then in effect). Such election shall satisfy the Participant’s obligations under Section 12(a) hereof, if any.

(c)Stock Withholding

At the election of the Participant, subject to the approval of the Committee or as required by the Committee, when shares of Common Stock are to be issued upon the exercise, grant or vesting of an Incentive Award, Chipotle shall withhold such number of shares elected by the Participant not in excess of the maximum amount required for federal, state and local (or other) tax withholding attributable to such exercise, grant or vesting (or, if permitted by the Company, such other withholding rate as will not cause adverse accounting consequences under the

accounting rules then in effect). Such election shall satisfy the Participant’s obligations under Section 12(a) hereof, if any.

(d)Section 15 Approval

With respect to any Participant who is a member of the Board of Directors or an officer (as defined under SEC Rule 16a-1), a withholding or tender of shares of Common Stock shall be a subsequent transaction approved as part of the Incentive Award for purposes of the exemption under Rule 16b-3 of the Exchange Act.

13.Amendment or Termination of the Plan

The Board of Directors may at any time suspend or discontinue the Plan or revise or amend it in any respect whatsoever; provided, however, that no amendment to the Plan shall be effective without the approval of Chipotle’s shareholders if (i) shareholder approval is required by applicable law, rule or regulation, including any rule of the NYSE, or any other stock exchange on which the Common Stock is then traded, or (ii) such amendment seeks to modify the prohibition on repricing set forth in Section 3(b) or the Non-Employee Director compensation limit set forth in Section 4; provided further, that no amendment may materially impair the rights of a holder of an outstanding award without the consent of such holder. The preceding sentence shall not restrict the Committee’s ability to exercise its discretionary authority hereunder pursuant to Section 4, which discretion may be exercised without amendment to the Plan. No provision of this Section 13 shall be given effect to the extent that such provision would cause any tax to become due under Section 409A of the Code. Except as expressly provided in the Plan, no action hereunder may, without the consent of a Participant, materially impair the Participant’s rights under any previously granted and outstanding Incentive Award. Nothing in the Plan shall limit the right of the Company to pay compensation of any kind outside the terms of the Plan.

14.No Obligation to Exercise

The grant to a Participant of an Incentive Award shall impose no obligation upon such Participant to exercise such Incentive Award.

15.Transfers Upon Death

Upon the death of a Participant, outstanding Incentive Awards granted to such Participant may be exercised only by the executors or administrators of the Participant’s estate or by any person or persons who shall have acquired such right to exercise by will or by the laws of descent and distribution. No transfer by will or the laws of descent and distribution of any Incentive Award, or the right to exercise any Incentive Award, shall be effective to bind Chipotle unless the Company shall have been furnished with (a) written notice thereof and with a copy of the will and/or such evidence as the Company may deem necessary to establish the validity of the transfer and (b) an agreement by the transferee to comply with all the terms and conditions of the Incentive Award that are or would have been applicable to the Participant and to be bound by the acknowledgements made by the Participant in connection with the grant of the Incentive Award.

16.Expenses and Receipts

The expenses of the Plan shall be paid by Chipotle. Any proceeds received by Chipotle in connection with any Incentive Award will be used for general corporate purposes.

17.Governing Law

The Plan and the rights of all persons under the Plan shall be construed and administered in accordance with the laws of the State of Delaware without regard to its conflict of law principles.

18.Duration of the Plan

The Board may suspend or terminate the Plan at any time. In no event may an Incentive Stock Option be granted more than ten years after the earlier of (a) the date of the adoption of the Plan by the Board or (b) the Effective Date. After the Plan is terminated, no new Incentive Awards may be granted but Incentive Awards previously granted shall remain outstanding in accordance with their applicable terms and conditions and the Plan’s terms and conditions.

19.Company Recoupment of Incentive Awards

The rights contained in this Plan shall be subject to (a) any right that the Company may have under any other Company recoupment policy or other agreement or arrangement with a Participant in effect as of the date of grant of the Incentive Award or adopted thereafter to comply with applicable law, including Chipotle’s Clawback and Recoupment of Compensation Policy, as amended from time to time, or (b) any right or obligation that the Company may have regarding the recovery of “incentive-based compensation” under Section 10D of the Exchange Act, as amended (as determined by the applicable rules and regulations promulgated thereunder from time to time by the U.S. Securities and Exchange Commission) or other applicable law. The Committee may determine, as late as the time of such recoupment or recovery, regardless of whether such method is stated in the Incentive Award agreement, whether the Company shall effect any such recoupment or recovery: (i) by seeking repayment from the Participant; (ii) by reducing (subject to applicable law and the terms and conditions of the applicable plan, program or arrangement) the amount that would otherwise be payable to the Participant under any compensatory plan, program or arrangement maintained by the Company; (iii) by withholding payment of future increases in compensation (including the payment of any discretionary bonus amount) or grants of compensatory awards that would otherwise have been made in accordance with the Company’s otherwise applicable compensation practices; (iv) by holdback or escrow (before or after taxation) of part or all the Common Stock, payment or property received upon exercise or satisfaction of an Incentive Award or (v) by any combination of the foregoing.

20.International Participants.

With respect to Participants who reside or work outside of the United States of America, the Committee may in its sole discretion grant Incentive Awards on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan, and, in furtherance of such purposes, the Committee may make such modifications, amendments,

procedures, or subplans as may be necessary or advisable to comply with such legal or regulatory provisions and/or to obtain more favorable tax or other treatment for a Participant, Chipotle or its Subsidiaries. For avoidance of doubt, the Committee may delegate its authority under this Section 20 with respect to any Participant; provided, however that only the Committee (or a subcommittee) thereof shall be authorized to grant Incentive Awards or otherwise provide additional benefits to a member of the Board of Directors or officer (as defined under SEC Rule 16a-1).

21.Provisions Relating to Termination of Consultants and Non-Employee Directors.

To the extent that an Incentive Award is made to a Non-Employee Director or Consultant, the provisions of the Plan relating to termination of employment shall be deemed to refer to the termination of such individual’s service with Chipotle or a Subsidiary.

22.Certain Terminations of Employment, Hardship and Approved Leave of Absence.

Notwithstanding any other provision of this Plan to the contrary, in the event of a Participant’s termination of employment (including by reason of death, disability or retirement) or in the event of hardship or other special circumstances, the Committee may in its sole discretion take any action that it deems to be equitable under the circumstances or in the best interests of the Company, including, without limitation, waiving or modifying any limitation or requirement with respect to any Award under this Plan. The Committee shall have the discretion to determine whether and to what extent the vesting of Awards shall be tolled during any leave of absence, paid or unpaid; provided however, that in the event of military leave, vesting shall toll during any unpaid portion of such leave, provided that, upon a Participant’s returning from military leave (under conditions that would entitle him or her to protection upon such return under the Uniform Services Employment and Reemployment Rights Act), he or she shall be given vesting credit with respect to the Award to the same extent as would have applied had the Participant continued to provide services to the Company throughout the leave on the same terms as he or she was providing services immediately prior to such leave. Any actions taken by the Committee shall be taken consistent with the requirements of Section 409A of the Code.

23.Tolling of Exercisability of Options and Stock Appreciation Rights.

In the event a Participant is prevented from exercising an Option or Stock Appreciation Right or the Company is unable to settle an Incentive Award due to either any trading restrictions applicable to Chipotle’s shares of Common Stock, the Participant’s physical infirmity or administrative error by the Company relied upon and not caused by the Participant, then unless otherwise determined by the Committee and subject to Section 409A of the Code, the length of time applicable to any such restriction, condition or event shall toll any exercise period (i) until such restriction lapses, (ii) until the Participant (or his representative) is able to exercise the Incentive Award or (iii) until such error is corrected, as applicable.

No Duty to Inform Regarding Exercise Rights.

Neither Chipotle, its Subsidiaries, the Committee nor the Board of Directors shall have any duty to inform a Participant of the pending expiration of the period in which a Stock Appreciation Right may be exercised or in which an Option may be exercised.

25.No Constraint on Corporate Action.

Nothing in this Plan shall be construed to: (i) limit, impair, or otherwise affect Chipotle’s or a Subsidiary’s right or power to make adjustments, reclassifications, reorganizations, or changes of its capital or business structure, or to merge or consolidate, or dissolve, liquidate, sell, or transfer all or any part of its business or assets; or (ii) limit the right or power of Chipotle or a Subsidiary to take any action which such entity deems to be necessary or appropriate.

26.Effect of Disposition of Facility or Operating Unit.

If Chipotle or any of its Subsidiaries closes or disposes of the facility at which a Participant is located or Chipotle or any of its Subsidiaries diminish or eliminate ownership interests in any operating unit of Chipotle or any of its Subsidiaries so that such operating unit ceases to be majority owned by Chipotle or any of its Subsidiaries then, with respect to Incentive Awards held by Participants who subsequent to such event will not be Employees, the Committee may, to the extent consistent with Section 409A (if applicable), take any of the actions described in Section 8 with respect to a Change in Control. If the Committee takes no special action with respect to any disposition of a facility or an operating unit, then the Participant shall be deemed to have terminated his or her employment with Chipotle and its Subsidiaries and the terms and conditions of the award agreement and the other terms and conditions of this Plan shall control.

27.Limitations Period.

Any person who believes he or she is being denied any benefit or right under this Plan may file a written claim with the Committee. Any claim must be delivered to the Committee within forty-five (45) days of the specific event giving rise to the claim. Untimely claims will not be processed and shall be deemed denied. The Committee, or its designated agent, will notify the Participant of its decision in writing as soon as administratively practicable. Claims not responded to by the Committee in writing within ninety (90) days of the date the written claim is delivered to the Committee shall be deemed denied. The Committee’s decision shall be final, conclusive and binding on all persons. No lawsuit relating to this Plan or an Incentive Award granted hereunder may be filed before a written claim is filed with the Committee and is denied or deemed denied, and any lawsuit must be filed within one year of such denial or deemed denial or be forever barred. The venue for any lawsuit relating to this Plan or an Incentive Award shall be Wilmington, Delaware.

28.No Fractional Shares.

No fractional shares of Chipotle Common Stock shall be issued or delivered pursuant to the Plan or any grant. The Committee shall determine whether cash, other awards or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.

29.Protected Rights.

Nothing contained in this Plan or an agreement evidencing an Incentive Award is intended to limit the Participant’s ability to (i) report possible violations of law or regulation to,

or file a charge or complaint with, the Securities and Exchange Commission, the Equal Employment Opportunity Commission, the National Labor Relations Board, the Occupational Safety and Health Administration, the Department of Justice, the Congress, any Inspector General, or any other federal, state or local governmental agency or commission (“Government Agencies”), (ii) communicate with any Government Agencies or otherwise participate in any investigation or proceeding that may be conducted by any Government Agency, including providing documents or other information, without notice to the Company or (iii) under applicable United States federal law to (A) disclose in confidence trade secrets to federal, state, and local government officials, or to an attorney, for the sole purpose of reporting or investigating a suspected violation of law or (B) disclose trade secrets in a document filed in a lawsuit or other proceeding, but only if the filing is made under seal and protected from public disclosure.

		Exhibit 103

Exhibit 10.3

CHIPOTLE MEXICAN GRILL, INC.

EMPLOYEE STOCK PURCHASE PLAN

1.Purpose. The purpose of the Chipotle Mexican Grill, Inc. Employee Share Purchase Plan (this “Plan”) is to provide eligible employees of the Company and Participating Subsidiaries with a convenient means of acquiring an equity interest in the Company through payroll deductions or other contributions in order to enhance such employees’ sense of participation in the affairs of the Company.

This Plan includes two components: (a) a component intended to qualify as an “employee stock purchase plan” under Section 423 of the Code (the “423 Component”), the provisions of which shall be construed so as to extend and limit participation in a uniform and nondiscriminatory manner consistent with the requirements of Section 423 of the Code; and (b) a component that does not qualify as an “employee stock purchase plan” under Section 423 of the Code (the “Non-423 Component”), under which options shall be granted pursuant to rules, procedures or sub-plans adopted by the Committee designed to achieve tax, securities laws or other objectives for eligible Employees, the Company and its Participating Subsidiaries. Except as otherwise provided in this Plan, the Non-423 Component will operate and be administered in the same manner as the 423 Component.

2.Definitions. As used herein, the terms set forth below have the meanings assigned to them in this Section 2 and shall include the plural as well as the singular.

“1933 Act” means the Securities Act of 1933, as amended.

“1934 Act” means the Securities Exchange Act of 1934, as amended.

“Board” means the Board of Directors of Chipotle Mexican Grill, Inc.

“Business Day” shall mean a day on which the NYSE is open for trading.

“Brokerage Account” means the account in which the Purchased Shares are held.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the Compensation Committee of the Board, or the designee of the Compensation Committee.

“Company” means Chipotle Mexican Grill, Inc., a Delaware corporation.

“Compensation” means the base pay received by a Participant, plus overtime and regular annual, quarterly and monthly cash bonuses and vacation, holiday and sick pay. Compensation does not include: (1) commissions, (2) income related to stock option awards, stock grants and other equity incentive awards, (3) expense reimbursements, (4) relocation-related payments, (5) benefit plan payments (including but not limited to short-term disability pay, long-term disability pay, maternity pay, military pay, tuition reimbursement and adoption assistance),

(6) accrued but unpaid compensation for a deceased Participant, (7) income from non-cash and fringe benefits, (8) severance payments, and (9) other forms of compensation not specifically listed herein.

“Employee” means any individual who is a common law employee of the Company or any other Participating Subsidiary. For purposes of the Plan, the employment relationship shall be treated as continuing intact while the individual is on sick leave or other leave of absence approved by the Company or the Participating Subsidiary, as appropriate, and only to the extent permitted under Section 423 of the Code with respect to the 423 Component. For purposes of the Plan, an individual who performs services for the Company or a Participating Subsidiary pursuant to an agreement (written or oral) that classifies such individual’s relationship with the Company or a Participating Subsidiary as other than a common law employee shall not be considered an “employee” with respect to any period preceding the date on which a court or administrative agency issues a final determination that such individual is an “employee.”

“Enrollment Date” means the first Business Day of each Offering Period.

“Exercise Date” means the last Business Day of each Offering Period (or, if determined by the Committee, the Purchase Period if different from the Offering Period).

“Fair Market Value” on or as of any date means the official closing price for a Share as reported on the NYSE on the relevant valuation date or, if no official closing price is reported on such date, on the preceding day on which an official closing price is reported on the NYSE was reported; or, if the Shares are no longer listed on the NYSE, the closing price for Shares as reported on the official website for such other exchange on which the Shares are listed.

“Offering Period” means every three-month period beginning each March 1st, June 1st September 1st and December 1st or such other period designated by the Committee; provided that in no event shall an Offering Period exceed twenty-seven (27) months. The first Offering Period under the Plan shall commence on June 1, 2022 and shall end on August 31, 2022, subject to shareholder approval of the Plan at the 2022 annual meeting of shareholders. Notwithstanding anything herein to the contrary, the Committee may establish an Offering Period with multiple Purchase Periods within such Offering Period.

“Option” means an option granted under this Plan that entitles a Participant to purchase Shares.

“Participant” means an Employee who satisfies the requirements of Sections 3 and 5 of the Plan.

“Participating Subsidiary” means each Subsidiary other than those that the Committee or the Board has excluded from participation in the Plan, if any.

“Plan” means this Chipotle Mexican Grill, Inc. Employee Stock Purchase Plan, as amended from time to time.

“Purchase Account” means the account used to purchase Shares through the exercise of Options under the Plan.

“Purchase Period” means the period designated by Committee during which payroll deductions or other contributions of the Participants are accumulated under the Plan. A Purchase Period may coincide with an entire Offering Period or there may be multiple Purchase Periods within an Offering Period, as determined by the Committee prior to the commencement of the applicable Offering Period.

“Purchase Price” shall be the lesser of: (i) 92.5% percent of the Fair Market Value of a Share on the applicable Enrollment Date for an Offering Period and (ii) 92.5% percent of the Fair Market Value of a Share on the applicable Exercise Date; provided, however, that the Committee may determine a different per share Purchase Price so long as such per share Purchase Price is communicated to Participants prior to the beginning of the Offering Period and provided that in no event shall such per share Purchase Price be less than the lesser of (i) 85% of the Fair Market Value of a Share on the applicable Enrollment Date or (ii) 85% of the Fair Market Value of a Share on the Exercise Date.

“Purchased Shares” means the full Shares issued or delivered pursuant to the exercise of Options under the Plan.

“Shares” means shares of the common stock of the Company.

“Subsidiary” means an entity, domestic or foreign, of which not less than 50% of the voting equity is held by the Company or a Subsidiary, whether or not such entity now exists or is hereafter organized or acquired by the Company or a Subsidiary; provided such entity is also a “subsidiary” within the meaning of Section 424 of the Code.

“Termination Date” means (i) the date on which a Participant terminates employment or on which the Participant ceases to provide services to the Company or a Subsidiary as an employee or as otherwise required under Section 423 with respect to the 423 Component or (ii) subject to Section 423 of the Code with respect to the 423 Component, the date on which the Participant’s employment is determined to have been terminated for purposes of the Plan by the Committee. The Termination Date specifically does not include any period following that date on which the Participant may be eligible for or in receipt of other payments from the Company, including in lieu of notice or termination or severance pay or as wrongful dismissal damages.

3.Eligibility.

(a)An Employee shall be eligible to participate on the first Enrollment Date that occurs at least twelve (12) full months (or such other time determined by the Committee and consistent with Section 423 of the Code with respect to the 423 Component) after such Employee’s first date of employment with the Company or a Participating Subsidiary. In no event may a Participant be granted an Option under the Plan following his or her Termination Date.

(b)Any provisions of the Plan to the contrary notwithstanding, no Employee shall be granted an Option under the 423 Component of the Plan if (i) immediately after the grant, such Employee (or any other person whose stock would be attributed to such Employee pursuant to Section 424(d) of the Code) would own capital stock of the Company and/or hold outstanding

Options or options to purchase capital stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or of any of its Subsidiaries or (ii) such Option would permit his or her rights to purchase stock under all employee stock purchase plans (described in Section 423 of the Code) of the Company and its Subsidiaries to accrue at a rate that exceeds $25,000 of the Fair Market Value of such stock (determined at the time each such Option is granted) for each calendar year in which such Option is outstanding at any time. Except as otherwise determined by the Committee prior to the commencement of an Offering Period, no Participant may purchase more than 5,000 Shares during any Offering Period.

4.Exercise of an Option. Options shall be exercised on behalf of Participants in the Plan every Exercise Date, using payroll deductions that have accumulated in the Participants’ Purchase Accounts during the immediately preceding Purchase Period or that have been retained from a prior Purchase Period pursuant to Section 8 hereof.

5.Participation.

(a)An eligible Employee may participate by properly completing and submitting an election form by the deadline prescribed by the Company.

(b)An Employee who does not become a Participant on the first Enrollment Date on which he or she is eligible may thereafter become a Participant on any subsequent Enrollment Date by properly completing and submitting an election form by the deadline prescribed by the Company.

(c)Payroll deductions for a Participant shall commence on the first payroll date following the Enrollment Date and shall end on the last payroll date in the Purchase Period to which such authorization is applicable, unless sooner terminated by the Participant as provided in Section 12 hereof.

6.Payroll Deductions.

(a)A Participant shall elect to have payroll deductions made during a Purchase Period equal to no less than 1% of the Participant’s Compensation up to a maximum of 15% (or such greater amount as the Committee establishes from time to time). The amount of such payroll deductions shall be in whole percentages. All payroll deductions made by a Participant shall be credited to his or her Purchase Account. A Participant may not make any additional payments into his or her Purchase Account. Notwithstanding the foregoing or any provisions to the contrary in the Plan, the Committee may allow participants to make other contributions under the Plan via cash, check, or other means instead of payroll deductions if payroll deductions are not permitted under applicable local law, and for any Offering Period under the 423 Component, the Committee determines that such other contributions are permissible under Section 423 of the Code.

(b)Except as otherwise determined by the Committee prior to the commencement of an Offering Period, a Participant may not increase or decrease the rate of payroll deductions during an Offering Period. A Participant may change his or her payroll deduction percentage under subsection 6(a) above for any subsequent Offering Period by properly completing and

submitting an election change form in accordance with the procedures prescribed by the Committee. The change in amount shall be effective as of the first Enrollment Date following the date of filing of the election change form. Unless otherwise determined by the Committee prior to the commencement of an Offering Period, a payroll deduction election will automatically apply to the next Offering Period, unless otherwise cancelled or changed by the Participant prior to the commencement of such Offering Period.

(c)Notwithstanding the foregoing, to the extent necessary to comply with Section 423(b)(8) of the Code and Section 3(b) hereof, a Participant’s payroll deductions may be decreased to 0% at any time during an Offering Period. Payroll deductions shall recommence at the rate provided in such Participant’s election form at the beginning of the first Offering Period which is scheduled to end in the following calendar year, unless terminated by the Participant as provided in Section 12 hereof.

Grant of Option. On the applicable Enrollment Date, each Participant in an Offering Period shall be granted an Option to purchase on the applicable Exercise Date a number of full Shares determined by dividing such Participant’s payroll deductions accumulated prior to such Exercise Date and retained in the Participant’s Purchase Account as of the applicable Exercise Date by the applicable Purchase Price.

8.Exercise of Option. A Participant’s Option for the purchase of Shares shall be exercised automatically on the Exercise Date, and the maximum number of Shares subject to the Option shall be purchased for such Participant at the applicable Purchase Price with the accumulated payroll deductions in his or her Purchase Account. If the Fair Market Value of a Share on the first day of the current Offering Period in which a participant is enrolled is higher than the Fair Market Value of a Share on the first day of any subsequent Offering Period, the Company may establish procedures to automatically enroll such participant in the subsequent Offering Period and any funds accumulated in a participant’s account prior to the first day of such subsequent Offering Period will be applied to the purchase of shares on the Exercise Date immediately prior to the first day of such subsequent Offering Period. A participant does not need to file any forms with the Company to be automatically enrolled in the subsequent Offering Period.

Participants shall be permitted to purchase fractional Shares under the Plan. All payroll deductions and other contributions accumulated in a Participant’s Purchase Account and not used to purchase Shares on an Exercise Date shall be distributed to the Participant. During a Participant’s lifetime, a Participant’s Option is exercisable only by him or her. The Company shall satisfy the exercise of all Participants’ Options for the purchase of Shares through (a) the issuance of authorized but unissued Shares, (b) the transfer of treasury Shares, (c) the purchase of Shares on behalf of the applicable Participants on the open market through an independent broker and/or (d) a combination of the foregoing.

9.Issuance of Stock. The Shares purchased by each Participant shall be issued in book entry form and shall be considered to be issued and outstanding to such Participant’s credit as of the end of the last day of each Purchase Period. The Committee may permit or require that shares be deposited directly in a Brokerage Account with one or more brokers designated by the Committee or to one or more designated agents of the Company, and the Committee may use

electronic or automated methods of share transfer. The Committee may require that Shares be retained with such brokers or agents for a designated period of time and/or may establish other procedures to permit tracking of disqualifying dispositions of such shares, and may also impose a transaction fee with respect to a sale of Shares issued to a Participant’s credit and held by such a broker or agent. The Committee may permit Shares purchased under the Plan to participate in a dividend reinvestment plan or program maintained by the Company and establish a default method for the payment of dividends.

10.Approval by Shareholders. Notwithstanding the above, the Plan is expressly made subject to the approval of the shareholders of the Company within 12 months before or after the date the Plan is adopted by the Board. Such shareholder approval shall be obtained in the manner and to the degree required under applicable federal and state law. If the Plan is not so approved by the shareholders within 12 months before or after the date the Plan is adopted by the Board, this Plan shall not come into effect.

11.Administration.

(a)Powers and Duties of the Committee. The Plan shall be administered by the Committee. Subject to the provisions of the Plan, Section 423 of the Code and the regulations thereunder with respect to the 423 Component, the Committee shall have the discretionary authority to determine the time and frequency of granting Options, the duration of Offering Periods and Purchase Periods, the terms and conditions of the Options and the number of Shares subject to each Option. The Committee shall also have the discretionary authority to do everything necessary and appropriate to administer the Plan, including, without limitation, interpreting the provisions of the Plan (but any such interpretation shall not be inconsistent with the provisions of Section 423 of the Code with respect to the 423 Component). All actions, decisions and determinations of, and interpretations by the Committee with respect to the Plan shall be final and binding upon all Participants and upon their executors, administrators, personal representatives, heirs and legatees. No member of the Board or the Committee shall be liable for any action, decision, determination or interpretation made in good faith with respect to the Plan or any Option granted hereunder. With respect to the 423 Component, an Offering Period shall be administered so as to ensure that all Participants have the same rights and privileges as provided by Section 423(b)(5) of the Code.

(b)Administrator. The Company, Board or the Committee may engage the services of a brokerage firm or financial institution to perform certain ministerial and procedural duties under the Plan including, but not limited to, mailing and receiving notices contemplated under the Plan, determining the number of Purchased Shares for each Participant, maintaining or causing to be maintained the Purchase Account and the Brokerage Account, disbursing funds maintained in the Purchase Account or proceeds from the sale of Shares through the Brokerage Account, and filing with the appropriate tax authorities proper tax returns and forms (including information returns) and providing to each Participant statements as required by law or regulation.

(c)Indemnification. Each person who is or shall have been (a) a member of the Board, (b) a member of the Committee, or (c) an officer or employee of the Company to whom authority was delegated in relation to this Plan, shall be indemnified and held harmless by the

Company against and from any loss, cost, liability or expense that may be imposed upon or reasonably incurred by him or her in connection with or resulting from any claim, action, suit or proceeding to which he or she may be a party or in which he or she may be involved by reason of any action taken or failure to act under the Plan and against and from any and all amounts paid by him or her in settlement thereof, with the Company’s approval, or paid by him or her in satisfaction of any judgment in any such claim, action, suit or proceeding against him or her; provided, however, that he or she shall give the Company an opportunity, at its own expense, to handle and defend the same before he or she undertakes to handle and defend it on his or her own behalf, unless such loss, cost, liability or expense is a result of his or her own willful misconduct or except as expressly provided by statute.

The foregoing right of indemnification shall not be exclusive of any other rights of indemnification to which such persons may be entitled under the Company’s certificate of incorporation or bylaws, any contract with the Company, as a matter of law, or otherwise, or of any power that the Company may have to indemnify them or hold them harmless.

12.Withdrawal. A Participant may withdraw from the Plan by properly completing and submitting to the Company a withdrawal form in accordance with the procedures prescribed by the Committee, which must be submitted prior to the date specified by the Committee before the last day of the applicable Offering Period. Upon withdrawal, any payroll deductions and other accumulated contributions credited to the Participant’s Purchase Account prior to the effective date of the Participant’s withdrawal from the Plan will be returned to the Participant. No further payroll deductions for the purchase of Shares will be made during subsequent Offering Periods, unless the Participant properly completes and submits an election form, by the deadline prescribed by the Company. A Participant’s withdrawal from an offering will not have any effect upon his or her eligibility to participate in the Plan or in any similar plan that may hereafter be adopted by the Company.

13.Termination of Employment. On the Termination Date of a Participant for any reason prior to the applicable Exercise Date, whether voluntary or involuntary, and including termination of employment due to retirement, death or as a result of liquidation, dissolution, sale, merger or a similar event affecting the Company or a Participating Subsidiary, the corresponding payroll deductions and other contributions credited to his or her Purchase Account will be returned to him or her or, in the case of the Participant’s death, to the person or persons entitled thereto under Section 16, and his or her Option will be automatically terminated.

14.Interest. No interest shall accrue on the payroll deductions of a Participant in the Plan.

15.Stock.

(a) The stock subject to Options shall be common stock of the Company as traded on the NYSE or on such other exchange as the Shares may be listed.

(b) Subject to adjustment upon changes in capitalization of the Company as provided in Section 18 hereof, the maximum number of Shares which shall be made available for sale under the Plan shall be 250,000 Shares. If, on a given Exercise Date, the number of Shares with

respect to which Options are to be exercised exceeds the number of Shares then available under the Plan, the Committee shall make a pro rata allocation of the Shares remaining available for purchase in as uniform a manner as shall be practicable and as it shall determine to be equitable.

(c) A Participant shall have no interest or voting right in Shares covered by his or her Option until such Option has been exercised and the Participant has become a holder of record of Shares acquired pursuant to such exercise.

16.Designation of Beneficiary. The Committee may permit Participants to designate beneficiaries to receive any Purchased Shares or payroll deductions, if any, in the Participant’s accounts under the Plan in the event of such Participant’s death. Beneficiary designations shall be made in accordance with procedures prescribed by the Committee. If no properly designated beneficiary survives the Participant, the Purchased Shares and payroll deductions, if any, will be distributed to the Participant’s estate.

17.Assignability of Options. Neither payroll deductions credited to a Participant’s Purchase Account nor any rights with regard to the exercise of an Option or to receive Shares under the Plan may be assigned, transferred, pledged or otherwise disposed of in any way (other than by will, the laws of descent and distribution or as provided in Section 16 hereof) by the Participant. Any such attempt at assignment, transfer, pledge or other disposition shall be without effect, except that the Company may treat such act as an election to withdraw from an Offering Period in accordance with Section 12 hereof.

18.Adjustment of Number of Shares Subject to Options.

(a)Adjustment. Subject to any required action by the shareholders of the Company, the maximum number of securities available for purchase under the Plan, as well as the price per security and the number of securities covered by each Option under the Plan which has not yet been exercised shall be appropriately adjusted in the event of any a stock split, reverse stock split, stock dividend, extraordinary cash dividend, combination or reclassification of the common stock of the Company, or any other increase or decrease in the number of Shares effected without receipt of consideration by the Company; provided, however, that conversion of any convertible securities of the Company shall not be deemed to have been “effected without receipt of consideration.” Such adjustment shall be made by the Board or the Committee, whose determination in that respect shall be final, binding and conclusive. If any such adjustment would result in a fractional security being available under the Plan, such fractional security shall be disregarded. Except as expressly provided herein, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason thereof shall be made with respect to, the number or price of Shares subject to an Option. With respect to the 423 Component, the Options granted pursuant to the Plan shall not be adjusted in a manner that causes the Options to fail to qualify as options issued pursuant to an “employee stock purchase plan” within the meaning of Section 423 of the Code.

(b)Dissolution or Liquidation. In the event of the proposed dissolution or liquidation of the Company, any Offering Period then in progress will terminate immediately prior to the consummation of such proposed action, unless otherwise provided by the Board, and the Board may either provide for the purchase of Shares as of the date on which such Offering Period

terminates or return to each Participant the payroll deductions credited to such Participant’s Purchase Account.

(c)Merger or Asset Sale. In the event of a proposed sale of all or substantially all of the assets of the Company, or the merger of the Company with or into another corporation in which the Company is not the surviving entity, each outstanding Option shall be assumed or an equivalent option substituted by the successor corporation or a parent or subsidiary of the successor corporation, unless the Board determines, in the exercise of its sole discretion, that in lieu of such assumption or substitution to either terminate all outstanding Options and return to each Participant the payroll deductions and other contributions credited to such Participant’s Purchase Account or to provide for the Offering Period in progress to end on a date prior to the consummation of such sale or merger.

19.Amendments or Termination of the Plan.

(a)The Board or the Committee may at any time and for any reason amend, modify, suspend, discontinue or terminate the Plan without notice; provided that no Participant’s existing rights in respect of existing Options are adversely affected thereby. To the extent necessary to comply with Section 423 of the Code (or any other applicable law, regulation or stock exchange rule), the Company shall obtain shareholder approval in such a manner and to such a degree as required.

(b)Without shareholder consent and without regard to whether any Participant rights may be considered to have been “adversely affected,” the Board or the Committee shall be entitled to change the Purchase Price, Offering Periods, Purchase Periods, eligibility requirements, limit or increase the frequency and/or number of changes in the amount withheld during a Purchase Period, establish the exchange ratio applicable to amounts withheld in a currency other than U.S. dollars, permit payroll withholding in an amount less than or greater than the amount designated by a Participant in order to adjust for delays or mistakes in the Company’s processing of properly completed withholding elections, establish reasonable waiting and adjustment periods and/or accounting and crediting procedures to ensure that amounts applied toward the purchase of Shares for each Participant properly correspond with amounts withheld from the Participant’s Compensation, and establish such other limitations or procedures as the Board or the Committee determines in its sole discretion advisable which are consistent with the Plan; provided, however, that changes to (i) the Purchase Price, (ii) the Offering Period, (iii) the Purchase Period, (iv) the maximum percentage of Compensation that may be deducted pursuant to Section 6(a) or (v) the maximum number of Shares that may be purchased in a Purchase Period, shall not be effective until communicated to Participants in a reasonable manner, with the determination of such reasonable manner in the sole discretion of the Board or the Committee.

20.No Other Obligations. The receipt of an Option pursuant to the Plan shall impose no obligation upon the Participant to purchase any Shares covered by such Option. Nor shall the granting of an Option pursuant to the Plan constitute an agreement or an understanding, express or implied, on the part of the Company to employ the Participant for any specified period.

21.Notices and Communication. Any notice or other form of communication which the Company or a Participant may be required or permitted to give to the other shall be provided through such means as designated by the Committee, including but not limited to any paper or electronic method.

22.Condition upon Issuance of Shares.

(a)Shares shall not be issued with respect to an Option unless the exercise of such Option and the issuance and delivery of such Shares pursuant thereto shall comply with all applicable provisions of law, domestic or foreign, including, without limitation, the 1933 Act and the 1934 Act and the rules and regulations promulgated thereunder, and the requirements of any stock exchange upon which the Shares may then be listed, and shall be further subject to the approval of counsel for the Company with respect to such compliance.

(b)As a condition to the exercise of an Option, the Company may require the person exercising such Option to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any of the aforementioned applicable provisions of law.

23.General Compliance. The Plan will be administered, and Options will be exercised, in compliance with the 1933 Act, 1934 Act and all other applicable securities laws and Company policies, including without limitation, any insider trading policy of the Company.

24.Term of the Plan. The Plan shall become effective upon the earlier to occur of (i) its adoption by the Board and (ii) its approval by the shareholders of the Company (the earlier of such events, the “Effective Date”), and shall continue in effect until the earlier of (x) the termination of the Plan pursuant to Section 19 hereof or (y) the purchase of all Shares available for issuance under the Plan.

25.Governing Law. The Plan and all Options granted hereunder shall be construed in accordance with and governed by the laws of the State of Delaware without reference to conflicts of law principles and subject in all cases to the Code and the regulations thereunder.

26.Non-U.S. Participants. To the extent permitted under Section 423 of the Code, without the amendment of the Plan, the Company may provide for the participation in the Plan by Employees who are subject to the laws of foreign countries or jurisdictions on such terms and conditions different from those specified in the Plan as may in the judgment of the Company be necessary or desirable to foster and promote achievement of the purposes of the Plan and, in furtherance of such purposes the Company may make such modifications, amendments, procedures, subplans and the like as may be necessary or advisable to comply with provisions of laws of other countries or jurisdictions in which the Company or the Participating Subsidiaries operate or have employees. Each subplan shall constitute a separate “offering” under this Plan in accordance with Treas. Reg. §1.423-2(a) and, to the extent inconsistent with the requirements of Section 423, any such subplan shall be considered part of the Non-423 Component, and rights granted thereunder shall not be required by the terms of the Plan to comply with Section 423 of the Code.

27.Section 409A. The 423 Component is exempt from the application of Section 409A of the Code, and any ambiguities herein shall be interpreted to so be exempt from Section 409A of the Code. The Non-423 Component is intended to be exempt from the application of Section 409A of the Code under the short-term deferral exception and any ambiguities shall be construed and interpreted in accordance with such intent. In furtherance of the foregoing and notwithstanding any provision in the Plan to the contrary, if the Committee determines that an option granted under the Plan may be subject to Section 409A of the Code or that any provision in the Plan would cause an option under the Plan to be subject to Section 409A, the Committee may amend the terms of the Plan and/or of an outstanding option granted under the Plan, or take such other action the Committee determines is necessary or appropriate, in each case, without the participant’s consent, to exempt any outstanding option or future option that may be granted under the Plan from or to allow any such options to comply with Section 409A of the Code, but only to the extent any such amendments or action by the Committee would not violate Section 409A of the Code. Notwithstanding the foregoing, the Company shall have no liability to a participant or any other party if the option under the Plan that is intended to be exempt from or compliant with Section 409A of the Code is not so exempt or compliant or for any action taken by the Committee with respect thereto.

		Exhibit 311

Exhibit 31.1

CERTIFICATION

I, Brian R. Niccol, certify that: | 1. | I have reviewed this quarterly report on Form 10-Q of Chipotle Mexican Grill, Inc.; | | --- | --- | | 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | | --- | --- | | 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | | --- | --- | | 4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | | --- | --- | | (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | | --- | --- | | (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | | --- | --- | | (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | | --- | --- | | (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | | --- | --- | | 5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | | --- | --- | | (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | | --- | --- | | (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | | --- | --- | Date: July 27, 2022

|  |

| --- | | | | | | /s/ Brian R. Niccol | | Brian R. Niccol | | Chairman and Chief Executive Officer (Principal Executive Officer) |

		Exhibit 312

Exhibit 31.2

CERTIFICATION

I, John R. Hartung, certify that: | 1. | I have reviewed this quarterly report on Form 10-Q of Chipotle Mexican Grill, Inc.; | | --- | --- | | 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; | | --- | --- | | 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; | | --- | --- | | 4. | The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: | | --- | --- | | (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; | | --- | --- | | (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; | | --- | --- | | (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and | | --- | --- | | (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and | | --- | --- | | 5. | The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): | | --- | --- | | (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and | | --- | --- | | (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. | | --- | --- | Date: July 27, 2022

|  |

| --- | | | | /s/ John R. Hartung | | John R. Hartung | | Chief Financial Officer (Principal Financial Officer) |

		Exhibit 321

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In accordance with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, Brian R. Niccol, the Chairman and Chief Executive Officer of Chipotle Mexican Grill, Inc. (the “Registrant”) and John R. Hartung, the Chief Financial Officer of the Registrant, each hereby certifies that, to the best of his knowledge: | 1. | The Registrant’s Quarterly Report on Form 10-Q for the period ended June 30, 2022, to which this Certification is attached as Exhibit 32.1 (the “Periodic Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Securities Exchange Act of 1934, as amended; and | | --- | --- | | 2. | The information contained in the Periodic Report fairly presents, in all material respects, the financial condition of the Registrant at the end of the period covered by the Periodic Report and results of operations of the Registrant for the periods covered by the Periodic Report. | | --- | --- | Date: July 27, 2022

|  |  |

| --- | --- | | | | | /s/ Brian R. Niccol | /s/ John R. Hartung | | Brian R. Niccol | John R. Hartung | | Chairman and Chief Executive Officer (Principal Executive Officer) | Chief Financial Officer (Principal Financial Officer) | | | |

10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

xQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2022

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 1-32731

CHIPOTLE MEXICAN GRILL, INC.

Registrant’s telephone number, including area code: (949) 524-4000

TABLE OF CONTENTS

PART I

ITEM 1. FINANCIAL STATEMENTS

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

See accompanying notes to condensed consolidated financial statements.

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

See accompanying notes to condensed consolidated financial statements.

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

See accompanying notes to condensed consolidated financial statements.

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

See accompanying notes to condensed consolidated financial statements.

CHIPOTLE MEXICAN GRILL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Basis of Presentation and Update to Accounting Policies

2. Recently Issued Accounting Standards

3. Revenue Recognition

Gift Cards

Chipotle Rewards

4. Fair Value of Financial Instruments

Assets and Liabilities Measured at Fair Value on a Recurring Basis

Held-to-Maturity Investments

U.S. Treasury Securities

Corporate Debt Security

Rabbi Trust

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Equity Method Investment

Non-Marketable Equity Securities

5. Shareholders’ Equity

6. Stock-Based Compensation

7. Income Taxes

8. Leases

9. Earnings Per Share

10. Commitments and Contingencies

Purchase Obligations

Litigation

New York Legal Proceedings

Other

Accrual for Estimated Liability

11. Debt

12. Related Party Transactions

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

Second Quarter 2022 Financial Highlights, year-over-year:

Restaurant Activity

Results of Operations

Revenue

Labor Costs

Occupancy Costs

Oher Operating Costs

General and Administrative Expenses

Depreciation and Amortization

Impairment, Closure Costs, and Asset Disposals

Provision for Income Taxes

Seasonality

Liquidity and Capital Resources

Cash Flows

Critical Accounting Estimates

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Commodity Price Risks

Changing Interest Rates

Foreign Currency Exchange Risk

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Changes in Internal Control over Financial Reporting