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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 March 31, 2021

¨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 1300 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 April 26, 2021, there were 28,150,479 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	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 Policy	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	8
	Note 7 - Income Taxes	8
	Note 8 - Leases	9
	Note 9 - Earnings Per Share	9
	Note 10 - Commitments and Contingencies	9
	Note 11 - Debt	10
	Note 12 - Related Party Transactions	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	11
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	16
Item 4.	Controls and Procedures	16
	PART II
Item 1.	Legal Proceedings	17
Item 1A.	Risk Factors	17
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	17
Item 6.	Exhibits	18
	Signatures	19

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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,
		2020

Assets
Current assets:
Cash and cash equivalents	694,776	$	607,987
Accounts receivable, net	68,449		104,500
Inventory	24,304		26,445
Prepaid expenses and other current assets	61,615		54,906
Income tax receivable	244,122		282,783
Investments	363,585		343,616
Total current assets	1,456,851		1,420,237
Leasehold improvements, property and equipment, net	1,613,670		1,584,311
Long-term investments	110,928		102,328
Restricted cash	27,863		27,849
Operating lease assets	2,858,345		2,767,185
Other assets	59,463		59,047
Goodwill	21,939		21,939
Total assets	6,149,059	$	5,982,896
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	147,417	$	121,990
Accrued payroll and benefits	221,677		203,054
Accrued liabilities	145,627		164,649
Unearned revenue	110,197		127,750
Current operating lease liabilities	209,086		204,756
Total current liabilities	834,004		822,199
Commitments and contingencies (Note 10)
Long-term operating lease liabilities	3,040,176		2,952,296
Deferred income tax liabilities	135,929		149,422
Other liabilities	41,419		38,844
Total liabilities	4,051,528		3,962,761
Shareholders' equity:
Preferred stock, 0.01 par value, 600,000 shares authorized, no shares issued as of March 31, 2021 and December 31, 2020, respectively	-		-
Common stock, 0.01 par value, 230,000 shares authorized, 36,936 and 36,704 shares issued as of March 31, 2021 and December 31, 2020, respectively	369		367
Additional paid-in capital	1,606,501		1,549,909
Treasury stock, at cost, 8,777 and 8,703 common shares as of March 31, 2021 and December 31, 2020, respectively	(2,908,111)		(2,802,075)
Accumulated other comprehensive loss	(4,492)		(4,229)
Retained earnings	3,403,264		3,276,163
Total shareholders' equity	2,097,531		2,020,135
Total liabilities and shareholders' equity	6,149,059	$	5,982,896

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
	March 31,
	2021		2020
Food and beverage revenue	$	1,715,990	$	1,402,117
Delivery service revenue		25,585		8,655
Total revenue		1,741,575		1,410,772
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
Food, beverage and packaging		522,671		462,299
Labor		433,669		393,565
Occupancy		101,769		95,279
Other operating costs		294,710		210,762
General and administrative expenses		155,103		106,470
Depreciation and amortization		63,122		58,374
Pre-opening costs		3,421		3,566
Impairment, closure costs, and asset disposals		5,668		9,336
Total operating expenses		1,580,133		1,339,651
Income from operations		161,442		71,121
Interest and other income (expense), net		(2,168)		2,743
Income before income taxes		159,274		73,864
Benefit/(provision) for income taxes		(32,173)		2,524
Net income	$	127,101	$	76,388
Earnings per share:
Basic	$	4.52	$	2.75
Diluted	$	4.45	$	2.70
Weighted-average common shares outstanding:
Basic		28,125		27,792
Diluted		28,582		28,323
Other comprehensive income (loss), net of income taxes:
Foreign currency translation adjustments	$	(263)	$	(1,841)
Comprehensive income	$	126,838	$	74,547

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, 2019	36,323	$	363	$	1,465,697	8,568	$	(2,699,119)	$	2,921,448	$	(5,363)	$	1,683,026
Adoption of ASU No. 2016-13, Financial Instrument-Credit Losses (Topic 326)	-		-		-	-		-		(1,051)		-		(1,051)
Stock-based compensation	-		-		17,708	-		-		-		-		17,708
Stock plan transactions and other	194		2		(181)	-		-		-		-		(179)
Acquisition of treasury stock	-		-		-	134		(102,031)		-		-		(102,031)
Net income	-		-		-	-		-		76,388		-		76,388
Other comprehensive income (loss), net of income tax	-		-		-	-		-		-		(1,841)		(1,841)
Balance, March 31, 2020	36,517	$	365	$	1,483,224	8,702	$	(2,801,150)	$	2,996,785	$	(7,204)	$	1,672,020
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

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)

	Three months ended
	March 31,
	2021		2020
Operating activities
Net income	$	127,101	$	76,388
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		63,122		58,374
Amortization of operating lease assets		49,269		42,961
Deferred income tax provision		(13,482)		27,343
Impairment, closure costs, and asset disposals		4,937		8,805
Provision for credit losses		(275)		(90)
Stock-based compensation expense		55,390		17,395
Other		2,180		707
Changes in operating assets and liabilities:
Accounts receivable		32,175		25,967
Inventory		2,148		2,734
Prepaid expenses and other current assets		(8,756)		(4,158)
Other assets		(186)		(5,133)
Accounts payable		19,446		20,245
Accrued payroll and benefits		18,188		5,839
Accrued liabilities		(17,869)		(9,389)
Unearned revenue		(15,606)		(15,924)
Income tax payable/receivable		38,640		(29,179)
Operating lease liabilities		(50,902)		(40,918)
Other long-term liabilities		453		104
Net cash provided by operating activities		305,973		182,071
Investing activities
Purchases of leasehold improvements, property and equipment		(86,619)		(77,653)
Purchases of investments		(90,477)		(80,746)
Maturities of investments		60,593		99,037
Net cash used in investing activities		(116,503)		(59,362)
Financing activities
Acquisition of treasury stock		(57,229)		(54,401)
Tax withholding on stock-based compensation awards		(44,810)		(47,630)
Other financing activities		(221)		(69)
Net cash used in financing activities		(102,260)		(102,100)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		(407)		(819)
Net change in cash, cash equivalents, and restricted cash		86,803		19,790
Cash, cash equivalents, and restricted cash at beginning of period		635,836		508,481
Cash, cash equivalents, and restricted cash at end of period	$	722,639	$	528,271
Supplemental disclosures of cash flow information
Income taxes paid (refunded)	$	6,909	$	(14)
Purchases of leasehold improvements, property, and equipment accrued in accounts payable and accrued liabilities	$	54,868	$	33,757
Acquisition of treasury stock accrued in accounts payable and accrued liabilities	$	3,997	$	-

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 March 31, 2021, we operated 2,759 Chipotle restaurants throughout the United States as well as 40 international Chipotle restaurants. We are also an investor in a consolidated entity that owns and operates four Pizzeria Locale restaurants, a fast-casual pizza concept. We manage our 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, 2020.

2. Recently Issued Accounting Standards

Recently Issued Accounting Standards

In March 2020, the Financial Accounting Standards Board (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 currently 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.

Recently Adopted Accounting Standards

On January 1, 2021, we adopted ASU 2019-12, “Simplifying the Accounting for Income Taxes (Topic 740)”, which modified certain technical guidelines for accounting for income taxes. The adoption of ASU 2019-12 did not result in a material change to our 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, based on historical redemption rates, 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. The breakage rates are 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 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:

	March 31,		December 31,
	2021		2020
Gift card liability	$	86,272	$	105,413

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
	March 31,
	2021		2020
Revenue recognized from gift card liability balance at the beginning of the year	$	30,866	$	28,070

Chipotle Rewards

We have a national loyalty program called Chipotle Rewards. Eligible customers who enroll in the program generally earn points for every dollar spent. After accumulating a certain number of points, the customer earns a reward that can be redeemed for a free entrée. We may also periodically offer promotions, which typically provide the customer with the opportunity to earn bonus points or free food vouchers (“Bonus Vouchers”). Earned rewards generally expire one 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 Bonus Vouchers earned by customers as each point or Bonus Voucher is earned, net of points we do not expect to be redeemed. The estimated selling price of each point or Bonus Voucher earned is based on the estimated value of the product for which the reward is expected to be redeemed. Our estimate of points and Bonus Vouchers we expect to be redeemed is based on historical data. The cost associated with rewards and Bonus Vouchers redeemed are included in food, beverage, and packaging expense on our condensed consolidated statements of income and comprehensive income.

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
	March 31,
	2021		2020
Chipotle Rewards liability, beginning balance	$	22,337	$	10,584
Revenue deferred		25,861		15,217
Revenue recognized		(24,273)		(12,317)
Chipotle Rewards liability, ending balance	$	23,925	$	13,484

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.

Our investments are comprised of held-to-maturity U.S. Treasury securities, non-marketable equity securities and an equity method investment. We also maintain a deferred compensation plan with related assets held in a rabbi trust.

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Held-to-Maturity Investments

We invest in U.S. Treasury securities with maturities of up to 17 months, with $363,585 maturing within one year from March 31, 2021. The fair value of our held-to-maturity investments is measured using Level 1 inputs (quoted prices for identical assets in active markets). We designate the appropriate classification of our investments at the time of purchase based upon the intended holding period.

All held-to-maturity investments are carried at amortized cost. The amortized costs of these investments exceeded the fair value by $94 and $117 as of March 31, 2021 and December 31, 2020, respectively. We recognize a reserve for the expected credit losses when lifetime credit losses are expected by management. As of March 31, 2021, management has concluded there is no risk of non-payment.

Rabbi Trust

We maintain a rabbi trust to fund obligations under a deferred compensation plan. Amounts in the rabbi trust are invested in mutual funds, 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 $17,505 and $15,296 as of March 31, 2021 and December 31, 2020, respectively. We record trading gains and losses in general and administrative expenses on the condensed consolidated statements of income and comprehensive income, 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.

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, operating lease assets, investments in non-marketable equity securities, 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.

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

		Carrying Value
		March 31,
	Level	2021		2020
Leasehold improvements, property and equipment, net	3	$	1,087	$	978
Operating lease assets	3		566		1,461
Total		$	1,653	$	2,439

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. During the three months ended March 31, 2021 and 2020 we recorded asset impairments related to restaurants and offices of $2,709 and $7,650, respectively. Carrying value after the impairment charges approximates fair value.

Non-Marketable Equity Securities

On March 23, 2021, we acquired 766 shares of the Series C Preferred Stock of Nuro, Inc. (“Nuro”) in exchange for cash consideration of $10,000. 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 their 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.

Equity Method Investment

On April 16, 2020, we acquired approximately 10% of the common stock of a supplier in exchange for cash consideration of $7,500. On August 6, 2020, we acquired an additional 3.2% of the common stock of the same supplier in exchange for cash consideration of $2,500. As of March 31, 2021, we own approximately 12.7% of the supplier’s common stock and have invested total cash consideration of $10,000. As we are a significant customer of the supplier and maintain board representation, we are accounting for our investment under the equity method. The investment is included within other assets on the condensed consolidated balance sheet as of March 31, 2021, with a carrying value of $9,202. The investment would be impaired if the carrying value exceeds the fair value of the investment.

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5. Shareholders’ Equity

We have had a stock repurchase program in place since 2008. Through March 31, 2021, our Board of Directors had authorized us to repurchase shares of our common stock with an aggregate purchase price of up to $2,900,000, which includes the most recent authorization of $100,000 announced on April 21, 2021. As of March 31, 2021, $153,792 remained available for share repurchases under these authorizations. 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 three months ended March 31, 2021, 31 shares of common stock at a total cost of $44,810 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.

6. Stock-Based Compensation

For the three months ended March 31, 2021, we granted stock only stock appreciation rights (“SOSARs”) on 72 shares of our common stock to eligible employees. The weighted-average grant date fair value of the SOSARs was $393.58 per share with a weighted-average exercise price of $1,479.55 per share. The SOSARs vest in two equal installments on the second and third anniversary of the grant date. For the three months ended March 31, 2021, 247 SOSARs were exercised, and 2 SOSARs were forfeited.

For the three months ended March 31, 2021, we granted restricted stock units (“RSUs”) on 23 shares of our common stock to eligible employees. The weighted-average grant date fair value of the RSUs was $1,479.55 per share. The RSUs generally vest in two equal installments on the second and third anniversary of the grant date. For the three months ended March 31, 2021, 40 RSUs vested and 1 RSU was forfeited.

For the three months ended March 31, 2021, we awarded performance share units (“PSUs”) on 18 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 $1,479.55 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.

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 $24,366 was recognized during the three months ended March 31, 2021, and $46,609 remains unamortized as of March 31, 2021. 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 will vest in four installments over this period. The remaining expense will be recognized over this requisite service period. For the three months ended March 31, 2021, no other PSUs vested, and no PSUs were forfeited.

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

	Three months ended
	March 31,
	2021		2020
Stock-based compensation	$	55,960	$	17,708
Stock-based compensation, net of income taxes	$	50,465	$	14,505
Total capitalized stock-based compensation included in leasehold improvements, property and equipment, net on the condensed consolidated balance sheets	$	570	$	313
Excess tax benefit on stock-based compensation recognized in benefit/(provision) for income taxes on the condensed consolidated statements of income and comprehensive income	$	15,025	$	23,631

7. Income Taxes

The effective tax rate for the three months ended March 31, 2021, was 20.2%, an increase from negative 3.4% for the three months ended March 31, 2020. The increase was primarily due to increased profit before tax and fewer excess tax benefits related to option exercises and equity vesting in the three months ended March 31, 2021, as compared to the three months ended March 31, 2020.

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On March 11, 2021, President Biden signed the American Rescue Plan Act (“ARPA”). The ARPA includes several provisions, such as measures that extend and expand the employee retention credit, previously enacted under the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”), through December 31, 2021. For the quarter ended March 31, 2021, we did not record a tax benefit related to the employee retention credit. We are still evaluating the ARPA and we do not expect that it will have a material impact on our financial statements.

8. Leases

We determine if a contract contains a lease at inception. Our material operating leases consist of restaurant locations and office space. 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 are as follows:

	Three months ended
	March 31,
	2021		2020
Cash paid for operating lease liabilities	$	88,808	$	77,889
Operating lease assets obtained in exchange for operating lease liabilities	$	144,102	$	136,966
Derecognition of operating lease assets due to terminations or impairment	$	1,547	$	2,007

In April 2020, the FASB issued guidance allowing entities to make a policy election whether to account for lease concessions related to the COVID-19 pandemic as lease modifications. The election applies to any lessor-provided lease concession related to the impact of the COVID-19 pandemic, provided the concession does not result in a substantial increase in the rights of the lessor or in the obligations of the lessee. In 2020, we received non-substantial concessions from certain landlords in the form of rent deferrals and abatements related to the COVID-19 pandemic. We have elected to not account for these rent concessions as lease modifications. The recognition of rent concessions did not have a material impact on our condensed consolidated financial statements as of March 31, 2021.

9. Earnings Per Share

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

	Three months ended
	March 31,
	2021		2020
Net income	$	127,101	$	76,388
Shares:
Weighted-average number of common shares outstanding (for basic calculation)		28,125		27,792
Dilutive stock awards		457		531
Weighted-average number of common shares outstanding (for diluted calculation)		28,582		28,323
Basic earnings per share	$	4.52	$	2.75
Diluted earnings per share	$	4.45	$	2.70

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

	Three months ended
	March 31,
	2021		2020
Stock awards subject to performance conditions		69		90
Stock awards that were antidilutive		48		103
Total stock awards excluded from diluted earnings per share		117		193

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

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 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

As of March 31, 2021, we had an accrued legal liability balance of $29,082 included within accrued liabilities on the condensed consolidated balance sheet. The settlements are part of our plan to resolve longstanding legal proceedings whenever appropriate to better allow us to focus on our strategic priorities.

11. Debt

On May 8, 2020, we entered into a $600,000 revolving credit facility with JPMorgan Chase Bank (“JPMorgan”) as administrative agent. We pay a commitment fee of 0.625% per year for unused amounts under the credit facility. Interest on borrowings would bear interest at a rate equal to the LIBOR plus 1.50%, which was subject to increase due to changes in our total leverage ratio as defined in the credit agreement. Further, we were subject to certain covenants, which included (i) maintaining a total leverage ratio of less than 3.0x, (ii) maintaining a consolidated fixed charge coverage ratio of greater than 1.5x and (iii) limiting us from making investments and capital expenditures in certain circumstances. We had no outstanding borrowings under the credit facility as of March 31, 2021.

On April 13, 2021, we terminated the above referenced credit facility and entered into a new 5-year $500,000 revolving credit facility, with JPMorgan as administrative agent. Borrowings on the new 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 (i) maintaining a total leverage ratio of less than 3.0x, (ii) maintaining a consolidated fixed charge coverage ratio of greater than 1.5x, and (iii) limiting us from incurring additional indebtedness in certain circumstances.

12. Related Party Transactions

In April 2020, we acquired common stock of a supplier. As of March 31, 2021, we owned approximately 12.7% of the common stock outstanding of a supplier. As we are a significant customer of the supplier and maintain board representation, we are accounting for our investment under the equity method. Accordingly, we have identified the supplier as a related party. We purchase product from the supplier for sale to customers in our restaurants. During the three months ended March 31, 2021, purchases from the supplier were $5,742.

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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 potential impact of actions we have taken to mitigate the impact of COVID-19, the expected benefit of the CARES Act or the ARPA on our taxes and tax rate, the number of new restaurants we expect to open this year, 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, the risk factors described in our annual report on Form 10-K for the year ended December 31, 2020, and in other reports filed subsequently with the SEC.

Overview of the Impact of COVID-19

The COVID-19 pandemic has adversely affected, and may continue to adversely affect, our operations and financial results for the foreseeable future. In response to COVID-19, we temporarily closed some restaurants and dining rooms in our restaurants. We continue to follow guidance from health officials in determining the appropriate restrictions to put in place for each restaurant. As of March 31, 2021, most of our restaurants were open for dine-in with restrictions, such as social distancing and mask requirements for all customers and employees, to ensure the health and safety of our guests and employees. Some restaurants only offer take-out, digital order ahead and delivery services in accordance with local guidance and regulations. Our restaurant operations have been and could continue to be disrupted by employees who are unable or unwilling to work, because of illness, quarantine, fear of contracting COVID-19 or caring for family members due to COVID-19, or for other reasons. For a further discussion of the impacts that COVID-19 has had on our financial results, refer to “Results of Operations” below.

We remain in regular contact with our major suppliers and while to date we have not experienced significant disruptions in our supply chain, we could see future disruptions should the impacts of COVID-19 extend for a considerable amount of time. Within our restaurants, we have taken a number of steps to enhance our robust food safety protocols including the creation of the steward role which is focused on sanitization in high-touch and high-traffic areas, providing masks for all employees, and having a tamper evident packaging seal for all digital orders. To support our employees, we are limiting non-essential travel, continuing to work remotely for our support centers, and offering expanded employee benefits. We remain focused on limiting non-essential controllable costs and judiciously spending on return generating projects to preserve liquidity. We resumed our stock buyback program in February 2021, which may be modified, suspended, or discontinued at any time. Refer to the “Liquidity and Capital Resources” below for further detail.

First Quarter 2021 Financial Highlights, year-over-year:

Total revenue increased 23.4% to $1.7 billion

Comparable restaurant sales increased 17.2%

Diluted earnings per share was $4.45, which included a $0.91 after-tax impact from expenses related to the 2018 PSU modification to account for the unplanned effects of COVID-19, restaurant asset impairment and closure costs, as well as corporate restructuring

Sales Trends. Comparable restaurant sales increased 17.2% for the three months ended March 31, 2021. This increase is primarily attributable to a higher average check from menu price increases and an increase in entrees sold, and a higher attachment to sides. We believe effective marketing, the release of new menu items and government stimulus payments to consumers had a positive impact on sales.

Digital sales grew 133.9% to $869.8 million for the three months ended March 31, 2021, as compared to the three months ended March 31, 2020 and represented 50.1% of sales. Just over half of the digital sales were from order ahead transactions.

Restaurant Operating Costs. Our restaurant operating costs (food, beverage and packaging; labor; occupancy; and other operating costs) as a percentage of total revenue decreased 470 basis points to 77.7% for the three months ended March 31, 2021, as compared to 82.4% for the three months ended March 31, 2020. The improvement was driven primarily by leverage from the comparable restaurant sales increases, partially offset by increased delivery expense and wage inflation.

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Restaurant Development. We opened 40 new restaurants and closed five restaurants during the three months ended March 31, 2021. Of the 40 new restaurants, 26 included Chipotlanes. 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 the U.S. We believe our strong financial position will allow us to build a robust new unit development pipeline.

Restaurant Activity

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

	Three months ended
	March 31,
	2021	2020
Beginning of period	2,768	2,622
Chipotle openings	40	19
Chipotle permanent closures	(5)	(2)
Chipotle relocations	-	(1)
Total restaurants at end of period	2,803	2,638

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
	March 31,				Percentage
	2021		2020		change
	(dollars in millions)
Food and beverage revenue	$	1,716.0	$	1,402.1	22.4%
Delivery service revenue		25.6		8.7	195.6%
Total revenue	$	1,741.6	$	1,410.8	23.4%
Average restaurant sales ^(1)^	$	2.313	$	2.217	4.3%
Comparable restaurant sales increase		17.2%		3.3%
^(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 March 31, 2021 compared to March 31, 2020, were comparable restaurant sales increases of $234.4 million, and to a lesser extent, increases in total revenue from restaurants not yet in the comparable base of $96.1 million, of which $8.6 million was attributable to restaurants opened in 2021.

Food, Beverage and Packaging Costs

	Three months ended
	March 31,				Percentage
	2021		2020		change
	(dollars in millions)
Food, beverage and packaging	$	522.7	$	462.3	13.1%
As a percentage of total revenue		30.0%		32.8%	(2.8%)

Food, beverage and packaging costs decreased as a percentage of total revenue for the three months ended March 31, 2021 compared to March 31, 2020, primarily due to the benefit of menu price increases, and to a lesser extent, a mix shift towards higher margin proteins and lower waste. These decreases were partially offset by costs associated with cauliflower rice and fewer sales of high margin beverages.

COVID-19 had an immaterial direct impact on food, beverage and packaging costs for the three months ended March 31, 2021. Indirect impacts included a lower incidence of beverage sales from pre-pandemic levels.

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Labor Costs

	Three months ended
	March 31,				Percentage
	2021		2020		change
	(dollars in millions)
Labor costs	$	433.7	$	393.6	10.2%
As a percentage of total revenue		24.9%		27.9%	(3.0%)

Labor costs decreased as a percentage of total revenue for the three months ended March 31, 2021 compared to March 31, 2020, primarily due to sales leverage and to a lesser extent improved labor efficiency realized from digital enhancements to the restaurants. This decrease was partially offset by increased crew wages including expanded emergency leave benefits to accommodate employees directly affected by COVID-19.

COVID-19 increased labor costs as a percentage of total revenue for the three months ended March 31, 2021 compared to March 31, 2020, by 0.2%. This increase was primarily due to our emergency leave benefits to accommodate employees directly affected by COVID-19, partially offset by a comparison against temporary assistance pay that we provided during March 2020.

Occupancy Costs

	Three months ended
	March 31,				Percentage
	2021		2020		change
	(dollars in millions)
Occupancy costs	$	101.8	$	95.3	6.8%
As a percentage of total revenue		5.8%		6.8%	(1.0%)

Occupancy costs decreased as a percentage of total revenue for the three months ended March 31, 2021 compared to March 31, 2020, primarily due to sales leverage, partially offset by increased rent expense associated with new restaurants.

COVID-19 had an immaterial impact on occupancy costs for the three months ended March 31, 2021.

Other Operating Costs

	Three months ended
	March 31,				Percentage
	2021		2020		change
	(dollars in millions)
Other operating costs	$	294.7	$	210.8	39.8%
As a percentage of total revenue		16.9%		14.9%	2.0%

Other operating costs include, among other items, marketing and promotional costs, delivery expense, bank and credit card processing fees, restaurant utilities, and maintenance costs. Other operating costs increased as a percentage of total revenue for the three months ended March 31, 2021 compared to March 31, 2020, primarily due to higher delivery expenses associated with increased delivery sales.

As a result of COVID-19, sales shifted towards delivery after we temporarily closed our dining rooms to help control the spread of COVID-19 and delivery sales have remained elevated from pre-pandemic levels. We are also continuing to limit non-essential controllable costs.

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General and Administrative Expenses

	Three months ended
	March 31,				Percentage
	2021		2020		change
	(dollars in millions)
General and administrative expense	$	155.1	$	106.5	45.7%
As a percentage of total revenue		8.9%		7.5%	1.4%

General and administrative expense increased in dollar terms for the three months ended March 31, 2021 compared to March 31, 2020, primarily due to a $36.9 million increase in stock based compensation, $24.4 million of which relates to the modification of 2018 PSUs to account for the unplanned effects of COVID-19, a $7.4 million increase in outside services expense related to initiatives to support restaurant growth, and a $4.1 million increase in payroll taxes due to the vesting and exercises of stock awards. The increase in general and administrative expense was partially offset by a $2.2 million decrease in legal contingencies and settlements and a $1.7 million decrease in travel expense resulting from COVID-19.

Other than the impact on travel expenses and stock-based compensation discussed above, COVID-19 had a minimal impact on general and administrative expenses for the three months ended March 31, 2021.

Depreciation and Amortization

	Three months ended
	March 31,				Percentage
	2021		2020		change
	(dollars in millions)
Depreciation and amortization	$	63.1	$	58.4	8.1%
As a percentage of total revenue		3.6%		4.1%	(0.5%)

Depreciation and amortization decreased as a percentage of total revenue for the three months ended March 31, 2021 compared to March 31, 2020, primarily due to the benefit of sales leverage, which was partially offset by increases in depreciation expense associated with new restaurants, upgrading equipment in our restaurants primarily to support the growth in our digital business, and depreciation associated with our website and mobile app.

COVID-19 had an immaterial impact on depreciation and amortization for the three months ended March 31, 2021.

Impairment, Closure Costs, and Asset Disposals

	Three months ended
	March 31,				Percentage
	2021		2020		change
	(dollars in millions)
Impairment, closure costs, and asset disposals	$	5.7	$	9.3	(39.3%)
As a percentage of total revenue		0.3%		0.7%	(0.4%)

Impairment, closure costs, and asset disposals decreased in dollar terms for the three months ended March 31, 2021 compared to March 31, 2020, primarily due to a comparison against elevated impairments of leasehold improvements, operating lease assets, and property and equipment. These elevated impairments were primarily the result of the COVID-19 pandemic negatively impacting our near-term restaurant level cash flow forecasts.

While the majority of our restaurants and markets have returned to pre-pandemic restaurant level cash flow levels, COVID-19 continues to have a negative impact on our assumptions for future near-term restaurant level cash flows for certain markets or restaurants.

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Benefit/(Provision) for Income Taxes

	Three months ended
	March 31,				Percentage
	2021		2020		change
	(dollars in millions)
Benefit/(provision) for income taxes	$	(32.2)	$	2.5	(1,374.7%)
Effective tax rate		20.2%		(3.4%)	23.6%

The effective income tax rate for the three months ended March 31, 2021 was 20.2%, an increase from an effective income tax rate of negative 3.4% for the three months ended March 31, 2020. The increase was primarily due to increased profit before tax and fewer excess tax benefits related to option exercises and equity vesting in the quarter.

The effective tax rate for the three months ended March 31, 2021 of 20.2% is lower than our expected effective income tax rate for the full year 2021, primarily due to elevated excess tax benefits related to option exercises and equity vesting in the first quarter.

COVID-19, the CARES Act and the ARPA did not have a material impact on our tax rate for the three months ended March 31, 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 lower margins 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.

Liquidity and Capital Resources

Historically, our primary liquidity and capital requirements are for new restaurant construction, initiatives to improve the guest experience in our restaurants, working capital and general corporate needs. As of March 31, 2021, we had a cash and marketable investments balance of $1.2 billion, excluding restricted cash of $27.9 million. We expect to utilize cash flow from operations to provide capital for the continued investment in new restaurant construction and to remodel restaurants, primarily those that do not have a digital kitchen or Chipotlane, to repurchase additional shares of our common stock subject to market conditions, and for general corporate purposes. Additionally, as of March 31, 2021, we had $600.0 million of undrawn borrowing capacity under 365-day revolving credit facility. On April 13, 2021, we terminated this credit facility and entered into a new $500.0 million revolving credit facility with a term of five years.

As sales fell quickly from the impact of COVID-19, we proactively implemented several actions to reduce cash outlays and expenses. As part of our cash preservation strategy, in March 2020 we temporarily suspended our stock buyback program. We resumed our stock buyback program in February 2021, which may be modified, suspended, or discontinued at any time. In our restaurants, we are working to minimize waste, effectively schedule labor hours, and limit non-essential controllable costs. We continue to limit all non-essential travel and expenses. 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 other 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, generally within ten days, thereby reducing the need for incremental working capital to support our growth.

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Off-Balance Sheet Arrangements

As of March 31, 2021, and December 31, 2020, we had no material off-balance sheet arrangements or obligations.

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, 2020.

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, 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 36 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.

Changing Interest Rates

We are exposed to interest rate risk through fluctuations of interest rates on our investments. Changes in interest rates affect the interest income we earn, and therefore impact our cash flows and results of operations. As of March 31, 2021, we had $1.1 billion in interest-bearing cash accounts, including insurance-related restricted trust accounts classified in restricted cash, and U.S. treasury securities. We had $81.0 million in accounts with an earnings credit we classify as interest and other income. Combined these earned a weighted-average interest rate of 0.10%.

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 March 31, 2021, 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.

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Changes in Internal Control over Financial Reporting

There were no changes during the fiscal quarter ended March 31, 2021, 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.”

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, 2020.

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 first quarter of 2021.

		Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs^(1)^	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs^(2)^
January		-	$	-	-	$	115,017,912
	Purchased 1/1 through 1/31
February		12,536	$	1,435.45	12,536	$	97,023,165
	Purchased 2/1 through 2/28
March		30,432	$	1,420.57	30,432	$	153,792,369
	Purchased 3/1 through 3/31
Total		42,968	$	1,424.91	42,968

(1) Shares were repurchased pursuant to repurchase programs announced on July 23, 2019 and February 4, 2020.

(2) This column includes an additional $100 million in authorized repurchases approved on March 31, 2021 and announced April 21, 2021. There is no expiration date for this program, and the authorization to repurchase shares will end when we have repurchased the maximum amount of shares authorized, or our Board of Directors have determined to discontinue such repurchases.

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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	Revolving Credit Agreement dated April 13, 2021, among Chipotle Mexican Grill, Inc. and JPMorgan Chase Bank, N.A., Administrative Agent, and other lenders party to the Agreement	8-K	1-32731	April 16, 2021	10.1
10.2†	Form of 2021 Performance Share Unit Agreement	-	-	-	-	X
10.3†	Form of Amended and Restated 2018 Performance Share Unit Agreement	-	-	-	-	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: April 28, 2021

		Exhibit 10.2

Exhibit 10.2

CHIPOTLE MEXICAN GRILL, INC. PERFORMANCE SHARE AGREEMENT

Name of Participant:

Target Number of Performance Shares:

Grant Date:

Performance Period: January 1, 2021 – December 31, 2023

Vesting Date: Date of the Performance Certification (as defined below)

This Performance Share Agreement (this “Agreement”), dated as of the Grant Date stated above, is delivered by Chipotle Mexican Grill, Inc., a Delaware corporation (the “Company”), to the Participant named above (the “Participant” or “you”).

Recitals

WHEREAS, the Company is awarding you performance shares (“Performance Shares”) representing the right to receive shares of Common Stock of the Company (the “Shares”) on the terms and conditions provided below and pursuant to the Amended and Restated Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan (the “Plan”). This Agreement and the Performance Shares granted hereunder are expressly subject to all of the terms, definitions and provisions of the Plan. Except as expressly indicated herein, defined terms used in this Agreement have the meanings set forth in the Plan.

WHEREAS, the Compensation Committee (the “Committee”) of the Company’s Board of Directors (the “Board”) has approved this award of Performance Shares (the “Award”).

Agreement

NOW, THEREFORE, the parties hereby agree as follows:

1. Grant of Performance Shares. The Company hereby grants to you the Award with respect to the target number of Performance Shares set forth above, pursuant to which you shall be eligible to receive a number of equivalent Shares for each Performance Share that vests, subject to your fulfillment of the vesting and other conditions set forth in this Agreement, including Appendix A hereto, including both:

(a) Certification by the Committee of the extent to which the Performance Goals set forth on Appendix A have been achieved (the “Performance Certification”), if at all, and the satisfaction or occurrence of any additional conditions to vesting set forth on Appendix A, with such Performance Certification occurring on February 15, 2024, which follows the conclusion of the Performance Period; and

(b) Your continuous employment with the Company (subject to the provisions of Section 2) from the Grant Date through the date of Performance Certification (the “Vesting Date”).

2. Effect of Termination of Employment and Change in Control.

(a) Termination of Employment Due to Death, Disability or Retirement. Unless otherwise determined by the Committee, or except as provided in an agreement between you and your Employer, if your employment terminates by reason your death, termination by the Company due to Disability, or Retirement (each as defined below) prior to the Vesting Date, you shall vest in the Performance Shares as follows:

(i) In the event of your Retirement prior to the one-year anniversary of the Grant Date, you shall become vested on the Vesting Date in a pro rata portion of the Performance Shares, determined by multiplying the total number of Performance Shares determined based on actual achievement during the Performance Period of the Performance Goals set forth on Appendix A by a fraction, the numerator of which is the number of days from the Grant Date through your Retirement and the denominator of which is 365.

(ii) In the event of your Retirement on or after the one-year anniversary of the Grant Date, the total number of Performance Shares determined based on actual achievement during the Performance Period of the Performance Goals set forth on Appendix A, without proration, shall become vested on the Vesting Date.

(iii) In the event of your death or termination by the Company due to Disability at any time after the Grant Date, the total number of Performance Shares determined based on actual achievement during the Performance Period of the Performance Goals set forth on Appendix A, without proration, shall become vested on the Vesting Date.

For purposes of this Agreement: “Disability” means your medically-diagnosed, permanent physical or mental inability to perform your duties as an employee of the Company; “Retirement” means that you have a combined Age and Years of Service (each as defined below) of at least 70 and you have done all of the following (w) given the Company at least six (6) months prior written notice of your Retirement; (x) signed and delivered to the Company an agreement providing for such restrictive covenants, as may be determined from time to time by the Committee, based on individual facts and circumstances, to be reasonably necessary to protect the Company’s interests, with such restrictive covenants continuing for a period of two (2) years after such Retirement (or, indefinitely, in the case of confidentiality and similar restrictive covenants), (y) signed and delivered to the Company, within 21 days of the date of your employment termination (or such later time as required under applicable law) a general release agreement of claims against the Company and its affiliates in a form reasonably acceptable to the Company, which is not later revoked, and (z) voluntarily terminated your employment with the Company. The term “Age” means (as of a particular date of determination), your age on that date in whole years and any fractions thereof; and “Years of Service” means the number of years and fractions thereof during the period beginning on your most recent commencement of employment with the Company and

ending on the date your employment with the Company terminated. Your refusal to fulfill any of the conditions set forth in (w), (x), (y) or (z) above, your breach of any agreement entered into pursuant to (x) or (y) above, or if, after your Retirement, facts and circumstances are discovered that would have justified your termination for Cause (as defined below) if you were still employed by the Company, shall constitute a waiver by you of the benefits attributable to Retirement under this Agreement.

(b) Forfeiture of Performance Shares. Unless otherwise determined by the Committee, or except as provided in an agreement between you and the Company, if your employment terminates before the Vesting Date for any reason other than Death, termination by the Company due to Disability, Retirement or a Qualifying Termination (as described in Section 2(c) below), all Performance Shares subject to this Award shall be forfeited and canceled as of the date of such employment termination.

(i) Satisfaction of Performance Goals. In the event of a Change in Control prior to the end of a Performance Period, the Performance Period shall end as of the date of the Change in Control and the Performance Goals shall be deemed to have been satisfied at the greater of (A) 100% of the target level, with the potential payout pro-rated based on the time elapsed in the Performance Period through the date of the Change in Control and (B) the actual level of achievement of the Performance Goals set forth in Appendix A as of the date of the Change in Control, as determined by the Committee, as constituted immediately prior to the Change in Control, without proration.

(ii) Settlement of Award Not Assumed. In the event of a Change in Control prior to the end of a Performance Period pursuant to which the Award is not assumed or continued by the surviving or acquiring corporation in such Change in Control (as determined by the Board or Committee, with appropriate adjustments to the number and kind of shares, in each case, that preserve the value of the Award and other material terms and conditions of this Award as in effect immediately prior to the Change in Control), the Performance Shares shall vest as of the date of the Change in Control, based on the performance level determined in accordance with clause (i) above and shall be settled within 60 days following the Change in Control; provided, however, if the Performance Shares are “nonqualified deferred compensation” within the meaning of Section 409A of the Code and the Change in Control is not a “change in control event” within the meaning of Section 409A of the Code or the settlement upon such Change in Control would otherwise be prohibited under Section 409A of the Code, then the Performance Shares shall be settled at the time specified in Section 3.

(iii) Settlement of Award Assumed. In the event of a Change in Control prior to the end of a Performance Period pursuant to which this Award is assumed or continued by the surviving or acquiring corporation in such Change in Control (as determined by the Board or Committee, with appropriate adjustments to the number and kind of shares, in each case, that preserve the value of the Award and other material terms and conditions of this Award as in effect immediately prior to the Change in Control) and either (A) you remain continuously and actively employed by the Company through the end of such Performance Period, (B) you experience a Qualifying Termination or your employment

terminates due to death, termination by the Company due to Disability or Retirement following such Change in Control, then in any such case, the Performance Shares shall vest based on the performance level determined in accordance with clause (i) above and shall be settled within 60 days following the earlier to occur of (x) the end of the Performance Period and (y) the date of your death or such termination of employment.

For purposes of this Agreement and notwithstanding anything in the Plan to the contrary for purposes of determining whether a Qualifying Termination has occurred during the two-year period following a Change in Control: (A) “Cause” means, unless otherwise provided in an effective employment agreement or other written agreement with respect to the termination of your employment with the Company, the termination of your employment with the Company on account of: (u) your failure to substantially perform your duties (other than as a result of physical or mental illness or injury); (w) your willful misconduct or gross negligence which is materially injurious to the Company or results in reputational harm to the Company; (x) a breach by you of your fiduciary duty or duty of loyalty to the Company; (y) your commission of any felony or other serious crime involving moral turpitude; or (z) your material violation of Company policies or agreements between you and the Company and (B) “Good Reason” means, unless otherwise provided in an effective employment agreement or other written agreement with respect to the termination of your employment with the Company, the termination of your employment with the Company on account of: (x) a material diminution of your duties and responsibilities other than a change in your duties and responsibilities that results from becoming part of a larger organization following a Change in Control, (y) a material decrease in your base salary or bonus opportunity other than a decrease in bonus opportunity that applies to all employees of the Company otherwise eligible to participate in the applicable bonus plan, or (z) a relocation of your primary work location more than 30 miles from your work location on the Grant Date, without your prior written consent; provided that, within thirty days following the occurrence of any of the Good Reason events set forth herein, you shall have delivered written notice to the Company of your intention to terminate your employment for Good Reason, which notice specifies in reasonable detail the circumstances claimed to give rise to your right to terminate employment for Good Reason, and the Company shall not have cured such circumstances within thirty days following the Company’s receipt of such notice.

3. Distribution Upon Vesting. Subject to Sections 2 and 18, as soon as practicable following the expiration of the Performance Period (but no later than March 15th following the expiration of the Performance Period), the Company shall issue or deliver, subject to the conditions of this Agreement, the Shares for the vested Performance Shares to you. The Award may only be settled in Shares. Such issuance or delivery of Shares shall be evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company. The Company shall pay all original issue or transfer taxes and all fees and expenses incident to such issuance or delivery, except as otherwise provided in Section 6. Prior to the issuance to you of the Shares subject to the Award, you shall have no direct or secured claim in any specific assets of the Company or in such Shares, and will have the status of a general unsecured creditor of the Company.

4. No Shareholder Rights. Neither you nor any person claiming under or through you shall have rights as a holder of Shares (e.g., you have no right to vote or receive dividends) with respect to the Performance Shares granted hereunder unless and until such Performance Shares have been settled in Shares that have been registered in your name as owner.

5. Dividend Equivalents. Prior to the settlement of the Performance Shares, you shall accumulate dividend equivalents with respect to the Performance Shares, which dividend equivalents shall be paid in cash (without interest) to you only if and when the applicable Performance Shares vest and become payable. Dividend equivalents shall equal the dividends, if any, actually paid with respect to Shares prior to the settlement of the Award while (and to the extent) the Performance Shares remain outstanding and unpaid. In the event you forfeit Performance Shares, you also shall immediately forfeit any dividend equivalents held by the Company that are attributable to the Shares underlying such forfeited Performance Shares.

6. Tax Withholding. As a condition precedent to the issuance of Shares following the vesting of the Performance Shares, you shall, upon request by the Company, pay to the Company such amount as the Company determines is required, under all applicable federal, state, local or other laws or regulations, to be withheld and paid over as income or other withholding taxes (the “Required Tax Payments”) with respect to such vesting of the Performance Shares. If you shall fail to advance the Required Tax Payments after request by the Company, the Company may, in its discretion, deduct any Required Tax Payments from any amount then or thereafter payable by the Company to you. Notwithstanding the foregoing, your obligation to advance the Required Tax Payments shall be satisfied by the Company withholding whole Shares that would otherwise be delivered to you upon vesting of the Performance Shares having an aggregate fair market value, determined as of the date on which such withholding obligation arises (the “Tax Date”), equal to the Required Tax Payments; however, if you submit a written request to the Company at least ten (10) days in advance of the Vesting Date, the Company may agree, in its discretion, to permit you to satisfy your obligation to advance the Required Tax Payments by a check or cash payment to the Company. Shares shall be withheld based on the applicable statutory minimum tax rate; however, if you submit a written request to the Company at least ten (10) days in advance of the Vesting Date, the Company (or, in the case of an individual subject to Section 16 of the Securities Exchange Act of 1934, as amended, the Committee) may agree, in its discretion, to withhold shares based on a higher tax rate permitted by applicable withholding rules and accounting rules without resulting in variable accounting treatment. No Share or certificate representing a Share shall be issued or delivered until the Required Tax Payments have been satisfied in full.

7. Repayment; Right of Set-Off. You agree and acknowledge that this Agreement is subject the Company’s Executive Compensation Recoupment Policy and any other repayment policies that are in effect on the Grant Date or that the Committee may adopt from time to time with respect to the repayment to the Company of any benefit received hereunder, including “clawback,” recoupment or set-off policies. In addition, you agree that in the event the Company, in its reasonable judgment, determines that you owe the Company any amount due to any loan, note, obligation or indebtedness, including but not limited to amounts owed to the Company pursuant to the Company’s policies with respect to travel and business expenses, and if you have not satisfied such obligation, then the Company may instruct the plan administrator to withhold

and/or sell Shares acquired by you upon settlement of the Award, or the Company may deduct funds equal to the amount of such obligation from other funds due to you from the Company.

8. Adjustment of Performance Shares. The number of Performance Shares subject to this Award and the related Performance Goals shall automatically be adjusted in accordance with Section 9 of the Plan to prevent accretion, or to protect against dilution, in the event of a change to the Common Stock resulting from a recapitalization, stock split, consolidation, spin-off, reorganization, or liquidation or other similar transactions.

9. Non-Transferability of Award. Unless the Committee specifically determines otherwise, the Performance Shares may not be transferred by you other than by will or the laws of descent and distribution. Except to the extent permitted by the foregoing sentence, the Award may not be sold, transferred, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) or be subject to execution, attachment or similar process. Upon any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of the Award, the Award and all rights hereunder shall immediately become null and void.

10. No Right to Continued Employment or Service. The granting of the Award shall not be construed as granting to you any right to continue your employment or Service with the Company.

11. Amendment of this Award. This Award or the terms of this Agreement may be amended by the Board or the Committee at any time (a) if the Board or the Committee determines, in its reasonable discretion, that amendment is necessary or appropriate to conform the 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 your approval or consent to the extent permitted by applicable law; provided that, such amendment shall not materially and adversely affect your rights hereunder; or (b) with your consent.

12. Electronic Delivery and Acceptance. You hereby consent and agree to electronic delivery of any Plan documents, proxy materials, annual reports and other related documents. You also hereby consent to any and all procedures that the Company has established or may establish for an electronic signature system for delivery and acceptance of Plan documents (including documents relating to any programs adopted under the Plan), and agree you’re your electronic signature is the same as, and shall have the same force and effect as, your manual signature. You consent and agree that any such procedures and delivery may be effected by a third party engaged by the Company to provide administrative services related to the Plan, including any program adopted under the Plan.

13. Governing Plan Document. The Award is subject to all the provisions of the Plan, the provisions of which are hereby made a part of this Agreement, and is further subject to all interpretations, amendments, rules and regulations which may from time to time be promulgated and adopted pursuant to the Plan. In the event of any conflict between the provisions of the Award or this Agreement and those of the Plan, the provisions of the Plan shall control.

14. Governing Law. The validity, construction, interpretation and effect of this Agreement shall exclusively be governed by and determined in accordance with the laws of the State of Delaware, without giving effect to conflict of law rules or principles.

15. Entire Agreement. This Agreement and the Plan constitute the entire understanding and agreement between the Company and the Participant with respect to the subject matter contained herein and supersedes any prior agreements, understandings, restrictions, representations, or warranties between the Company and the Participant with respect to such subject matter other than those as set forth or provided for herein.

16. No Waiver. No failure by any party to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy consequent upon a breach thereof shall constitute waiver of any such breach or any other covenant, duty, agreement or condition.

17. Saving Clause. If any provision of this Agreement shall be determined to be illegal or unenforceable, such determination shall in no manner affect the legality or enforceability of any other provision hereof.

18. Compliance with Section 409A of the Code. This Award is intended to be exempt from or comply with Section 409A of the Code, and shall be interpreted and construed accordingly, and each payment hereunder shall be considered a separate payment. To the extent this Agreement provides for the Award to become vested and be settled upon the Holder’s termination of employment, the applicable shares of Stock shall be transferred to you or your beneficiary upon your “separation from service,” within the meaning of Section 409A of the Code; provided that if you are a “specified employee,” within the meaning of Section 409A of the Code, then to the extent the Award constitutes nonqualified deferred compensation, within the meaning of Section 409A of the Code, such Shares shall be transferred to you or your beneficiary upon the earlier to occur of (i) the six-month anniversary of such separation from service and (ii) the date of your death.

CHIPOTLE MEXICAN GRILL, INC.

By: /s/ Marissa Andrada

Chief People Officer

Appendix A to 2021 Performance Share Agreement

Performance Criteria

The performance criteria under this Performance Share Award shall be 3 Year CRS Growth and 2 Year Average RCF Margin, as such terms are defined below. In addition, there is a cap on above target payout based on relative Total Shareholder Return (TSR) compared to the S&P 500.

Performance Period

Performance will be measured from January 1, 2021 through December 31, 2023 for CRS and TSR, and from January 1, 2022 through December 31, 2023 for RCF.

Performance Goal Table

The number of Shares that can be earned under this Performance Share Award is equal to the Target Number of Performance Shares multiplied by the percentage determined under the Performance Goal Table set forth below (the “Payout Percentage”).

2022-2023 Avg RCF 2021-23 CRS Growth 7.0% 0% 25% 50% 75% 100% 7.5% 25% 50% 75% 100% 125% 8.0% 25% 75% 100% 125% 150% 8.5% 50% 75% 100% 125% 175% 9.0% 75% 100% 125% 175% 200% 9.5% 100% 150% 175% 225% 250% 10.0% 125% 175% 225% 275% 300% 10.5% 150% 200% 275% 300% 300% 23.0% 24.0% 25.0% 26.0% 27.0%

In no event will any Performance Shares be earned under this Appendix A if either (a) the 3 Year Average RCF Margin is less than 23.0% or (b) the 3 Year CRS Growth is less than 7.0%. In no event may more than 300% of the Target Number of Performance Shares be earned under this Appendix A. If the level of performance for either 3 Year CRS Growth, 2 Year Average RCF Margin or both falls between two stated performance levels in the Performance Goal Table, the Payout Percentage shall be determined under the heading “Interpolation” below.

Cap on Above Target Payout

In no event may more than 100% of the Target Number of Performance Shares be earned under this Appendix A if Chipotle’s 3 Year TSR is below the 25th percentile of the constituent companies comprising the S&P 500 on the date of grant.

“TSR” means total shareholder return as determined by dividing (i) the sum of (A) the Ending Period Average Price minus the Beginning Period Average Price plus (B) all dividends and other distributions paid on the issuer’s shares during the Performance Period by (ii) the Beginning Period Average Price. In calculating TSR, all dividends are assumed to have been reinvested in shares when paid. TSR for a constituent company will be negative one hundred percent (-100%) if during the Performance Period it: (i) files for bankruptcy, reorganization, or liquidation under

any chapter of the U.S. Bankruptcy Code; (ii) is the subject of an involuntary bankruptcy proceeding that is not dismissed within 30 days; (iii) is the subject of a stockholder approved plan of liquidation or dissolution; or (iv) ceases to conduct substantial business operations. If a constituent company is acquired, taken private or delisted (independent of situations covered in (i) through (IV) above) during the performance period, it will be excluded from the TSR calculation.

“Beginning Period Average Price” means the average closing price per share of the issuer over the 20-consecutive-trading days starting with and including the first day of the Performance Period (if the applicable day is not a trading day, the immediately preceding trading day), adjusted for stock splits or similar changes in capital structure.

“Ending Period Average Price” means the average closing price per share of the issuer over the 20-consecutive-trading days ending with and including the last day of the Performance Period (if the applicable day is not a trading day, the immediately preceding trading day), adjusted for stock splits or similar changes in capital structure.

3 Year CRS Growth

For purposes of the Performance Goal Table under this Appendix A, “3-Year CRS Growth” shall be determined with respect to the three-year period beginning on January 1, 2021 using the following formula:

[(1+X)*(1+Y)*(1+Z)]^(1/3)-1

Where:

“X” = the annual percentage change in the Comparable Restaurant Sales for the fiscal year ending December 31, 2021

“Y” = the annual percentage change in Comparable Restaurant Sales for the fiscal year ending December 31, 2022

“Z” = the annual percentage change in Comparable Restaurant Sales for the fiscal year ending December 31, 2023

The following terms shall have the respective meanings set forth below when determining 3-Year CRS Growth:

“Comparable Restaurant” means a restaurant operated under the Chipotle Mexican Grill and/or Pizzeria Locale brands by the Company or its direct or indirect Subsidiaries, beginning in such restaurant’s 13th full calendar month of operations.

“CRS” or “Comparable Restaurant Sales” with respect to a fiscal year, means the net sales attributable to Comparable Restaurants that are realized during such year, as determined in accordance with generally accepted accounting principles. For avoidance of doubt, net sales from a restaurant shall only be counted after it has become a Comparable Restaurant.

2 Year Average RCF Margin

For purposes of the Performance Goal Table under this Appendix A, “2 Year Average RCF Margin” shall be determined under the following formula:

Y + Z

Where:

“Y” = the Company’s RCF Margin from restaurant operations for the fiscal year ending December 31, 2022.

“Z” = the Company’s RCF Margin from restaurant operations for the fiscal year ending December 31, 2023.

“RCF Margin” represents the Company’s total revenue less restaurant operating costs (exclusive of depreciation and amortization), expressed as a percentage of the Company’s total revenue, for the applicable Company fiscal year. RCF Margin shall be determined in accordance with generally accepted accounting principles as in effect on the first day of the applicable Performance Period.

Potential Force-Majeure Related Adjustments

Notwithstanding the foregoing, if the Committee certifies that a Force Majeure Event has occurred and RCF Margin and/or CRS Growth, calculated on a consolidated company-wide basis, is “Significantly Impacted,” the calculation of RCF Margin and/or CRS Growth shall be adjusted in the manner outlined below. For purposes of this section, a “Force Majeure Event” is an extraordinary event or circumstance such as an act of God, war or war condition, government mandate, widespread civil disorder, embargo, fire, flood, earthquake or other nature disaster, epidemic, pandemic or other similar occurrence beyond the reasonable control of the company.

RCF Margin Adjustment – Expense Impact

The expenses that arise directly from or due to a Force Majeure Event will be excluded from the calculation of RCF Margin in the fiscal year during which the Company’s RCF Margin is significantly impacted by a Force Majeure Event.

“Significantly Impacted” means that (i) the direct costs associated with the Force Majeure event negatively impact RCF Margin by 100 BPS for three months in the fiscal year; or (ii) the direct costs associated with the Force Majeure event negatively impact RCF Margin by 100 BPS for the entire fiscal year.

RCF Adjustment – Sales Reduction Impact in 2022 and/or 2023

The calculation of RCF Margin will exclude any month in 2022 and/or 2023 during which the Company’s CRS is significantly impacted by a Force Majeure Event.

“Significantly Impacted” means that, for fiscal years 2022 and 2023, the CRS for the impacted month is 5% lower than the average CRS figure for the three months immediately preceding the month in which the Force Majeure event occurred.

CRS Adjustment in 2023

The calculation of CRS Growth in 2023 will exclude any month during with the Company’s CRS is significantly impacted by a Force Majeure Event.

“Significantly Impacted” means the CRS for the impacted month is 5% lower than the average CRS figure for the three months immediately preceding the month in which the Force Majeure event occurred.

Interpolation

The following rules shall be used to determine the Payout Percentage when the level of performance for either 3 Year CRS Growth, 2 Year Average RCF Margin or both falls between two stated performance levels in the Performance Goal Table:

(1) Determine what the Payout Percentage would have been without interpolation based on the highest actual results achieved and reflected in the Performance Goal Table for 3 Year CRS Growth and 2 Year Average RCF Margin. For example, assume that 2 Year Average RCF Margin is 23.50% and 3 Year CRS Growth is 7.25%. The Payout Percentage with no interpolation would be zero, as the highest achieved level of performance under the Performance Goal Table is 23% for 2 Year Average RCF Margin and 7.0% for 3 Year CRS Growth (with respect to each Performance Criteria, the “Base Achieved Level”).

(2) Calculate the CRS Adjustment Factor as follows:

(a) Determine what the Payout Percentage would have been had positive results in excess of the Base Achieved Level for 3 Year CRS Growth been rounded up to the next highest level of stated performance in the Performance Goal Table (the “CRS Rounded Up Level”). In the example noted in paragraph (1) above, the CRS Rounded Up Level would be 7.5% for 3 Year CRS Growth (7.25% rounded up to 7.5%), and the Payout Percentage based on the CRS Rounded Up Level would be 25% under the Performance Goal Table.

(b) Determine, as a percentage, the extent to which the Company achieved results for 3 Year CRS Growth greater than its Base Achieved Level as compared to its CRS Rounded Up Level, assuming that 2 Year Average RCF Margin equals its Base Achieved Level. In the example noted in Paragraph (1) above, the extent to which 3 Year CRS Growth was attained between its Base Achieved Level and CRS Rounded Up Level was 25%, assuming a Base Achieved Level of 23% for 2 Year Average RCF Margin (7.25% is halfway in between the Base Achieved Level and the CRS Rounded Up Level).

(c) Calculate the CRS Adjustment Factor by (A) multiplying the difference between the percentages in paragraphs (2)(a) and (1) above by the percentage determined in paragraph

(2)(b) above, rounded to the nearest tenth of a percent. In the example noted in paragraph (1) above, the CRS Adjustment Factor is 12.5% (i.e., (25% - 0%) multiplied by 50%).

(3) Calculate the RCF Adjustment Factor as follows:

(a) Determine what the Payout Percentage would have been had positive results in excess of the Base Achieved Level for 2 Year Average RCF Margin been rounded up to the next highest level of stated performance in the Performance Goal Table (the “RCF Rounded Up Level”). In the example noted in paragraph (1) above, the RCF Rounded Up Level would be 24% for 2 Year Average RCF Margin (23.50% rounded up to 24%), and the Payout Percentage based on the RCF Rounded Up Level would be 25% under the Performance Goal Table.

(b) Determine, as a percentage, the extent to which the Company achieved results for 2 Year Average RCF Margin greater than its Base Achieved Level as compared to its RCF Rounded Up Level, assuming that 3 Year CRS Growth equals its Base Achieved Level. In the example noted in Paragraph (1) above, the extent to which 2 Year Average RCF Margin was attained between its Base Achieved Level and Rounded Up Level was 25%, assuming a Base Achieved Level of 7% for 3 Year CRS Growth.

(c) Calculate the RCF Adjustment Factor by (A) multiplying the difference between the percentages in paragraphs (3)(a) and (1) above by the percentage determined in paragraph (3)(b) above, rounded to the nearest tenth of a percent. In the example noted in paragraph (1) above, the RCF Adjustment Factor is 12.5% (i.e., (25% - 0%) multiplied by 50%).

(4) Calculate the Payout Percentage by adding the CRS Adjustment Factor and the RCF Adjustment Factor to the Base Achieved Level from Paragraph (1). In the example noted in paragraph (1) above, the interpolated Payout Percentage would be 25% (i.e. 12.5% + 12.5%).

Other Provisions

If the Committee determines, after granting the Performance Share Award, that there has been a change in law or accounting rules that impacts CRS and/or RCF Margin as set forth in this Appendix A, the Committee shall modify these measures, in whole or in part, as it deems appropriate and equitable in its discretion for such events that were not determinable or considered at the Grant Date. For the avoidance of doubt, no adjustments otherwise authorized under Section 8 of the Plan shall be made with respect to the Performance Shares except as specifically provided in this Appendix A.

Performance Shares that are earned under this Appendix A shall only be issued to the Participant to the extent that the continued employment conditions set forth in the Performance Share Agreement have been satisfied.

		Exhibit 10.3

Exhibit 10.3

Amended and Restated Performance Share Agreement

This Performance Share Agreement, including the Appendices attached hereto, are amended and restated as of December 31, 2020.

Name of Participant:

Target Number of Performance Shares:

Grant Date:

Performance Period: January 1, 2018 – December 31, 2020

This Performance Share Agreement (“Agreement”) evidences the grant to the Participant by Chipotle Mexican Grill, Inc. (the “Company”) of the right to receive shares of Common Stock of the Company, $.01 par value per share (“Common Stock”), on the terms and conditions provided for herein pursuant to the Amended and Restated Chipotle Mexican Grill, Inc. 2011 Stock Incentive Plan (the “Plan”). Except as specifically set forth herein, this Agreement and the rights granted hereunder are expressly subject to all of the terms, definitions and provisions of the Plan as it may be amended and restated from time to time. Capitalized terms used in this Agreement and not defined herein shall have the meanings attributed to them in the Plan.

1. Grant of Performance Shares. Subject to the terms and provisions of this Agreement and the Plan, the Company hereby grants to Participant the right to be issued shares of Common Stock as provided in this Agreement, including Appendix A and Appendix C hereto (the “Performance Shares”), subject to the following conditions:

(a) Certification by the Committee of the extent to which the Performance Goals set forth on Appendix A and Appendix C have been achieved;

(b) Participant being continuously employed (subject to the provisions of Section 2) with the Company (as defined in the Plan) from the Grant Date through the final day of the Performance Period; and

The date on which all of the conditions set forth above are satisfied is the “Vesting Date,” and the Company will issue one share of Common Stock for each Performance Share earned and vested to the Participant on the March 15th immediately following the Performance Period, subject to (i) earlier payment in connection with a Change in Control under Section 3(c) or to the extent administratively practicable following the Vesting Date, or (ii) later payment as permitted without resulting in tax under Section 409A of the Code (the date of such issuance of shares following the Vesting Date, the “Payout Date”).

This Agreement represents the Company’s unfunded and unsecured promise to issue Common Stock at a future date, subject to the terms of this Agreement and the Plan. Participant has no rights under this Agreement other than the rights of a general unsecured creditor of the Company.

Subject to the satisfaction of any tax withholding obligations described in Section 6 below, Participant may elect to defer the receipt of any of the shares of Common Stock underlying the Performance Shares by submitting to the Company a deferral election in the form provided by the Company. In the event Participant intends to defer the receipt of Performance Shares, Participant must submit to the Company a completed deferral election form no later than the Final Election Date (as defined below). By submitting such deferral election, Participant represents that he/she understands the effect of any such deferral under relevant federal, state and local tax and social security laws, including, but not limited to, the fact that social security contributions may be due upon the Vesting Date notwithstanding the deferral election. Any deferral election may be amended or terminated prior to the Final Election Date. A deferral election shall become irrevocable on the Final Election Date and any deferral election or revision of a deferral election submitted after the Final Election Date shall be void and of no force or effect. The “Final Election Date” shall be the last business day occurring on or before the date that is six months prior to the final day of the Performance Period, provided that in no circumstances will the Final Election Date be later than the date Participant ceases to provide services to the Company or the date that the making of such election causes the Performance Shares to become subject to the excise tax pursuant to Code Section 409A.

2. Termination of Employment. Subject to the provisions that follow in this Section 2 and Section 3, if at any time prior to the expiration of the Performance Period Participant’s service with the Company terminates, then notwithstanding any contrary provision of this Agreement, the Performance Shares subject to this Agreement will be forfeited and cancelled automatically as of the date of such termination, and no shares of Common Stock will be issued hereunder.

Notwithstanding the foregoing or any contrary provision in the Plan, if Participant’s employment terminates prior to the Vesting Date as a result of Participant’s death, or the Committee determines that such termination is in connection with Participant’s Retirement (as defined below), or is as a result of Participant’s medically diagnosed permanent physical or mental inability to perform his or her job duties, then the award evidenced by this Agreement will continue in force following the date of such termination, and, subject to any then effective deferral election, a pro-rata portion of the shares of Common Stock underlying the Performance Shares will be issued to Participant (or if applicable his or her estate, heirs or beneficiaries) on the Payout Date, in an amount reflecting the period of Participant’s continued service to the Company from and after the Grant Date through the date of termination of Participant’s service. The Committee will determine the pro-rata portion of the Performance Shares to be paid out under the following formula: Total number of shares of Common Stock issuable on account of attaining the Performance Goals based upon the actual performance results during the Performance Period multiplied by a fraction, the numerator of which is the number of days of service following the Grant Date and occurring during the Performance Period and the denominator of which is the total number of days following the Grant Date through the final day of the Performance Period.

For purposes of this Section 2, “Retirement” means that a Participant having a combined Age and Years of Service (as those terms are defined below) of at least 70 (a) has given the Chief Executive Officer of the Company or his or her designee at least six months prior written notice of such Participant’s retirement; (b) has signed and delivered to the Company an agreement providing for such restrictive covenants, for a period of two years after such retirement, as may be determined from time to time by the Committee, based on individual facts and circumstances, to be reasonably necessary to protect the Company’s interests; (c) has signed and delivered to the Company, within 21 days of the Executive’s date of employment termination (or such later time as required under applicable law) a general release agreement of claims against the Company and its affiliates in a form reasonably acceptable to the Committee, which is not later revoked; and (d) voluntarily terminates from service with the Company. The term “Age” of a Participant means (as of a particular date of determination), the Participant’s age on that date in whole years and any fractions thereof, and the term “Years of Service” means the number of years and fractions thereof during the period beginning on a Participant’s most recent commencement of employment with the Company or a subsidiary or parent of the Company (or such other Company-associated entity as the Committee may determine from time to time) and ending on the date of such Participant’s termination of service with the Company or a subsidiary or parent of the Company. The Participant’s refusal to meet any of the conditions set forth in (a), (b), (c) or (d) above, or breach of any agreement entered into pursuant to (b) or (c) above, shall constitute a waiver by the Participant of the benefits attributable to Retirement under this Agreement.

Notwithstanding the foregoing, if at any time prior to the Payout Date Participant’s service with the Company terminates for Cause, then notwithstanding any contrary provision of this Agreement, the Performance Shares subject to this Agreement will be forfeited and cancelled automatically as of the date of such termination, and no shares of Common Stock will be issued hereunder.

3. Change in Control.

(a) In the event of a Change in Control that does not also constitute a “change in the ownership or effective control of a corporation, or a change in the ownership of a substantial portion of the assets of a corporation” under Treas. Reg. § 1.409A-3(i)(5), then (i) the Performance Shares subject to this Agreement shall remain outstanding, (ii) the Performance Shares shall continue to be subject to the terms of this Agreement, and (iii) the provisions of the first paragraph of Section 7(b) of the Plan (regarding rights upon a Qualifying Termination) shall not apply to such Performance Shares.

(b) In the event of a Change in Control that is also a “change in the effective control of a corporation” under Treas. Reg. § 1.409A-3(i)(5)(vi), then (i) the Performance Shares subject to this Agreement shall remain outstanding, (ii) the Performance Shares shall continue to be subject to the terms of this Agreement, (iii) the provisions of the first paragraph of Section 7(b) of the Plan shall apply to such Performance Shares, and (iv) such Performance Shares shall be paid out upon the Payout Date based upon the actual level of performance.

(c) In the event of a Change in Control that is also a “change in the ownership of a corporation” under Treas. Reg. § 1.409A-3(i)(5)(v) or a “change in the ownership of a substantial portion of a corporation’s assets” under Treas. Reg. § 1.409A-3(i)(5)(vii) (a “Special CIC”), the Performance Shares subject to this Agreement shall immediately vest and the Participant shall receive, within 10 days of such Special CIC, the consideration (including all stock, other securities or assets, including cash) payable in respect of the Target Number of Performance Shares (or, if greater, the number of Performance Shares based on actual performance from the beginning of the Performance Period until the Special CIC, as reasonably determined by the Committee based on available information) as if they were vested, issued and outstanding at the time of such Special CIC; provided, however, that with respect to Performance Shares that are otherwise subject to a “substantial risk of forfeiture” under Treas. Reg. § 1.409A-1(d) and to the extent permitted by Treas. Reg. § 1.409-3, the Committee may arrange for the substitution for the Performance Shares with the grant of a replacement award (the “Replacement Award”) to Participant of shares of restricted stock of the surviving or successor entity (or the ultimate parent thereof) in such Change in Control, but only if all of the following criteria are met:

(i) Such Replacement Award shall consist of securities listed for trading following such Change in Control on a national securities exchange;

(ii) Such Replacement Award shall have a value as of the date of such Change in Control equal to the value of the Target Number of Performance Shares (or, if greater, the number of Performance Shares based on actual performance from the beginning of the Performance Period until the Special CIC, as reasonably determined by the Committee based on available information), calculated as if the Performance Shares were exchanged for the consideration (including all stock, other securities or assets, including cash) payable for shares of Common Stock in such Change in Control transaction;

(iii) Such Replacement Award shall become vested and the securities underlying the Replacement Award shall be issued to the Participant on the second anniversary of the commencement of the Performance Period or if such Change in Control occurs following that date shall become vested and shall be issued on third anniversary of the commencement of the Performance Period, in either case subject to Participant’s continued employment with the surviving or successor entity (or a direct or indirect subsidiary thereof) through such date, provided, however, that such Replacement Award will vest immediately upon and the securities underlying the Replacement Award shall be issued within 60 days after the date that (i) Participant’s employment is terminated by the surviving or successor entity Without Cause, (ii) Participant’s employment is terminated for Good Reason, (iii) Participant’s death or (iv) Participant’s medically diagnosed permanent physical or mental inability to perform his or her job duties;

(iv) Notwithstanding Section 3(c), such Replacement Award shall vest immediately prior to and the securities underlying the Replacement Award shall be issued to Participant upon (A) any transaction with respect to the surviving or

successor entity (or parent or subsidiary company thereof) of substantially similar character to a Change in Control, or (B) the securities constituting such Replacement Award ceasing to be listed on a national securities exchange, in each case so long as Participant remains continuously employed until such time; and

(v) The Replacement Award or the right to such Replacement Award does not cause the Performance Shares to become subject to tax under Code Section 409A.

Upon such substitution the Performance Shares shall terminate and be of no further force and effect.

4. Rights as Shareholder. Participant shall not have any of the rights of a shareholder with respect to the Performance Shares except to the extent that shares of Common Stock on account of such Performance Shares are issued to Participant in accordance with the terms and conditions of this Agreement and the Plan.

5. No Right to Continued Employment. Nothing contained in this Agreement shall be deemed to grant Participant any right to continue in the employ of the Company for any period of time or to any right to continue his or her present or any other rate of compensation, nor shall this Agreement be construed as giving Participant, Participant’s beneficiaries or any other person any equity or interests of any kind in the assets of the Company or creating a trust of any kind or a fiduciary relationship of any kind between the Company and any such person.

6. Withholding Taxes. No later than the date as of which an amount first becomes includible in the gross income of Participant for federal income or employment tax purposes with respect to the Performance Shares, Participant shall pay to the Company or make arrangements satisfactory to the Committee regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. To the extent approved in writing by the Committee, a Participant shall have the right to direct the Company to satisfy the minimum amount (or an amount up to a Participant’s highest marginal tax rate as may be permitted under the Plan from time to time provided such withholding does not trigger liability accounting under FASB ASC Topic 718 or its successor) required for federal, state and local tax withholding with Shares, including without limitation Shares otherwise delivered upon exercise of the SARs. The obligations of the Company under the Plan and this Agreement shall be conditional on such payment, and the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to the Participant.

7. No Fractional Shares. If any terms of this Agreement call for payment of a fractional Performance Share, the number of Performance Shares issuable hereunder will be rounded down to the nearest whole number.

8. Non-Transferability of Award. The Common Stock underlying the Performance Shares shall not be assignable or transferable by Participant prior to their vesting and issuance in accordance with this Agreement, except by will or by the laws of descent and

distribution. In addition, no Performance Shares shall be subject to attachment, execution or other similar process prior to vesting.

9. Applicability of the Plan. Except as specifically set forth herein, the Performance Shares are subject to all provisions of the Plan and all determinations of the Committee made in accordance with the terms of the Plan. By executing this Agreement, the Participant expressly acknowledges (i) receipt of the Plan and any current Plan prospectus and (ii) the applicability of the provisions of the Plan to the Performance Shares.

10. Additional Conditions to Issuance of Performance Shares. Notwithstanding the occurrence of the Vesting Date or Payout Date, the Company shall not be required to issue any Common Stock underlying the Performance Shares hereunder so long as the Company reasonably anticipates that such issuance will violate federal or state securities law or other applicable law; provided however, that in such event the Company shall issue such Performance Shares at the earliest possible date at which the Company reasonably anticipates that the issuance of the shares will not cause such violation.

11. Modification; Waiver. Except as provided in the Plan or this Agreement, no provision of this Agreement may be amended, modified, or waived unless such amendment or modification is agreed to in writing and signed by Participant and by a duly authorized officer of the Company, and such waiver is set forth in writing and signed by the party to be charged, provided that any change that is advantageous to Participant may be made by the Committee without Participant’s consent or written signature or acknowledgement. No waiver by either party hereto at any time of any breach by the other party hereto of any condition or provision of this Agreement to be performed by such other party shall be deemed a waiver of similar or dissimilar provisions or conditions at the same or at any prior or subsequent time. Participant acknowledges and agrees that the Committee has the right to amend this Agreement in whole or in part from time-to-time if the Committee believes, in its sole and absolute discretion, such amendment is required or appropriate in order to conform the award evidenced hereby to, or otherwise satisfy any legal requirement (including without limitation the provisions of Section 409A of the Code). Such amendments may be made retroactively or prospectively and without the approval or consent of 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.

12. Notices. Except as the Committee may otherwise prescribe or allow in connection with communications procedures developed in coordination with any third party administrator engaged by the Company, all notices, including notices of exercise, requests, demands or other communications required or permitted with respect to the Plan, shall be in writing addressed or delivered to the parties. Such communications shall be deemed to have been duly given to any party when delivered by hand, by messenger, by a nationally recognized overnight delivery company, by facsimile, or by first-class mail, postage prepaid and return receipt requested, in each case to the applicable addresses set forth below:

If to Participant:

to Participant’s most recent address on the records of the Company

If to the Company:

Chipotle Mexican Grill, Inc. 610 Newport Center Drive Newport Beach, CA 92660 Attn: Director – Compensation & Benefits

(or to such other address as the party in question shall from time to time designate by written notice to the other parties).

13. Compensation Recovery. The Company may cancel, forfeit or recoup any rights or benefits of, or payments to, the Participant hereunder, including but not limited to any Shares issued by the Company following vesting of the Performance Shares under this Agreement or the proceeds from the sale of any such Shares, under any future compensation recovery policy that it may establish and maintain from time to time, to meet listing requirements that may be imposed in connection with the Dodd-Frank Wall Street Reform and Consumer Protection Act or otherwise. The Company shall delay the exercise of its rights under this Section for the period as may be required to preserve equity accounting treatment.

14. Governing Law. Except to the extent that provisions of the Plan are governed by applicable provisions of the Code or other substantive provisions of federal law, this Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware without regard to the principles of conflicts of law thereof. | | | | | --- | --- | --- | | | CHIPOTLE MEXICAN GRILL, INC. | | | | | | | | By: | /s/ Neil Flanzraich | | | By: | Neil Flanzraich | | | | Chairman, Compensation Committee | | | | | | | | Participant | | | | | | | | Name: |

Signature Page to Performance Share Agreement

Amended and Restated

Appendix A to 2018 Performance Share Agreement

This Appendix A to 2018 Performance Share Agreement is amended and restated as of December 31, 2020.

Name of Participant:

Performance Criteria

The performance criteria under this Incentive Award shall be 3 Year Comparable Restaurant Sales (“CRS”) Growth (for the period from January 1, 2018 to December 31, 2020) and 2 Year Average Restaurant Cash Flow (“RCF”) Margin (for the period from January 1, 2019 to December 31, 2020), as such terms are defined below.

Performance Goal Table

The number of shares that can be earned under this Incentive Award is equal to the Target Number of Performance Shares multiplied by the percentage determined under the Performance Goal Table set forth below (the “Payout Percentage”). | 2 Year Average RCF Margin | 3 Year CRS Growth | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | | 3.50% | 4.00% | 4.50% | 5.00% | 5.50% | 6.00% | 6.50% | 7.00% | | 18.50% | 0% | 0% | 25% | 50% | 75% | 100% | 125% | 150% | | 19.00% | 0% | 25% | 50% | 75% | 100% | 150% | 150% | 200% | | 20.00% | 50% | 75% | 100% | 150% | 150% | 200% | 200% | 250% | | 21.00% | 75% | 100% | 150% | 200% | 200% | 250% | 250% | 300% | | 22.00% | 75% | 125% | 175% | 225% | 250% | 275% | 300% | 300% |

In no event will any Performance Shares be earned under this Appendix A if either (a) the 2 Year Average RCF Margin is less than 18.5%, or (b) 3 Year CRS Growth is less than 3.5%. Notwithstanding a higher number in the table above, in no event may more than 275% of the Target Number of Performance Shares be earned under this Appendix A. If the level of performance for either 3 Year CRS Growth, 2 Year Average RCF Margin or both falls between two stated performance levels in the Performance Goal Table, the Payout Percentage shall be determined under the heading “Interpolation” below.

3 Year CRS Growth

For purposes of the Performance Goal Table under this Appendix A, “3-Year CRS Growth” shall be determined with respect to the three-year period beginning on January 1, 2018 using the following formula:

[(1+X)*(1+Y)*(1+Z)]^(1/3)-1

Where:

“X” = the annual percentage change in the CRS for the fiscal year ending December 31, 2018

“Y” = the annual percentage change in CRS for the fiscal year ending December 31, 2019

“Z” = the annual percentage change in CRS for the fiscal year ending December 31, 2020; provided that (i) COVID Impacted Months will be excluded from the calculation, and (ii) “Z” will be calculated as a straight average of change in 2020 CRS over 2019 for each non-COVID Impacted Month.

The following terms shall have the respective meanings set forth below when determining 3-Year CRS Growth:

“COVID Impacted Months” means March, April and May 2020, the only months during the fiscal year ending December 31, 2020 in which CRS was below -7.5%. For purposes of this calculation, only food and beverage revenue, excluding delivery service revenue (i.e., delivery and related service fees charged to customers on sales made through Chipotle’s app and website) were used. Conversely, the “non-COVID Impacted Months” means the nine months of January, February and June – December 2020.

“CRS” or “Comparable Restaurant Sales,” with respect to a fiscal year (or single month), means the net sales attributable to Comparable Restaurants that are realized during such year (or single month), as determined in accordance with generally accepted accounting principles. For avoidance of doubt, net sales from a restaurant shall only be counted after it has become a Comparable Restaurant.

2 Year Average RCF Margin

For purposes of the Performance Goal Table under this Appendix A, “2 Year Average RCF Margin” shall be determined under the following formula:

X + Y

Where:

“X” = the Company’s RCF Margin from restaurant operations for the fiscal year ending December 31, 2019

“Y” = the Company’s RCF Margin from restaurant operations for the fiscal year ending December 31, 2020; provided that (i) COVID Impacted Months will be excluded from the calculation, and (ii) for non-COVID Impacted Months beginning after February 2020, COVID Increase in Delivery Cost will be excluded from cash flow in the RCF Margin calculation. “Y” will be calculated as a straight average of the RCF Margin for the non-COVID Impacted Months.

The following terms shall have the respective meanings set forth below when determining the 2-Year Average RCF Margin:

“Baseline Delivery Cost Margin” equals: (a) delivery fees the Company paid to third parties during January and February 2020, divided by (b) total sales for January and February 2020.

“Non-Baseline Delivery Cost Margin” for each non-COVID Impacted Month beginning after February 2020, equals: the sum of (a) delivery fees the Company paid to third parties less (b) increased menu prices for delivery in effect during that month, divided by (c) total sales.

“COVID Increase in Delivery Cost” for each non-COVID Impacted Month occurring after February 2020, equals: the sum of (a) Non-Baseline Delivery Cost Margin less (b) Baseline Delivery Cost Margin, multiplied by (c) total sales.

“RCF Margin” means, for any fiscal year, (i) the Company’s total revenue less restaurant operating costs (excluding depreciation and amortization), divided by (ii) the Company’s total revenue. RCF Margin shall be determined in accordance with generally accepted accounting principles as in effect on the first day of the applicable Performance Period.

The calculation of Baseline Delivery Cost and Non-Baseline Delivery Cost shall be performed by the Company’s finance team and reviewed and approved by the Committee, and the Committee’s determination shall be final.

Example: Calculation of “COVID Increase in Delivery Cost”

For each non-COVID Impacted Month after February 2020, the COVID Increase in Delivery Cost will need to be calculated. Below is an example of the calculation using figures from the month ended August 31, 2020.

Step 1. Calculate Unadjusted “RCF Margin”

(a) Restaurant Level Operating Costs: $432,609,651

(b) Sales: $544,260,32

Unadjusted RCF Margin[((b) - (a))/(b)]: 20.5%

Step 2. Calculate “Baseline Delivery Cost Margin”

(a) Jan/Feb 2020 Delivery fees paid to third parties: $18,459,606

(b) Jan/Feb 2020 Sales: $944,553,173

Baseline Delivery Cost Margin[(a)/(b)]: 1.86%

Step 3. Calculate “Non-Baseline Delivery Cost Margin”

(a) Delivery fees paid to third parties: $26,399,115

(b) Increased delivery menu prices1 $6,922,203

(d) Sales: $544,360,322

Non-Baseline Delivery Cost Margin [(c)/(d)] 3.58%

Step 4. Calculate “COVID increase in Delivery Cost”

(a) Non-Baseline Delivery Cost Margin: 3.58%

(b) Sales: $544,360,322

(d) Baseline Delivery Cost Margin: 1.86%

(e) Sales: $544,360,322

(f) Baseline Delivery Cost: $10,103,710

COVID Increase in Delivery Cost[(c) – (f)]: $9,373,202

Step 5. Calculate Adjusted RCF

(a) Sales: $544,360,322

(b) Restaurant Level Costs: $432,609,651

(d) Adjusted Restaurant Level Costs [(b)-(c)]: $423,236,499

August Adjusted RCF [((a) – (d)) / (a)]: 22.25%

_______________________

1 Increased delivery menu prices equal the incremental revenue earned by placing differential menu pricing on delivery transactions.

Interpolation

(1) Determine what the Payout Percentage would have been without interpolation based on the highest actual results achieved and reflected in the Performance Goal Table for 3 Year CRS Growth and 2 Year Average RCF Margin. For example, assume that 2 Year Average RCF Margin is 18.75% and 3-Year CRS Growth is 4.25%. The Payout Percentage with no interpolation would be zero, as the highest achieved level of performance under the Performance Goal Table is 18.5% for 2 Year Average RCF Margin and 4.0% for 3 Year CRS Growth (with respect to each Performance Criteria, the “Base Achieved Level”).

(2) Calculate the CRS Adjustment Factor as follows:

(a) Determine what the Payout Percentage would have been had positive results in excess of the Base Achieved Level for 3 Year CRS Growth been rounded up to the next highest level of stated performance in the Performance Goal Table (the “CRS Rounded Up Level”). In the example noted in paragraph (1) above, the CRS Rounded Up Level would be 4.5% for 3 Year CRS Growth (4.25% rounded up to 4.5%), and the Payout Percentage based on the CRS Rounded Up Level would be 25% under the Performance Goal Table.

(b) Determine, as a percentage, the extent to which the Company achieved results for 3 Year CRS Growth greater than its Base Achieved Level as compared to its CRS Rounded Up Level, assuming that 2 Year Average RCF Margin equals its Base Achieved Level. In the example noted in Paragraph (1) above, the extent to which 3 Year CRS Growth was attained between its Base Achieved Level and CRS Rounded Up Level was 50%, assuming a Base Achieved Level of 18.5% for 2 Year Average RCF Margin (4.25% is halfway in between the Base Achieved Level and the CRS Rounded Up Level).

(c) Calculate the CRS Adjustment Factor by (A) multiplying the difference between the percentages in paragraphs (2)(a) and (1) above by the percentage determined in paragraph (2)(b) above, rounded to the nearest tenth of a percent. In the example noted in paragraph (1) above, the CRS Adjustment Factor is 12.5% (i.e., (25% - 0%) multiplied by 50%).

(3) Calculate the RCF Adjustment Factor as follows:

(a) Determine what the Payout Percentage would have been had positive results in excess of the Base Achieved Level for 2 Year Average RCF Margin been rounded up to the next highest level of stated performance in the Performance Goal Table (the “RCF Rounded Up Level”). In the example noted in paragraph (1) above, the RCF Rounded Up Level would be 19% for 2 Year Average RCF Margin (18.75% rounded up to 19%), and the Payout Percentage based on the RCF Rounded Up Level would be 25% under the Performance Goal Table.

(b) Determine, as a percentage, the extent to which the Company achieved results for 2 Year Average RCF Margin greater than its Base Achieved Level as compared to its RCF Rounded Up Level, assuming that 3 Year CRS Growth equals its Base Achieved Level. In the example noted in Paragraph (1) above, the extent to which 2 Year Average RCF Margin was attained between its Base Achieved Level and Rounded Up Level was 50%, assuming a Base Achieved Level of 4.0% for 3 Year CRS Growth (18.75% is halfway in between the Base Achieved Level and the RCF Rounded Up Level).

See Appendix B for additional examples of the interpolation method used to determine Payout Percentages when the level of performance for either 3 Year CRS Growth, 2 Year Average RCF Margin or both falls between two stated performance levels in the Performance Goal Table.

Other Provisions

If the Committee determines after granting an Incentive Award that there has been a change in law or accounting rules, that impacts CRS and/or RCF Margin as set forth in this Appendix A, the Committee shall modify these measures, in whole or in part, as it deems appropriate and equitable in its discretion for such events that were not determinable or considered at the Grant Date. For the avoidance of doubt, no adjustments otherwise authorized under Section 8 of the Plan shall be made with respect to the Performance Shares except as specifically provided in this Appendix A.

The Target Number of Performance Shares shall be adjusted to prevent the enlargement or dilution of rights under this Award Agreement due to any increase or decrease in issued shares of the Company’s Common Stock without consideration consistent with the terms of the Plan.

Appendix B to 2018 Performance Share Agreement

Set forth below are additional examples illustrating the interpolation method used to determine Payout Percentages when the level of performance for either 3 Year CRS Growth, 2 Year Average RCF Margin or both falls between two stated performance levels in the Performance Goal Table in Appendix A. The numbered steps below refer to the steps described in detail in Appendix A, above.

Example 1

Assume that 2 Year Average RCF Margin is 19.5% and 3-Year CRS Growth is 4.75%.

(1) The Base Achieved Level is 50%.

(2) The CRS Adjustment Factor is calculated as follows:

(a) The CRS Rounded Up Level would be 5% (4.75% rounded up to 5%), and the Payout Percentage based on the CRS Rounded Up Level would be 75% under the Performance Goal Table.

(b) The percentage reflecting the extent to which 3 Year CRS Growth was attained between its Base Achieved Level and CRS Rounded Up Level is 50% (4.75% is halfway in between 4.5% and 5%).

(3) The RCF Adjustment Factor is calculated as follows:

(a) The RCF Rounded Up Level would be 20% (19.5% rounded up to 20%), and the Payout Percentage based on the RCF Rounded Up Level would be 100% under the Performance Goal Table.

(b) The percentage reflecting the extent to which 2 Year Average RCF Margin was attained between its Base Achieved Level and Rounded Up Level was 50% (19.5% is halfway in between 19% and 20%).

(4) The interpolated Payout Percentage would be 87.5% (i.e. 12.5% + 25% + 50%).

Example 2

Assume that 2 Year Average RCF Margin is 20.5% and 3-Year CRS Growth is 6.75%.

(1) The Base Achieved Level is 200%.

(2) The CRS Adjustment Factor is calculated as follows:

(a) The CRS Rounded Up Level would be 7% (6.75% rounded up to 7%), and the Payout Percentage based on the CRS Rounded Up Level would be 250% under the Performance Goal Table.

(b) The percentage reflecting the extent to which 3 Year CRS Growth was attained between its Base Achieved Level and CRS Rounded Up Level is 50% (6.75% is halfway in between 6.5% and 7%).

(3) The RCF Adjustment Factor is calculated as follows:

(a) The RCF Rounded Up Level would be 21% (20.5% rounded up to 21%), and the Payout Percentage based on the RCF Rounded Up Level would be 250% under the Performance Goal Table.

(b) The percentage reflecting the extent to which 2 Year Average RCF Margin was attained between its Base Achieved Level and Rounded Up Level was 50% (20.5% is halfway in between 20% and 21%).

(4) The interpolated Payout Percentage would be 250% (i.e. 25% + 25% + 200%).

Example 3

Assume that 2 Year Average RCF Margin is 20.9% and 3-Year CRS Growth is 4.9%.

(1) The Base Achieved Level is 100%.

(2) The CRS Adjustment Factor is calculated as follows:

(a) The CRS Rounded Up Level would be 5% (4.9% rounded up to 5%), and the Payout Percentage based on the CRS Rounded Up Level would be 150% under the Performance Goal Table.

(b) The percentage reflecting the extent to which 3 Year CRS Growth was attained between its Base Achieved Level and CRS Rounded Up Level is 80% (4.9% is four-fifths in between 4.5% and 5%).

(3) The RCF Adjustment Factor is calculated as follows:

(a) The RCF Rounded Up Level would be 21% (20.9% rounded up to 21%), and the Payout Percentage based on the RCF Rounded Up Level would be 150% under the Performance Goal Table.

(b) The percentage reflecting the extent to which 2 Year Average RCF Margin was attained between its Base Achieved Level and Rounded Up Level was 90% (20.9% is nine-tenths in between 20% and 21%).

(4) The interpolated Payout Percentage would be 185% (i.e. 40% + 45% + 100%).

Appendix C to 2018 Performance Share Agreement

The terms and conditions of this Appendix C shall apply only to shares of Common Stock subject to the “Post-Modified PSUs,” defined as (i) the total number of shares of Common Stock issuable pursuant to this Amended and Restated Performance Share Agreement, minus (ii) the total number of shares of Common Stock that would have been issuable pursuant to the original terms and conditions of the Performance Share Agreement, without regard to this Amendment and Restatement (such shares in (ii), the “Original PSUs”). The calculation of issuable PSUs shall be performed by the Company’s finance team and reviewed and approved by the Committee, and the Committee’s determination shall be final. You acknowledge that, absent the Amended and Restated Performance Share Agreement, you would have no rights to such Post-Modified PSUs and such Post-Modified PSUs shall be considered separate payments from the Original PSUs and shall not be subject to the deferral election contemplated in Section 1 of the Amended and Restated Performance Share Agreement. Except as expressly set forth in this Appendix C, the Post-Modified PSUs are subject to the terms and conditions of the Amended and Restated Performance Share Agreement.

1. Vesting Schedule for Post-Modified PSUs. Subject to Section 2 below, any Post-Modified PSUs shall vest over a two-year period as follows (the “Vesting Schedule”), subject to your continued employment through the applicable vesting date:

 One-third of the Post-Modified PSUs shall vest on June 30, 2021

 One-third of the Post-Modified PSUs shall vest on December 31, 2021

 One-sixth of the Post-Modified PSUs shall vest on June 30, 2022

 One-sixth of the Post-Modified PSUs shall vest on December 31, 2022

2. Effect of Termination of Employment on Post-Modified PSUs.

(a) Termination of Employment Due to Death, Disability or Retirement. If your employment terminates by reason your death, termination by the Company due to Disability, or Retirement (each as defined below) prior to December 31, 2022, you shall vest in the Post-Modified PSUs as follows:

(i) In the event of your Retirement or termination by the Company due to Disability, you shall continue to vest in the Post-Modified PSUs in accordance with the Vesting Schedule, even after your termination of employment;

(iii) In the event of your death, all Post-Modified PSUs shall vest in full on the date of your death.

circumstances, to be reasonably necessary to protect the Company’s interests, with such restrictive covenants continuing for a period of two (2) years after such Retirement (or, indefinitely, in the case of confidentiality and similar restrictive covenants), (y) signed and delivered to the Company, within 21 days of the date of your employment termination (or such later time as required under applicable law) a general release agreement of claims against the Company and its affiliates in a form reasonably acceptable to the Company, which is not later revoked, and (z) voluntarily terminated your employment with the Company. The term “Age” means (as of a particular date of determination), your age on that date in whole years and any fractions thereof; and “Years of Service” means the number of years and fractions thereof during the period beginning on your most recent commencement of employment with the Company and ending on the date your employment with the Company terminated. Your refusal to fulfill any of the conditions set forth in (w), (x), (y) or (z) above, your breach of any agreement entered into pursuant to (x) or (y) above, or if, after your Retirement, facts and circumstances are discovered that would have justified your termination for Cause (as defined below) if you were still employed by the Company, shall constitute a waiver by you of the benefits attributable to Retirement under this Agreement.

(b) If your employment is terminated by the Company without Cause, or by you for Good Reason, prior to December 31, 2022, the Post-Modified PSUs shall continue to vest in accordance with the Vesting Schedule, even after your employment terminates. For purposes of this Agreement:

(i) “Cause” means the termination of your employment with the Company on account of: (A) your failure to substantially perform your duties (other than as a result of physical or mental illness or injury); (B) your willful misconduct or gross negligence which is materially injurious to the Company or results in reputational harm to the Company; (C) a breach by you of your fiduciary duty or duty of loyalty to the Company; (D) your commission of any felony or other serious crime involving moral turpitude; or (E) your material violation of Company policies or agreements between you and the Company, and

(ii) “Good Reason” means the termination of your employment with the Company on account of: (A) a material diminution of your duties and responsibilities other than a change in your duties and responsibilities that results from becoming part of a larger organization following a Change in Control, (B) a material decrease in your base salary or bonus opportunity other than a decrease in bonus opportunity that applies to all employees of the Company otherwise eligible to participate in the applicable bonus plan, or (C) a relocation of your primary work location more than 30 miles from your work location on the date of this Amended and Restated Performance Share Agreement, without your prior written consent; provided that, within thirty days following the occurrence of any of the Good Reason events set forth herein, you shall have delivered written notice to the Company of your intention to terminate your employment for Good Reason, which notice specifies in reasonable detail the circumstances claimed to give rise to your right to terminate employment for Good Reason, and the Company shall not have cured such circumstances within thirty days following the Company’s receipt of such notice; provided further that you shall have signed and delivered to the Company a

general release agreement of claims against the Company and its affiliates in a form reasonably acceptable to the Company, which is not later revoked.

(c) Forfeiture of Post-Modified PSUs. If your employment terminates prior to December 31, 2022 for any reason other the reasons set forth in Sections 2(a) or 2(b) of this Appendix C, all unvested Post-Modified PSUs shall be forfeited and canceled automatically as of the date your employment terminates.

		Exhibit 31.1

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: April 28, 2021

|  |

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

		Exhibit 31.2

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: April 28, 2021

|  |

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

		Exhibit 32.1

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 March 31, 2021, 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: April 28, 2021

|  |  |

| --- | --- | | | | | /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 March 31, 2021

¨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

Recently Issued Accounting Standards

Recently Adopted 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

Rabbi Trust

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Non-Marketable Equity Securities

Equity Method Investment

5. Shareholders’ Equity

6. Stock-Based Compensation

7. Income Taxes

8. Leases

9. Earnings Per Share

10. Commitments and Contingencies

Purchase Obligations

Litigation

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

Overview of the Impact of COVID-19

First Quarter 2021 Financial Highlights, year-over-year:

Restaurant Activity

Results of Operations

Revenue

Food, Beverage and Packaging Costs

Labor Costs

Occupancy Costs

Other Operating Costs

General and Administrative Expenses

Depreciation and Amortization

Impairment, Closure Costs, and Asset Disposals

Benefit/(Provision) for Income Taxes

Seasonality

Liquidity and Capital Resources

Off-Balance Sheet Arrangements

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