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,~~September 30, 2023

¨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 incorporation or organization)	(IRS Employer Identification No.)

610 Newport Center Drive, Suite 1100 Newport Beach, CA	92660
(Address of Principal Executive Offices)	(Zip Code)

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

______________________________

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


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

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

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

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


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

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

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

As of ~~April~~October 24, 2023, there were ~~27,589,840~~27,444,660 shares of the registrant’s common stock, par value of $0.01 per share outstanding.

Table of Contents

TABLE OF CONTENTS



	PART I
Item 1.	Financial Statements (Unaudited)	1
	Condensed Consolidated Balance Sheets	1
	Condensed Consolidated Statements of Income and Comprehensive Income	2
	Condensed Consolidated Statements of Shareholders’ Equity	3
	Condensed Consolidated Statements of Cash Flows	4
	Notes to Condensed Consolidated Financial Statements	5
	Note 1 - Basis of Presentation and Update to Accounting Policies	5
	Note 2 - Recently Issued Accounting Standards	5
	Note 3 - Revenue Recognition	5
	Note 4 - Fair Value of Financial Instruments	6
	Note 5 – Equity Investments	8
	Note 6 - Shareholders' Equity	9
	Note 7 - Stock-Based Compensation	9
	Note 8 - Income Taxes	9
	Note 9 - Leases	9
	Note 10 - Earnings Per Share	10
	Note 11 - Commitments and Contingencies	10
	Note 12 - Debt	11
	Note 13 - Related Party Transactions	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	12
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	1718
Item 4.	Controls and Procedures	1718
	PART II
Item 1.	Legal Proceedings	18
Item 1A.	Risk Factors	1819
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	1819
Item 3	Defaults upon Senior Securities	1819
Item 4	Mine Safety Disclosures	1819
Item 5	Other Information	19
Item 6.	Exhibits	20
	Signatures	21

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)



	March 31,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
	(unaudited)				(unaudited)
Assets
Current assets:
Cash and cash equivalents	$	409,727	$	384,000	$	602,307	$	384,000
Accounts receivable, net		65,869		106,880		71,122		106,880
Inventory		34,599		35,668		40,177		35,668
Prepaid expenses and other current assets		98,389		86,412		104,038		86,412
Income tax receivable		-		47,741		-		47,741
Investments		652,858		515,136		851,699		515,136
Total current assets		1,261,442		1,175,837		1,669,343		1,175,837
Leasehold improvements, property and equipment, net		1,981,329		1,951,147		2,093,011		1,951,147
Long-term investments		368,023		388,055		473,247		388,055
Restricted cash		25,133		24,966		25,315		24,966
Operating lease assets		3,334,277		3,302,402		3,555,808		3,302,402
Other assets		61,229		63,158		72,830		63,158
Goodwill		21,939		21,939		21,939		21,939
Total assets	$	7,053,372	$	6,927,504	$	7,911,493	$	6,927,504
Liabilities and shareholders' equity
Current liabilities:
Accounts payable	$	182,606	$	184,566	$	207,541	$	184,566
Accrued payroll and benefits		116,465		170,456		155,015		170,456
Accrued liabilities		160,436		147,539		151,148		147,539
Unearned revenue		157,898		183,071		156,320		183,071
Current operating lease liabilities		239,029		236,248		244,994		236,248
Income tax payable		37,658		-		172,689		-
Total current liabilities		894,092		921,880		1,087,707		921,880
Commitments and contingencies (Note 11)
Long-term operating lease liabilities		3,532,566		3,495,162		3,773,087		3,495,162
Deferred income tax liabilities		98,137		98,623		111,089		98,623
Other liabilities		46,892		43,816		53,296		43,816
Total liabilities		4,571,687		4,559,481		5,025,179		4,559,481
Shareholders' equity:
Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of March 31, 2023 and December 31, 2022, respectively		-		-
Common stock, $0.01 par value, 230,000 shares authorized, 37,419 and 37,320 shares issued as of March 31, 2023 and December 31, 2022, respectively		374		373
Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of September 30, 2023 and December 31, 2022, respectively						-		-
Common stock, $0.01 par value, 230,000 shares authorized, 37,467 and 37,320 shares issued as of September 30, 2023 and December 31, 2022, respectively						375		373
Additional paid-in capital		1,849,683		1,829,304		1,917,868		1,829,304
Treasury stock, at cost, 9,818 and 9,693 common shares as of March 31, 2023 and December 31, 2022, respectively		(4,480,833)		(4,282,014)
Treasury stock, at cost, 9,982 and 9,693 common shares as of September 30, 2023 and December 31, 2022, respectively						(4,798,748)		(4,282,014)
Accumulated other comprehensive loss		(7,431)		(7,888)		(8,080)		(7,888)
Retained earnings		5,119,892		4,828,248		5,774,899		4,828,248
Total shareholders' equity		2,481,685		2,368,023		2,886,314		2,368,023
Total liabilities and shareholders' equity	$	7,053,372	$	6,927,504	$	7,911,493	$	6,927,504

See accompanying notes to condensed consolidated financial statements.

Table of Contents

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)



	Three months ended				Three months ended				Nine months ended
	March 31,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022
Food and beverage revenue	$	2,351,009	$	1,998,956	$	2,456,039	$	2,202,336	$	7,304,557	$	6,394,094
Delivery service revenue		17,571		21,583		15,909		17,839		50,772		59,959
Total revenue		2,368,580		2,020,539		2,471,948		2,220,175		7,355,329		6,454,053
Restaurant operating costs (exclusive of depreciation and amortization shown separately below):
Food, beverage and packaging		692,559		626,926		734,186		662,540		2,165,409		1,963,394
Labor		583,794		531,940		616,282		557,178		1,811,754		1,639,044
Occupancy		121,931		112,032		126,269		115,826		372,097		341,777
Other operating costs		363,206		330,695		345,368		322,085		1,058,281		970,261
General and administrative expenses		148,340		147,402		159,501		140,896		464,337		429,118
Depreciation and amortization		76,585		71,665		78,546		71,416		233,902		212,814
Pre-opening costs		6,198		5,348		9,605		7,618		23,341		18,219
Impairment, closure costs, and asset disposals		8,361		4,310		7,241		6,363		31,842		15,354
Total operating expenses		2,000,974		1,830,318		2,076,998		1,883,922		6,160,963		5,589,981
Income from operations		367,606		190,221		394,950		336,253		1,194,366		864,072
Interest and other income (expense), net		8,949		(213)
Interest and other income, net						18,392		3,712		43,787		14,071
Income before income taxes		376,555		190,008		413,342		339,965		1,238,153		878,143
Provision for income taxes		(84,911)		(31,714)		(100,125)		(82,827)		(291,502)		(202,769)
Net income	$	291,644	$	158,294	$	313,217	$	257,138	$	946,651	$	675,374
Earnings per share:
Basic	$	10.56	$	5.64	$	11.37	$	9.26	$	34.31	$	24.20
Diluted	$	10.50	$	5.59	$	11.32	$	9.20	$	34.13	$	24.02
Weighted-average common shares outstanding:
Basic		27,624		28,043		27,550		27,773		27,593		27,907
Diluted		27,788		28,301		27,681		27,956		27,739		28,116
Other comprehensive income, net of income taxes:
Other comprehensive income/(loss), net of income taxes:
Foreign currency translation adjustments	$	457	$	195	$	(1,128)	$	(2,257)	$	(192)	$	(3,542)
Comprehensive income	$	292,101	$	158,489	$	312,089	$	254,881	$	946,459	$	671,832

See accompanying notes to condensed consolidated financial statements.

Table of Contents

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)


	Common Stock					Treasury Stock									Common Stock					Treasury Stock
	Shares	Amount		Additional ‎Paid-In ‎Capital		Shares	Amount		Retained ‎Earnings		Accumulated Other Comprehensive Loss		Total		Shares	Amount		Additional ‎Paid-In ‎Capital		Shares	Amount		Retained ‎Earnings		Accumulated Other Comprehensive Loss		Total
Balance, December 31, 2021	37,132	$	371	$	1,729,312	9,052	$	(3,356,102)	$	3,929,147	$	(5,354)	$	2,297,374	37,132	$	371	$	1,729,312	9,052	$	(3,356,102)	$	3,929,147	$	(5,354)	$	2,297,374
Stock-based compensation	-		-		24,077	-		-		-		-		24,077	-		-		24,077	-		-		-		-		24,077
Stock plan transactions and other	134		2		(61)	-		-		-		-		(59)	134		2		(61)	-		-		-		-		(59)
Acquisition of treasury stock	-		-		-	230		(345,921)		-		-		(345,921)	-		-		-	230		(345,921)		-		-		(345,921)
Net income	-		-		-	-		-		158,294		-		158,294	-		-		-	-		-		158,294		-		158,294
Other comprehensive income, net of income taxes	-		-		-	-		-		-		195		195
Other comprehensive income (loss), net of income taxes															-		-		-	-		-		-		195		195
Balance, March 31, 2022	37,266	$	373	$	1,753,328	9,282	$	(3,702,023)	$	4,087,441	$	(5,159)	$	2,133,960	37,266	$	373	$	1,753,328	9,282	$	(3,702,023)	$	4,087,441	$	(5,159)	$	2,133,960
Stock-based compensation															-		-		29,142	-		-		-		-		29,142
Stock plan transactions and other															18		-		(167)	-		-		-		-		(167)
Acquisition of treasury stock															-		-		-	198		(267,198)		-		-		(267,198)
Net income															-		-		-	-		-		259,942		-		259,942
Other comprehensive income (loss), net of income taxes															-		-		-	-		-		-		(1,480)		(1,480)
Balance, June 30, 2022															37,284	$	373	$	1,782,303	9,480	$	(3,969,221)	$	4,347,383	$	(6,639)	$	2,154,199
Stock-based compensation															-		-		25,587	-		-		-		-		25,587
Stock plan transactions and other															22		-		48	-		-		-		-		48
Acquisition of treasury stock															-		-		-	75		(107,334)		-		-		(107,334)
Net income															-		-		-	-		-		257,138		-		257,138
Other comprehensive income (loss), net of income taxes															-		-		-	-		-		-		(2,257)		(2,257)
Balance, September 30, 2022															37,306	$	373	$	1,807,938	9,555	$	(4,076,555)	$	4,604,521	$	(8,896)	$	2,327,381

Balance, December 31, 2022	37,320	$	373	$	1,829,304	9,693	$	(4,282,014)	$	4,828,248	$	(7,888)	$	2,368,023	37,320	$	373	$	1,829,304	9,693	$	(4,282,014)	$	4,828,248	$	(7,888)	$	2,368,023
Stock-based compensation	-		-		20,670	-		-		-		-		20,670	-		-		20,670	-		-		-		-		20,670
Stock plan transactions and other	99		1		(291)	-		-		-		-		(290)	99		1		(291)	-		-		-		-		(290)
Acquisition of treasury stock	-		-		-	125		(198,819)		-		-		(198,819)	-		-		-	125		(198,819)		-		-		(198,819)
Net income	-		-		-	-		-		291,644		-		291,644	-		-		-	-		-		291,644		-		291,644
Other comprehensive income, net of income taxes	-		-		-	-		-		-		457		457
Other comprehensive income (loss), net of income taxes															-		-		-	-		-		-		457		457
Balance, March 31, 2023	37,419	$	374	$	1,849,683	9,818	$	(4,480,833)	$	5,119,892	$	(7,431)	$	2,481,685	37,419	$	374	$	1,849,683	9,818	$	(4,480,833)	$	5,119,892	$	(7,431)	$	2,481,685
Stock-based compensation															-		-		31,467	-		-		-		-		31,467
Stock plan transactions and other															40		1		(217)	-		-		-		-		(216)
Acquisition of treasury stock															-		-		-	45		(88,319)		-		-		(88,319)
Net income															-		-		-	-		-		341,790		-		341,790
Other comprehensive income (loss), net of income taxes															-		-		-	-		-		-		479		479
Balance, June 30, 2023															37,459	$	375	$	1,880,933	9,863	$	(4,569,152)	$	5,461,682	$	(6,952)	$	2,766,886
Stock-based compensation															-		-		36,614	-		-		-		-		36,614
Stock plan transactions and other															8		-		321	-		-		-		-		321
Acquisition of treasury stock															-		-		-	119		(229,596)		-		-		(229,596)
Net income															-		-		-	-		-		313,217		-		313,217
Other comprehensive income (loss), net of income taxes															-		-		-	-		-		-		(1,128)		(1,128)
Balance, September 30, 2023															37,467	$	375	$	1,917,868	9,982	$	(4,798,748)	$	5,774,899	$	(8,080)	$	2,886,314

See accompanying notes to condensed consolidated financial statements.

Table of Contents

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)



	Three months ended				Nine months ended
	March 31,				September 30,
	2023		2022		2023		2022
Operating activities
Net income	$	291,644	$	158,294	$	946,651	$	675,374
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		76,585		71,665		233,902		212,814
Deferred income tax provision		(486)		(14,024)		12,465		(8,567)
Impairment, closure costs, and asset disposals		8,152		4,265		30,536		15,127
Provision for credit losses		500		(918)		565		(969)
Stock-based compensation expense		20,084		23,590		86,557		77,371
Other		(2,810)		(998)		(17,272)		(13,045)
Changes in operating assets and liabilities:
Accounts receivable		39,659		10,394		33,666		22,891
Inventory		1,086		2,970		(4,508)		(1,056)
Prepaid expenses and other current assets		(14,569)		5,920		(23,494)		(3,169)
Operating lease assets		59,135		55,125		185,056		171,464
Other assets		3,277		(1,132)		(6,939)		(1,537)
Accounts payable		(2,732)		15,702		4,886		10,774
Accrued payroll and benefits		(53,428)		10,438		(14,902)		(32,861)
Accrued liabilities		17,009		(31,151)		1,882		(16,562)
Unearned revenue		(22,653)		(21,604)		(21,190)		(18,141)
Income tax payable/receivable		85,400		43,367		220,427		(18,070)
Operating lease liabilities		(51,584)		(49,596)		(156,180)		(153,200)
Other long-term liabilities		767		595		5,910		2,968
Net cash provided by operating activities		455,036		282,902		1,518,018		921,606
Investing activities
Purchases of leasehold improvements, property and equipment		(120,369)		(96,162)		(388,801)		(335,518)
Purchases of investments		(214,819)		(118,827)		(845,981)		(513,813)
Maturities of investments		99,639		81,923		440,788		202,997
Net cash used in investing activities		(235,549)		(133,066)		(793,994)		(646,334)
Financing activities
Acquisition of treasury stock		(126,709)		(263,308)		(437,305)		(629,775)
Tax withholding on stock-based compensation awards		(67,185)		(85,811)		(68,613)		(92,374)
Other financing activities		11		(359)		546		(586)
Net cash used in financing activities		(193,883)		(349,478)		(505,372)		(722,735)
Effect of exchange rate changes on cash, cash equivalents and restricted cash		290		147		4		(1,170)
Net change in cash, cash equivalents, and restricted cash		25,894		(199,495)		218,656		(448,633)
Cash, cash equivalents, and restricted cash at beginning of period		408,966		846,230		408,966		846,230
Cash, cash equivalents, and restricted cash at end of period	$	434,860	$	646,735	$	627,622	$	397,597
Supplemental disclosures of cash flow information
Income taxes paid (refunded)	$	(245)	$	2,291
Purchases of leasehold improvements, property, and equipment accrued in accounts payable and accrued liabilities	$	63,745	$	52,802
Income taxes paid					$	54,615	$	227,452
Purchases of leasehold improvements, property and equipment accrued in accounts payable and accrued liabilities					$	81,724	$	58,127
Acquisition of treasury stock accrued in accounts payable and accrued liabilities	$	9,422	$	4,497	$	15,312	$	5,999

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,~~September 30, 2023, we operated ~~3,224~~3,321 restaurants including ~~3,164~~3,260 Chipotle restaurants within the United States 54and 61 international Chipotle ~~restaurants, and six~~restaurants. In the current quarter we closed all non-Chipotle restaurants. We manage our U.S. operations based on eight regions and have aggregated our operations to one reportable segment.

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, footnotes and management’s discussion and analysis included in our annual report on Form 10-K for the year ended December 31, 2022.

2. Recently Issued Accounting Standards

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2024. We ~~are evaluating the impact of~~do not expect the transition from LIBOR to alternative reference rates ~~but do not expect~~to have a significant impact to our consolidated financial statements.

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

3. Revenue Recognition

Gift Cards

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

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

March 31,
December 31,
2023
2022
Gift card liability
$
118,684
$
145,014



	September 30,		December 31,
	2023		2022
Gift card liability	$	115,244	$	145,014

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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,
2023
2022
Revenue recognized from gift card liability balance at the beginning of the year
$
38,878
$
37,435



	Three months ended				Nine months ended
	September 30,				September 30,
	2023		2022		2023		2022
Revenue recognized from gift card liability balance at the beginning of the year	$	6,481	$	6,311	$	56,402	$	54,780

Chipotle Rewards

We have a loyalty program called Chipotle Rewards. Eligible customers who enroll in the program generally earn points for every dollar spent. We may also periodically offer promotions, which typically provide the customer with the opportunity to earn bonus points or other rewards. Customers may redeem earned points for various rewards, which are primarily comprised of free food and beverage items. Earned rewards generally expire one month to two months after they are issued, and points generally expire if an account is inactive for a period of six months.

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

We recognize revenue associated with Chipotle Rewards 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				Three months ended				Nine months ended
	March 31,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022
Chipotle Rewards liability, beginning balance	$	38,057	$	25,572	$	40,923	$	29,381	$	38,057	$	25,572
Revenue deferred		31,057		29,688		32,947		32,621		95,672		92,495
Revenue recognized		(29,900)		(27,241)		(32,794)		(30,191)		(92,653)		(86,256)
Chipotle Rewards liability, ending balance	$	39,214	$	28,019	$	41,076	$	31,811	$	41,076	$	31,811

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 held-to-maturity investments are comprised of U.S. Treasury securities and a corporate debt security, which are held at amortized cost. We also have ~~an investment~~investments in a convertible ~~note~~notes receivable which isare held at ~~fair-value.~~fair value. Additionally, we maintain a deferred compensation plan with related assets held in a rabbi trust.

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The following tables show our cash, cash equivalents, and debt investments by significant investment category as of ~~March 31,~~September 30, 2023 and December 31, 2022:



	March 31, 2023														September 30, 2023
	Adjusted cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Investments		Long-term Investments		Adjusted cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Investments		Long-term Investments
Cash	$	73,240	$	-	$	-	$	73,240	$	73,240	$	-	$	-	$	86,629	$	-	$	-	$	86,629	$	86,629	$	-	$	-
Level 1⁽¹⁾
Money market funds		260,944		-		-		260,944		260,944		-		-		439,176		-		-		439,176		439,176		-		-
Time deposits		75,543		-		-		75,543		75,543		-		-		76,502		-		-		76,502		76,502		-		-
U.S. Treasury securities		965,452		788		9,850		956,390		-		652,858		312,594		1,259,791		520		8,512		1,251,799		-		850,900		408,891
Subtotal		1,301,939		788		9,850		1,292,877		336,487		652,858		312,594		1,775,469		520		8,512		1,767,477		515,678		850,900		408,891
Level 3
Corporate debt security⁽²⁾		17,800		-		480		17,320		-		-		17,800		17,600		-		118		17,482		-		799		16,801
Note receivable⁽³⁾		4,860		-		78		4,782		-		-		4,782
Notes receivable⁽³⁾																6,860		284		-		7,144		-		-		7,144
Subtotal		22,660		-		558		22,102		-		-		22,582		24,460		284		118		24,626		-		799		23,945
Total	$	1,397,839	$	788	$	10,408	$	1,388,219	$	409,727	$	652,858	$	335,176	$	1,886,558	$	804	$	8,630	$	1,878,732	$	602,307	$	851,699	$	432,836

	December 31, 2022														December 31, 2022
	Adjusted cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Investments		Long-term Investments		Adjusted cost		Unrealized Gains		Unrealized Losses		Fair Value		Cash and Cash Equivalents		Current Investments		Long-term Investments
Cash	$	75,829	$	-	$	-	$	75,829	$	75,829	$	-	$	-	$	75,829	$	-	$	-	$	75,829	$	75,829	$	-	$	-
Level 1⁽¹⁾
Money market funds		232,477		-		-		232,477		232,477		-		-		232,477		-		-		232,477		232,477		-		-
Time deposits		75,694		-		-		75,694		75,694		-		-		75,694		-		-		75,694		75,694		-		-
U.S. Treasury securities		847,354		63		14,355		833,062		-		515,136		332,218		847,354		63		14,355		833,062		-		515,136		332,218
Subtotal		1,155,525		63		14,355		1,141,233		308,171		515,136		332,218		1,155,525		63		14,355		1,141,233		308,171		515,136		332,218
Level 3
Corporate debt security⁽²⁾		17,900		-		700		17,200		-		-		17,900		17,900		-		700		17,200		-		-		17,900
Note receivable⁽³⁾		4,860		222		-		5,082		-		-		5,082		4,860		222		-		5,082		-		-		5,082
Subtotal		22,760		222		700		22,282		-		-		22,982		22,760		222		700		22,282		-		-		22,982
Total	$	1,254,114	$	285	$	15,055	$	1,239,344	$	384,000	$	515,136	$	355,200	$	1,254,114	$	285	$	15,055	$	1,239,344	$	384,000	$	515,136	$	355,200

⁽¹⁾ Level 1: Quoted prices in active markets for identical assets or liabilities that the entity has the ability to access.

⁽²⁾ The fair value of the corporate debt security is measured using Level 3 (unobservable) inputs. We determined the fair value for the corporate debt security using an internally-developed valuation model and unobservable inputs include credit and liquidity spreads and effective maturity.

⁽³⁾ We have elected to measure our investment in a convertible ~~note~~notes receivable of a private ~~company~~companies at fair value under the fair value option. The fair value of the ~~note~~notes receivable isare measured using Level 3 (unobservable) inputs. We determined the fair value for the ~~note~~notes receivable using an internally-developed valuation model and unobservable inputs include estimates of the equity value of the underlying business and the timing and probability of future financing events.

Rabbi Trust

We have elected to fund certain deferred compensation plan obligations through a rabbi trust, the assets of which are designated as trading securities. The rabbi trust is subject to creditor claims in the event of insolvency, but the assets held in the rabbi trust are not available for general corporate purposes. Amounts in the rabbi trust are invested in mutual funds, consistent with the investment choices selected by participants in their Deferred Plan accounts, which are designated as trading securities, carried at fair value and are included in other assets on the condensed consolidated balance sheets. We record trading gains and losses, along with the offsetting amount related to the increase or decrease in deferred compensation to reflect our exposure to liabilities for payment under the deferred plan in general and administrative expenses on the condensed consolidated statements of income and comprehensive income.

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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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

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



		Carrying Value					Carrying Value
		March 31,					September 30,
	Level	2023		2022		Level	2023		2022
Leasehold improvements, property and equipment, net	3	$	223	$	539	3	$	2,033	$	194
Operating lease assets	3		458		400	3		4,321		551
Total		$	681	$	939		$	6,354	$	745

Fair value of these assets was measured using Level 3 inputs (unobservable inputs for the asset or liability). Unobservable inputs include the discount rate, projected restaurant revenues and expenses, and sublease income if we are closing ~~the restaurant~~ and ~~intending~~intend to sublease the ~~restaurant.~~restaurant or office space. During the three months ended ~~March 31,~~September 30, 2023 and 2022, we recorded asset impairments related to restaurants and offices of ~~$1,299~~$1,611 and ~~$731,~~$698, respectively. During the nine months ended September 30, 2023 and 2022, we recorded asset impairments related to restaurants and offices of $10,726 and $1,796, respectively. Costs are recorded within impairment, closure costs, and asset disposals on the condensed consolidated statements of income and comprehensive income. Carrying value after the impairment charges approximates fair value.

5. Equity Investments



	March 31,		December 31,		September 30,		December 31,
	2023		2022		2023		2022
Equity method investments	$	11,122	$	11,697	$	9,717	$	11,697
Other investments		32,847		32,855		40,411		32,855
Total	$	43,969	$	44,552	$	50,128	$	44,552

Equity Method Investments

As of ~~March 31,~~September 30, 2023, we owned 4,325 shares of common stock of Tractor Beverages, Inc. (“Tractor”). Our investment represents ownership of approximately ~~10.3%~~10.2% of Tractor, and we have invested total cash consideration of $10,000. As we are a significant customer of Tractor and maintain board representation, we are accounting for our investment under the equity method. There were no impairment charges for the ~~three~~nine months ended ~~March 31,~~September 30, 2023 or 2022 associated with this equity method investment. The investment in common stock is included within other assets on the condensed consolidated balance sheets with a carrying value of ~~$11,122~~$9,717 and $11,697 as of ~~March 31,~~September 30, 2023 and December 31, 2022, respectively. Refer to Note 13. “Related Party Transactions” for related party disclosures.

Other Investments

As of ~~March 31,~~September 30, 2023, we hold warrants (the “Tractor Warrants”) to purchase 3,772 shares of common stock of Tractor. Tractor is a privately held company, and as such, the Tractor Warrants represent non-marketable equity securities. The investment is included within long-term investments on the condensed consolidated balance sheets with a carrying value of $10,747 as of ~~March 31,~~September 30, 2023 and December 31, 2022.

As of ~~March 31,~~September 30, 2023, we own 766 shares of the Series C Preferred Stock of Nuro, Inc. (“Nuro”). Our investment represents a minority interest and we have determined that we do not have significant influence over Nuro. Nuro is a privately held company, and as such, the preferred shares comprising our investment are illiquid and fair value is not readily determinable. As of ~~March 31,~~September 30, 2023, we have recognized a cumulative gain of $5,968 related to our investment in Nuro due to observable transactions in prior periods. The investment is included within long-term investments on the condensed consolidated balance sheets with a carrying value of $15,968 as of ~~March 31,~~September 30, 2023 and December 31, 2022.

As of ~~March 31,~~September 30, 2023, we held additional investments in other entities through the Cultivate Next Fund. ~~We do not have significant influence over these entities.~~ These additional investments are included within long-term investments on the condensed consolidated balance sheets with a carrying value of ~~$6,132~~$13,696 and $6,140 as of ~~March 31,~~September 30, 2023 and December 31, 2022, respectively.

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6. Shareholders’ Equity

We have had a stock repurchase program in place since 2008. As of ~~March 31,~~September 30, 2023, we had ~~$282,315~~$368,369 authorized for repurchasing shares of our common ~~stock.~~stock, which includes $300,000 additional authorization approved by our Board of Directors on September 13, 2023. 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~~nine months ended ~~March 31,~~September 30, 2023, 4041 shares of common stock at a total cost of ~~$67,185~~$68,613 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.

7. Stock-Based Compensation

For the ~~three~~nine months ended ~~March 31,~~September 30, 2023, we granted stock only stock appreciation rights (“SOSARs”) on 6972 shares of our common stock to eligible employees. The weighted-average grant date fair value of the SOSARs was ~~$517.43~~$521.66 per share with a weighted-average exercise price of ~~$1,606.91~~$1,615.39 per share. The SOSARs vest in two equal installments on the second and third anniversary of the grant date. For the ~~three~~nine months ended ~~March 31,~~September 30, 2023, 2694 SOSARs were exercised, and 618 SOSARs were forfeited.

For the ~~three~~nine months ended ~~March 31,~~September 30, 2023, we granted restricted stock units (“RSUs”) on 3235 shares of our common stock to eligible employees. The weighted-average grant date fair value of the RSUs was ~~$1,606.91~~$1,647.04 per share. The RSUs generally vest in two equal installments on the second and third anniversary of the grant date. For the ~~three~~nine months ended ~~March 31,~~September 30, 2023, 2022 RSUs vested and 28 RSUs were forfeited.

For the ~~three~~nine months ended ~~March 31,~~September 30, 2023, we awarded performance share units (“PSUs”) on 24 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 $1,606.91 per share, and the quantity of shares that will vest range from 0% to 300% of the targeted number of shares. If the defined minimum targets are not met, then no shares will vest. Further, in no event may more than 100% of the target number of PSUs vest if our 3-year total shareholder return is below the 25^th percentile of the constituent companies comprising the S&P 500 on the day of grant. For the ~~three~~nine months ended ~~March 31,~~September 30, 2023, 49 PSUs vested, and ~~1 PSU was~~3 PSUs were forfeited.

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



	Three months ended				Three months ended				Nine months ended
	March 31,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022
Stock-based compensation	$	20,670	$	24,077	$	36,614	$	25,587	$	88,751	$	78,806
Stock-based compensation, net of income taxes	$	16,696	$	20,550	$	31,065	$	22,067	$	74,966	$	67,541
Total capitalized stock-based compensation included in leasehold improvements, property and equipment, net on the condensed consolidated balance sheets	$	586	$	487	$	813	$	437	$	2,194	$	1,435
Excess tax benefit on stock-based compensation recognized in provision for income taxes on the condensed consolidated statements of income and comprehensive income	$	10,162	$	17,961
Excess tax benefit on stock-based compensation recognized in Provision for income taxes on the condensed consolidated statements of income and comprehensive income					$	994	$	3,711	$	23,004	$	24,383

8. Income Taxes

The effective income tax rate for the three months ended ~~March 31,~~September 30, 2023, was ~~22.5%~~24.2%, a decrease from an effective income tax rate of 24.4% for the three months ended September 30, 2022. The decrease is primarily due to a decrease in uncertain tax position reserves and higher income tax credits, mostly offset by a decrease in tax benefits from option exercises and equity vesting.

The effective income tax rate for the nine months ended September 30, 2023, was 23.5%, an increase from an effective income tax rate of ~~16.7%~~23.1% for the ~~three~~nine months ended ~~March 31,~~September 30, 2022. The increase is primarily due to ~~a decrease in~~fewer tax benefits related to option exercises and equity ~~vesting.~~vesting, partially offset by higher income tax credits.

9. Leases

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

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



	Three months ended				Three months ended				Nine months ended
	March 31,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022
Cash paid for operating lease liabilities	$	102,487	$	94,550	$	105,416	$	97,627	$	312,214	$	287,048
Operating lease assets obtained in exchange for operating lease liabilities	$	90,654	$	88,996	$	185,519	$	163,916	$	438,510	$	373,971
Derecognition of operating lease assets due to terminations or impairment	$	1,223	$	6,297	$	1,232	$	6,112	$	6,391	$	12,585

10. Earnings Per Share

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



	Three months ended				Three months ended				Nine months ended
	March 31,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022
Net income	$	291,644	$	158,294	$	313,217	$	257,138	$	946,651	$	675,374
Shares:
Weighted-average number of common shares outstanding (for basic calculation)		27,624		28,043		27,550		27,773		27,593		27,907
Dilutive stock awards		164		258		131		183		146		209
Weighted-average number of common shares outstanding (for diluted calculation)		27,788		28,301		27,681		27,956		27,739		28,116
Basic earnings per share	$	10.56	$	5.64	$	11.37	$	9.26	$	34.31	$	24.20
Diluted earnings per share	$	10.50	$	5.59	$	11.32	$	9.20	$	34.13	$	24.02

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



	Three months ended				Three months ended				Nine months ended
	March 31,				September 30,				September 30,
	2023		2022		2023		2022		2023		2022
Stock awards subject to performance conditions		48		55		56		61		54		60
Stock awards that were antidilutive		153		142		61		167		93		164
Total stock awards excluded from diluted earnings per share		201		197		117		228		147		224

11. 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~~capital projects, corporate assets, information technology, marketing initiatives and corporate ~~sponsorships.~~sponsorships, and other miscellaneous items.

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, privacy claims, and lease, construction and other commercial disputes, that arise in the ordinary course of business, some of which may be covered by insurance. The outcomes of these actions are not predictable, but we do not believe that the ultimate resolution of any pending or threatened actions of these ~~actions~~types will have a material adverse effect on our financial position, results of operations, liquidity, or capital resources. However, if there is a significant increase in the number of these claims, or if we incur greater liabilities than we currently anticipate under one or more claims, it could materially and adversely affect our business, financial condition, results of operations and cash flows.

Accrual for Estimated Liability

In relation to various legal matters, we had an accrued legal liability balance of ~~$15,970~~$7,382 and $15,227 included within accrued liabilities on the condensed consolidated balance sheets as of ~~March 31,~~September 30, 2023 and December 31, 2022, respectively.

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12. Debt

As of ~~March 31,~~September 30, 2023, we had a $500,000 revolving credit facility with JPMorgan Chase Bank (“JPMorgan”) as administrative agent. Borrowings on the credit facility bear interest at a rate equal to the Secured Overnight Financing Rate (“SOFR”) plus 1.475%, which is subject to increase due to changes in our total leverage ratio as defined in the credit agreement. We are also obligated to pay a commitment fee of 0.175% per year for unused amounts under the credit facility, which also may increase due to changes in our total leverage ratio. Further, we are subject to certain covenants defined in the credit agreement, which include maintaining a total leverage ratio of less than 3.0x, maintaining a consolidated fixed charge coverage ratio of greater than 1.5x, and limiting us from incurring additional indebtedness in certain circumstances. We had no outstanding borrowings under the credit facility and were in compliance with all covenants as of ~~March 31,~~September 30, 2023 and December 31, 2022.

13. Related Party Transactions

As of ~~March 31,~~September 30, 2023, we owned approximately ~~10.3%~~10.2% of the common stock outstanding of Tractor. As we are a significant customer of Tractor and maintain board representation, we are accounting for our investment under the equity method. Accordingly, we have identified Tractor as a related party. We purchase product from the supplier for sale to customers in our restaurants. During the three months ended ~~March 31,~~September 30, 2023 and ~~March 31,~~September 30, 2022, purchases from the supplier were ~~$9,228~~$12,509 and ~~$7,511,~~$11,506, respectively. During the nine months ended September 30, 2023 and September 30, 2022, purchases from the supplier were $32,682 and $28,330, respectively.

During the second quarter of 2023, we made an investment in the Series A preferred shares of Vebu Inc. (“Vebu”), a developer of restaurant automation technology. As we are a significant customer of Vebu and maintain board representation, we have determined that we maintain significant influence over Vebu. During the three months ended September 30, 2023 and September 30, 2022, purchases from Vebu were $248 and $502, respectively. During the nine months ended September 30, 2023 and September 30, 2022, purchases from the supplier were $991 and $612, respectively.

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

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this report are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements about the number of new restaurants we expect to open and the number with Chipotlanes, our expectation to generate positive cash flow for the foreseeable future, our ability to manage risks in our supply chain, our plans for continuing stock buybacks and the period of time during which our cash and short-term investment will fund our operations. We use words such as “anticipate”, “believe”, “could”, “should”, “may”, “approximately”, “estimate”, “expect”, “intend”, “project”, “target”, and similar terms and phrases, including references to assumptions, to identify forward-looking statements. The forward-looking statements in this report are based on currently available operating, financial and competitive information available to us as of the date of this filing 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, including but not limited to: ~~uncertainty regarding the resurgence of COVID-19 infections and its ultimate impact on our business;~~ increasing wage inflation and the competitive labor market,including as a result of regulations such as California AB 1228, which impacts our ability to attract and retain qualified employees and has resulted in occasional staffing shortages; the impact of any union organizing efforts and our responses to such efforts; increasing supply costs (including beef, ~~avocados~~tortillas, queso, salsa, beans and ~~packaging)~~rice); risks of food safety incidents and food-borne illnesses; risks associated with our reliance on certain information technology systems and potential material failures or interruptions; privacy and cyber security risks, including risk of breaches, unauthorized access, theft, modification or destruction of guest or employee personal or confidential information stored on our network or the network of third party providers; the impact of competition, including from sources outside the restaurant industry; the financial impact of increasing our average hourly wages; the impact of federal, state or local government regulations relating to our employees, employment practices, restaurant design and construction, and the sale of food or alcoholic beverages; our ability to achieve our planned growth, such as the costs and availability of suitable new restaurant sites, ~~and the availability of~~ construction materials and ~~contractors;~~contractors and the expected costs to accelerate our international expansion through franchise restaurants in the Middle East; increases in ingredient and other operating costs due to inflation, global conflicts, climate change, our Food with Integrity philosophy, tariffs or trade restrictions and supply shortages; the uncertainty of our ability to achieve expected levels of comparable restaurant sales due to factors such as changes in consumers' perceptions of our brand, including as a result of actual or rumored food safety concerns or other negative publicity, decreased consumer spending (including as a result of higher inflation, mass layoffs, fear of possible recession and higher energy prices), or the inability to increase menu prices or realize the benefits of menu price increases; risks associated with our digital business, including risks arising from our reliance on third party delivery services; risks relating to litigation, including possible governmental actions and potential class action litigation related to food safety incidents, cybersecurity incidents, employment or privacy laws, advertising claims or other matters; and other risk factors described from time to time in our SEC reports, including our Annual Report on Form 10-K for the year ended December 31, 2022, and in other reports filed with the SEC, all of which are available on the investor relations page of our website at ir.Chipotle.com.

As of ~~March 31,~~September 30, 2023, we operated ~~3,164~~3,260 Chipotle restaurants throughout the United States 54and 61 international Chipotle ~~restaurants, and six non-Chipotle~~ restaurants. We manage our U.S. operations based on eight regions and have aggregated our operations to one reportable segment.

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

Comparable restaurant sales

Restaurant operating costs as a percentage of total revenue

New restaurant openings

~~First~~Third Quarter 2023 Financial Highlights, year-over-year:

Total revenue increased ~~17.2%~~11.3% to ~~$2.4~~$2.5 billion

Comparable restaurant sales increased ~~10.9%~~5.0%

Diluted earnings per share was ~~$10.50, an 87.8%~~$11.32, a 23.0% increase from ~~$5.59~~$9.20, which includes a $0.04 after-tax impact from expenses related to corporate restructuring.

Sales Trends. Comparable restaurant sales increased ~~10.9%~~5.0% for the three months ended ~~March 31,~~September 30, 2023. The increase is primarily attributable to ~~an increase in menu prices,~~higher transactions and, to a lesser extent, ~~higher transactions.~~an increase in average check. Comparable restaurant sales represent the change in period-over-period total revenue for restaurants in operation for at least 13 full calendar months.

~~In-restaurant~~ Digital sales increased 22.9% in the three months ended March 31, 2023, compared to the three months ended March 31, 2022. The increase was primarily due to menu price increases, new restaurants, and a shift in consumer behaviors from digital sales to in-restaurant sales across the country. In-restaurant sales representrepresented 36.6% of total food and beverage ~~revenue generated on-premise and include revenue deferrals associated with Chipotle Rewards.~~revenue.

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Digital sales represented 39.3% of food and beverage revenue for the three months ended March 31, 2023, compared to 41.9% of food and beverage revenue for the three months ended March 31, 2022. The decrease in digital sales as a percentage of food and beverage revenue is primarily related to the increase of in-restaurant sales discussed above. Digital sales represent food and beverage revenue generated through the Chipotle website, Chipotle app or third-party delivery aggregators and includes revenue deferrals associated with Chipotle Rewards.

Restaurant Operating Costs. During the three months ended ~~March 31,~~September 30, 2023, our restaurant operating costs (food, beverage and packaging; labor; occupancy; and other operating costs) were ~~74.4%~~73.7% of total revenue, a decrease from ~~79.3%~~74.7% during the three months ended ~~March 31,~~September 30, 2022. The decrease was driven primarily by sales leverage, ~~and, to a lesser extent, lower avocado prices and lower delivery expense due to lower delivery volumes. These decreases were~~ partially offset by inflation across several food costs and, to a lesser extent, wage inflation.

Restaurant Development. During the three months ended ~~March 31,~~September 30, 2023, we opened 4162 new restaurants, which included 3454 restaurants with a Chipotlane. We remain on track to open approximately 255-285 new restaurants in 2023 (including 10 to 15 relocations), and expect to open approximately 285 to 315 new restaurants in 2024, which assumes utility, construction, permit and ~~material supply~~inspection delays do not worsen. We expect that at least 80% of our new restaurants will include a Chipotlane.

Cultivate Next Fund. Our Cultivate Next Fund is a venture formed to make early-stage investments into strategically aligned companies that further our mission to Cultivate a Better World. The Fund has an initial size of $50.0 million and will be financed almost entirely by Chipotle. During the three months ended September 30, 2023 we made a $2.0 million investment in a convertible note receivable issued by a developer of agriculture related robotic technologies. As of ~~March 31,~~September 30, 2023, we have made ~~$11.0~~$20.5 million in investments through this Fund.

Restaurant Activity

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



	Three months ended		Three months ended		Nine months ended
	March 31,		September 30,		September 30,
	2023	2022	2023	2022	2023	2022
Beginning of period	3,187	2,966	3,268	3,052	3,187	2,966
Chipotle openings	40	51	62	43	149	136
Non-Chipotle openings	1	-	-	-	1	-
Chipotle permanent closures	-	(1)	(1)	(1)	(1)	(3)
Chipotle relocations	(4)	(2)	(2)	(4)	(9)	(9)
Non-Chipotle permanent closures			(6)	-	(6)	-
Total restaurants at end of period	3,224	3,014	3,321	3,090	3,321	3,090

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					Three months ended					Nine months ended
	March 31,				Percentage	September 30,				Percentage	September 30,				Percentage
	2023		2022		change	2023		2022		change	2023		2022		change
	(dollars in millions)					(dollars in millions)					(dollars in millions)
Food and beverage revenue	$	2,351.0	$	1,999.0	17.6%	$	2,456.0	$	2,202.3	11.5%	$	7,304.6	$	6,394.1	14.2%
Delivery service revenue		17.6		21.6	(18.6%)		15.9		17.8	(10.8%)		50.8		60.0	(15.3%)
Total revenue	$	2,368.6	$	2,020.5	17.2%	$	2,471.9	$	2,220.2	11.3%	$	7,355.3	$	6,454.1	14.0%
Average restaurant sales ⁽¹⁾	$	2.9	$	2.7	7.7%	$	3.0	$	2.8	6.3%	$	3.0	$	2.8	6.3%
Comparable restaurant sales increase		10.9%		9.0%			5.0%		7.6%			7.7%		8.9%

⁽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.	⁽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.					⁽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~~September ~~31,~~30, 2023 compared to the three months ended ~~March~~September ~~31,~~30, 2022, were new restaurant openings and comparable restaurant sales increases. Total revenue increased due to restaurants not yet in the comparable base of $150.3 million, of which $73.4 million was due to restaurants opened in 2023 and comparable restaurant sales increases of $101.5 million. Comparable restaurant sales increased 5.0% as a result of an increase in transactions of 4.1% and an increase in average check of 0.9%. The increase in average check was driven by a 2.8% benefit from menu price increases, which was partially offset by a decrease in check mix.

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The significant factors contributing to the total revenue increase for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, were comparable restaurant sales increases and new restaurant openings. Total revenue increased due to comparable restaurant sales increases of ~~$209.0~~$462.8 million and restaurants not yet in the comparable base of ~~$139.1~~$438.6 million, of which ~~$8.4~~$124.0 million was due to restaurants opened in 2023. Comparable restaurant sales increased 7.7% as a result of an increase in transactions of 4.3% and an increase in average check of 3.4%. The increase in average check was driven by a 6.0% benefit from menu price increases, which was partially offset by a decrease in check mix.

~~Table of Contents~~

Food, Beverage and Packaging Costs



	Three months ended					Three months ended					Nine months ended
	March 31,				Percentage	September 30,				Percentage	September 30,				Percentage
	2023		2022		change	2023		2022		change	2023		2022		change
	(dollars in millions)					(dollars in millions)					(dollars in millions)
Food, beverage and packaging	$	692.6	$	626.9	10.5%	$	734.2	$	662.5	10.8%	$	2,165.4	$	1,963.4	10.3%
As a percentage of total revenue		29.2%		31.0%	(1.8%)		29.7%		29.8%	(0.1%)		29.4%		30.4%	(1.0%)

Food, beverage and packaging costs decreased 0.1% as a percentage of total revenue for the three months ended ~~March 31~~September 30, 2023 compared to the three months ended ~~March 31~~September 30, 2022, ~~primarily due~~including 0.8% benefit from menu price increases, partially offset by 0.7% from inflation on beef and queso.

Food, beverage and packaging costs decreased 1.0% as a percentage of total revenue for the nine months ended September 30, 2023 compared to the ~~benefit of~~nine months ended September 30, 2022, including 1.9% from menu price increases and ~~to a lesser extent,~~0.8% from lower avocado ~~prices. These decreases were~~costs, partially offset by 1.7% due to inflation across several food costs, primarily ~~dairy, tortillas, salsa, beans~~beef and ~~rice, and, to a lesser extent a mix shift towards Garlic Guajillo Steak, a limited time menu item.~~tortillas.

Labor Costs



	Three months ended					Three months ended					Nine months ended
	March 31,				Percentage	September 30,				Percentage	September 30,				Percentage
	2023		2022		change	2023		2022		change	2023		2022		change
	(dollars in millions)					(dollars in millions)					(dollars in millions)
Labor costs	$	583.8	$	531.9	9.7%	$	616.3	$	557.2	10.6%	$	1,811.8	$	1,639.0	10.5%
As a percentage of total revenue		24.6%		26.3%	(1.7%)		24.9%		25.1%	(0.2%)		24.6%		25.4%	(0.8%)

Labor costs decreased 0.2% as a percentage of total revenue for the three months ended ~~March 31~~September 30, 2023 compared to the three months ended ~~March 31,~~September 30, 2022, ~~primarily due to~~including 0.8% from sales leverage, partially offset by 0.6% due to restaurant wage inflation.

Labor costs decreased 0.8% as a percentage of total revenue for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, including 1.5% from sales leverage, partially offset by 0.9% due to restaurant wage inflation.

Occupancy Costs



	Three months ended					Three months ended					Nine months ended
	March 31,				Percentage	September 30,				Percentage	September 30,				Percentage
	2023		2022		change	2023		2022		change	2023		2022		change
	(dollars in millions)					(dollars in millions)					(dollars in millions)
Occupancy costs	$	121.9	$	112.0	8.8%	$	126.3	$	115.8	9.0%	$	372.1	$	341.8	8.9%
As a percentage of total revenue		5.1%		5.5%	(0.4%)		5.1%		5.2%	(0.1%)		5.1%		5.3%	(0.2%)

Occupancy costs decreased 0.1% and 0.2% as a percentage of total revenue for the three and nine months ended ~~March~~ 31,September 30, 2023 compared to the three and nine months ended ~~March 31,~~September 30, 2022, respectively, primarily due to sales leverage, partially offset by increased rent expense associated with new restaurants.

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Other Operating Costs



	Three months ended					Three months ended					Nine months ended
	March 31,				Percentage	September 30,				Percentage	September 30,				Percentage
	2023		2022		change	2023		2022		change	2023		2022		change
	(dollars in millions)					(dollars in millions)					(dollars in millions)
Other operating costs	$	363.2	$	330.7	9.8%	$	345.4	$	322.1	7.2%	$	1,058.3	$	970.3	9.1%
As a percentage of total revenue		15.3%		16.4%	(1.1%)		14.0%		14.5%	(0.5%)		14.4%		15.0%	(0.6%)

Other operating costs include, among other items, marketing and promotional costs, delivery expense, bank and credit card processing fees, restaurant utilities, technology costs, and maintenance costs.

Other operating costs decreased 0.5% as a percentage of total revenue for the three months ended ~~March~~September ~~31,~~30, 2023 compared to the three months ended ~~March~~September ~~31,~~30, 2022, ~~due to~~including 0.4% of sales leverage and 0.1% of lower marketing and promotional expenses, partially offset by 0.1% of higher maintenance costs.

Other operating costs decreased 0.6% as a percentage of total revenue for the nine months ended September 30, 2023 compared to ~~a lesser extent,~~the nine months ended September 30, 2022, including 0.6% of sales leverage and 0.3% of lower delivery expenses, ~~associated with lower volume of delivery transactions. These decreases were~~ partially offset by ~~higher costs across several expenses, most notably higher utilities due to inflation in natural gas and electricity and~~0.1% of higher maintenance costs.

~~Table of Contents~~

General and Administrative Expenses



	Three months ended					Three months ended					Nine months ended
	March 31,				Percentage	September 30,				Percentage	September 30,				Percentage
	2023		2022		change	2023		2022		change	2023		2022		change
	(dollars in millions)					(dollars in millions)					(dollars in millions)
General and administrative expense	$	148.3	$	147.4	0.6%	$	159.5	$	140.9	13.2%	$	464.3	$	429.1	8.2%
As a percentage of total revenue		6.3%		7.3%	(1.0%)		6.5%		6.3%	0.2%		6.3%		6.6%	(0.3%)

General and administrative expenses increased ~~slightly~~ in dollar terms for the three months ended September ~~March 31~~30, 2023 compared to the three months ended September 30, 2022, due to a $10.2 million increase in stock-based compensation performance awards, a $5.1 million increase in performance bonuses, a $3.5 million increase in conference expense, primarily associated with our upcoming biennial All Managers’ Conference which is scheduled for March 312024, and a $2.9 million increase in outside services expense related to corporate initiatives.

General and administrative expenses increased in dollar terms for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily due to a ~~$5.8~~$13.5 million increase in performance bonuses, an $11.5 million increase in outside services expense related to corporate initiatives, a $9.5 million increase in employee wages primarily due to headcount growth, an $8.0 million increase in stock-based compensation performance awards, and a ~~$4.7~~$6.5 million increase in ~~outside services expense related to corporate initiatives, and a $4.2 million increase in performance bonuses.~~restructuring costs. These increases were ~~mostly~~slightly offset by a ~~$14.1~~$10.8 million decrease in conference expense, primarily associated with our biennial All Managers’ Conference held in the 2022 comparable ~~period.~~period, and a $3.2 million decrease in recruitment expense.

Depreciation and Amortization



	Three months ended					Three months ended					Nine months ended
	March 31,				Percentage	September 30,				Percentage	September 30,				Percentage
	2023		2022		change	2023		2022		change	2023		2022		change
	(dollars in millions)					(dollars in millions)					(dollars in millions)
Depreciation and amortization	$	76.6	$	71.7	6.9%	$	78.5	$	71.4	10.0%	$	233.9	$	212.8	9.9%
As a percentage of total revenue		3.2%		3.5%	(0.3%)		3.2%		3.2%	0.0%		3.2%		3.3%	(0.1%)

Depreciation and amortization ~~decreased~~remained flat as a percentage of total revenue for the three months ended ~~March 31,~~September 30, 2023 compared to the three months ended ~~March 31,~~September 30, 2022, primarily due to sales leverage offset by increased depreciation expense associated with new restaurants.

Depreciation and amortization decreased 0.1% as a percentage of total revenue for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily due to sales leverage, partially offset by increased depreciation expense associated with new restaurants.

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Impairment, Closure Costs, and Asset Disposals



	Three months ended					Three months ended					Nine months ended
	March 31,				Percentage	September 30,				Percentage	September 30,				Percentage
	2023		2022		change	2023		2022		change	2023		2022		change
	(dollars in millions)					(dollars in millions)					(dollars in millions)
Impairment, closure costs, and asset disposals	$	8.4	$	4.3	94.0%	$	7.2	$	6.4	13.8%	$	31.8	$	15.4	107.4%
As a percentage of total revenue		0.4%		0.2%	0.2%		0.3%		0.3%	0.0%		0.4%		0.2%	0.2%

Impairment, closure costs, and asset disposals increased in dollar terms for the three months ended ~~March 31,~~September 30, 2023 compared to the three months ended ~~March 31,~~September 30, 2022,, primarily due to higher charges related to the replacement of certain leasehold improvements and, to a lesser extent, the replacement of certain kitchen equipment.

Impairment, closure costs, and asset disposals increased in dollar terms for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily due to elevated impairment of operating lease assets and leasehold improvements and higher charges related to the replacement of certain leasehold improvements and, to a lesser extent, the replacement of certain kitchen equipment. These elevated impairments include the impact of Pizzeria Locale closing.

Interest and Other Income, ~~(Expense),~~ net



	Three months ended					Three months ended					Nine months ended
	March 31,				Percentage	September 30,				Percentage	September 30,				Percentage
	2023		2022		change	2023		2022		change	2023		2022		change
						(dollars in millions)					(dollars in millions)
Interest and other income (expense), net	$	8.9	$	(0.2)	n/m*
Interest and other income, net						$	18.4	$	3.7	395.5%	$	43.8	$	14.1	211.2%
As a percentage of total revenue		0.4%		0.0%	0.4%		0.7%		0.2%	0.5%		0.6%		0.2%	0.4%

Interest and other income, ~~(expense),~~ net increased in dollar terms for the three months ended ~~March 31,~~September 30, 2023 compared to the three months ended ~~March 31,~~September 30, 2022, primarily due to increased interest income on our investments in U.S. Treasury securities, money market funds and time deposits due to increased interest ~~rates.~~rates and a higher average investment balance.

Interest and other income, net increased in dollar terms for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, primarily due to increased interest income on our investments in U.S. Treasury securities, money market funds and time deposits due to increased interest rates and a higher average investment balance, partially offset by a gain on our investments in Tractor Beverages, Inc. in the prior year.

Provision for Income Taxes



	Three months ended					Nine months ended
	September 30,				Percentage	September 30,				Percentage
	2023		2022		change	2023		2022		change
	(dollars in millions)					(dollars in millions)
Provision for income taxes	$	(100.1)	$	(82.8)	20.9%	$	(291.5)	$	(202.8)	43.8%
Effective income tax rate		24.2%		24.4%	n/m*		23.5%		23.1%	n/m*

*Not meaningful

The effective income tax rate decreased 0.2% for the three months ended September 30, 2023 compared to the three months ended September 30, 2022, including 0.5% from a decrease in uncertain tax position reserves, 0.4% from higher income tax credits, mostly offset by a 0.8% from a decrease in tax benefits from option exercises and equity vesting.

The effective income tax rate increased 0.4% for the nine months ended September 30, 2023 compared to the nine months ended September 30, 2022, including 0.9% from a decrease in tax benefits from option exercises and equity vesting, partially offset by 0.4% from higher income tax credits.

1516

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~~Provision for Income Taxes~~

Three months ended
March 31,
Percentage
2023
2022
change
(dollars in millions)
Provision for income taxes
$
(84.9)
$
(31.7)
167.7%
Effective income tax rate
22.5%
16.7%
n/m*
*Not meaningful

The effective income tax rate for the three months ended March 31, 2023, was 22.5%, an increase from an effective income tax rate of 16.7% for the three months ended March 31, 2022. The increase is primarily due to a decrease in tax benefits related to option exercises and equity vesting.

The effective tax rate for the three months ended March 31, 2023 of 22.5% is lower than our expected effective income tax rate for the full year 2023, primarily due to elevated excess tax benefits related to option exercises and equity vesting in the first quarter.

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, impact of inflation on consumer spending, fluctuations in food or packaging costs, or the timing of menu price increases or promotional activities and other marketing initiatives. The number of trading days in a quarter can also affect our results, although, on an overall annual basis, changes in trading days do not have a significant impact.

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

Liquidity and Capital Resources

As of ~~March 31~~September 30, 2023, we had a cash and marketable investments balance of ~~$1.4~~$1.9 billion, excluding non-marketable investments of $64.4 million and restricted cash of ~~$25.1 million and non-marketable investments of $55.4~~$25.3 million. After funding the current operations in our restaurants and support centers, the first planned use of our cash flow from operations is to provide capital for the continued investment in new restaurant construction. In addition to continuing to invest in our restaurant expansion, we expect to utilize cash flow from operations to: repurchase additional shares of our common stock subject to market conditions; invest in, maintain, and refurbish our existing restaurants; and for general corporate purposes. As of ~~March 31~~September 30, 2023, ~~$282.3~~$368.4 million remained available for repurchases of shares of our common stock. Under the remaining repurchase authorizations, shares may be purchased from time to time in open market transactions, subject to market conditions. Additionally, as of ~~March 31,~~September 30, 2023, we had $500.0 million of undrawn borrowing capacity under a line of credit facility.

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

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

~~Table of Contents~~

Cash Flows

Cash provided by operating activities was ~~$455.0~~$1.5 billion for the nine months ended September 30, 2023, compared to $921.6 million for the ~~three~~nine months ended ~~March 31, 2023, compared to $282.9 million for the three months ended March 31,~~September 30, 2022. The increase was primarily due to higher net earnings, timing of tax-related payments and receipts and, to a lesser extent, ~~timing of tax amounts owed. This increase was partially offset by~~ net cash changes in non-tax operating assets and liabilities.

Cash used in investing activities was ~~$235.5~~$794.0 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2023, compared to ~~$133.1~~$646.3 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022. The change was primarily associated with a ~~$78.3~~$94.4 million increase in ~~U.S. Treasury security~~investment purchases net of ~~U.S. Treasury security~~investment maturities and ~~to a lesser extent,~~ increased capital expenditures of ~~$24.2~~$53.3 million primarily related to costs associated with new restaurant development.

Cash used in financing activities was ~~$193.9~~$505.4 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2023, compared to ~~$349.5~~$722.7 million for the ~~three~~nine months ended ~~March 31,~~September 30, 2022. The change was primarily due to decreased treasury stock repurchases of ~~$136.6~~$192.5 million and, to a lesser extent, ~~$18.6~~$23.8 million of lower payments of tax withholdings related to stock-based compensation.

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, 2022.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Commodity Price Risks

We are exposed to commodity price risks. Many of the ingredients we use to prepare our food, as well as our packaging materials and utilities to run our restaurants, are ingredients or commodities that are affected by the price of other commodities, exchange rates, foreign demand, weather, seasonality, production, availability and other factors outside our control. We work closely with our suppliers and use a mix of forward pricing protocols under which we agree with our supplier on fixed prices for deliveries at some time in the future, fixed pricing protocols under which we agree on a fixed price with our supplier for the duration of that protocol, formula pricing protocols under which the prices we pay are based on a specified formula related to the prices of the goods, such as spot prices or based on changes in industry indices, and range forward protocols under which we agree on a price range for the duration of that protocol. Generally, our pricing protocols with suppliers can remain in effect for periods ranging from one to 24 months, depending on the outlook for prices of the particular ingredient. In some cases, we have minimum purchase obligations. We have tried to increase, where practical, the number of suppliers for our ingredients, which we believe can help mitigate pricing volatility, and we follow industry news, trade issues, exchange rates, foreign demand, weather, crises and other world events that may affect our ingredient prices. Increases in ingredient prices could adversely affect our results if we choose for competitive or other reasons not to increase menu prices at the same rate at which ingredient costs increase, or if menu price increases result in customer resistance. We also could experience shortages of key ingredients for many unforeseen reasons, such as crop damage due to inclement weather, if our suppliers need to close or restrict operations, or due to industry-wide shipping and freight delays.

Changing Interest Rates

We are exposed to interest rate risk through fluctuations of interest rates on our investments. As of ~~March 31,~~September 30, 2023, we had ~~$1.5~~$2.0 billion in cash and cash equivalents, current and long-term investments, and restricted cash, nearly all of which are interest bearing. Changes in interest rates affect the interest income we earn, and therefore impact our cash flows and results of operations.

Foreign Currency Exchange Risk

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

ITEM 4. CONTROLS AND PROCEDURES

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

~~Table of Contents~~

Evaluation of Disclosure Controls and Procedures

As of ~~March 31,~~September 30, 2023, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial and Administrative Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial and Administrative Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There were no changes during the fiscal quarter ended ~~March 31,~~September 30, 2023, 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 11. “Commitments and Contingencies” in our condensed consolidated financial statements included in Item 1. “Financial Statements.”

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ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

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~~third quarter of 2023.

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
January
21,617
$
1,478.17
21,617
$
381,993,083
Purchased 1/1 through 1/31
February
17,815
$
1,568.79
17,815
$
354,045,037
Purchased 2/1 through 2/28
March
45,333
$
1,582.30
45,333
$
282,314,823
Purchased 3/1 through 3/31
Total
84,765
$
1,552.90
84,765


		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
July		18,784	$	2,025.80	18,784	$	256,641,653
	Purchased 7/1 through 7/31
August		57,489	$	1,885.59	57,489	$	148,240,948
	Purchased 8/1 through 8/31
September		41,976	$	1,902.81	41,976	$	368,368,641
	Purchased 9/1 through 9/30
Total		118,249	$	1,913.98	118,249

(1) Shares were repurchased pursuant to repurchase programs announced on February 7, 2023 and July 26, ~~2022 and October 25, 2022.~~2023.

(2) The September total includes an additional $300 million in authorized repurchases approved on September 13, 2023 and announced October 26, 2023. There is no expiration date for this program. The authorization to repurchase shares will end when we have repurchased the maximum amount of shares authorized, or we have determined to discontinue such repurchases.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

~~Table of Contents~~

ITEM 5. OTHER INFORMATION

~~None.~~

None.
‎

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ITEM 6. EXHIBITS

EXHIBIT INDEX



		Description of Exhibit Incorporated Herein by Reference
Exhibit Number	Exhibit Description	Form	File No.	Filing Date	Exhibit Number	Filed Herewith
10.1†	~~Form of~~Chipotle Mexican Grill, Inc. Employee Stock Purchase Plan, Amended August 2023 ~~Restricted Stock Unit Agreement~~	-	-	-	-	X
~~10.2†~~	~~Form of 2023 Stock Appreciation Rights Agreement~~	-	-	-	-	X
~~10.3†~~	~~Form of 2023 Performance Share Agreement~~
~~10.4†~~	~~Form of 2023 Stock Option Agreement (Canada)~~	-	-	-	-	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 and Administrative 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 and Administrative 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 and Administrative Officer (principal financial officer and duly authorized signatory for the registrant)

Date: ~~April~~October 26, 2023