CMG 10-K & 10-Q changes, risk factors and insider trading

Food safety is our top priority, and we dedicate significant resources to ensuring that our guests enjoy safe, high-quality food products.products However,are safe; however, even with strong preventative controls and interventions from farm to restaurant,restaurant cannot completely eliminate food safety risks cannot be completely eliminated.risks. Incidents of food-borne illnesses have occurred and may continue to occur in the restaurantour and retailother foodrestaurants industries and incidents may resultresulting from the failure of restaurant employees to properly cook or maintain our ingredients,ingredients; employees or guests entering oura restaurant while infected with communicable diseases,diseases; or contaminated ingredients resulting from the failure of onea ofsupplier, ourdistributor suppliersor employee to execute food safety preventive controls. Although we monitor and audit compliance with our program, we cannot guarantee that every food item is safely and properly maintained from the start of the supply chain through guest consumption. Any report, legitimate or rumored, of food-borne illness caused by pathogens such as E. coli, hepatitis A, norovirus, listeria, Campylobacter, Clostridium perfringens or salmonella, or other food safety issues, such as food tamperingtampering, contamination or contamination,natural or foreign objects, at one of our restaurants could adversely affect our reputation and have a negative impact on our sales. In addition, instances of food-borne illness or food safety issues that occur solely at competitors’ restaurants,restaurants or at suppliers or distributors (even if we do not work with them) could result in negative publicity about the restaurant industry and adversely impact our sales. The occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, resulting in higher costs and lower margins.

We may be at ahave higher risk for food safety incidents than some competitors due toof our greatercompetitors because we use of fresh, unprocessed produce, handling ofhandle raw chicken in our restaurants, our reliancerely on employees cooking with traditional methods and thedon't lack ofuse artificial preservatives andor frozen ingredients in our menu items. The risk of illnesses associated with our food also may increase due to our delivery orand catering businesses, in which our food is transported, stored and/or served in conditions that are not under our control. All of these factors could have an adverse impact on our ability to attract and retain guests, which could in turn have a material adverse effect on our growth and profitability. In addition, real or perceived concerns about emergingpervasive chemicals and substances in the U.S. food safetysupply issues,chain, such as phthalates, per- and polyfluoroalkyl substances ("PFAS"), microplastics or heavy metalsmetals, inhave been the U.S.subject foodof supplyincreased chain,regulatory scrutiny and lawsuits against us and other restaurant companies, which could impact consumers’ confidence in the restaurant industry and reduce restaurant sales.

Failure to maintain the reputationvalue and relevancereputation of the Chipotle brand could negatively impact our financial results.

We built strong value in the Chipotle brand by serving delicious, high quality food, made fresh every day using responsibly sourced ingredients served in generous portions. Our continued success depends on maintaining this compelling brand value, which may be eroded by numerous factors, some of which are outside of our control. Incidents that could erode trust in our brand include actual or perceived food safety or food-borne illnesses; allegations of unethical, racially-biased, inequitable,unethical or socially irresponsibleunprofessional behavior by employees and/or guests; privacy breaches or violations of privacy laws; safety-related incidents occurring in or around our restaurants; guest perceptions regarding smaller entrée portion sizes; or other events or incidents described in this risk factors section. The adverse impact of such incidents may be compounded by negative publicity, including through social or digital media, or if they result in litigation. Social media, video-sharing, networking, and gaming and messaging platforms dramatically increase the speed withand reach at which negative publicity is disseminated, often before we have a meaningful opportunity to investigate, respond to and address an issue. Negative online postings or comments about us, including as a result of inaccurate, fictitious or malicious postings or media content, have in the past and could in the future magnify and prolong the adverse impact of any one incident and increase the damage to the value of our brand.

Additionally, consumer demand for our products and our brand value could diminish significantly if we, our employees or business partners fail to comply with applicable laws and regulations, take controversial positions or actions,actions that may be considered controversial, fail to deliver a consistently positive guest experience or fail to foster an inclusive and welcoming environment. In addition, we cannot ensure that our restaurant crew or business partners will not take actions that adversely affect our brand reputation and relevance.

The restaurant industry is highly competitive withon respectfactors tosuch tasteas preferences,taste, price, food quality and selection, customer service, brand reputation, digital engagement, advertising and promotional initiatives, and the location, attractiveness and maintenance of restaurants. We also compete with non-traditional market participants, such as “convenience meals” in the form of entrées, side dishes or meal preparation kits from grocery stores, meal kit delivery services, and “ghost” or “dark” kitchens, where meals are prepared at separate takeaway premises rather than a restaurant,restaurant. and with deliveryDelivery aggregators and food delivery services, which provide consumers with convenient access to a broad range of competing restaurant chains and food retailers, particularly in urbanized areas, may direct potential customers to other restaurants based on paid placements, online reviews and other factors, and may form a closer relationship with our guests. Increased competition could have an adverse effect on our sales, profitability and development plans. If guest tastes or dietary preferences change, if our marketing efforts are unsuccessful, or if our restaurantswe are unable to compete successfully with other restaurant outlets,concepts, our business could be adversely affected.

We continue to believe our commitment to higher-quality and responsibly sourced ingredients resonates with guests and gives us a competitive advantage; however, many of our competitors also make claims related to the quality of their ingredients and lack of artificial flavors, colors and preservatives. The increasing use of these claims by competitors, regardlesseven of the accuracy ofif such claims,claims are not accurate or comparable, may lessen our differentiation and make it more difficult for us to compete. If we are unable to continue to maintain our distinctiveness and compete effectively, our business, financial condition and results of operations could be adversely affected.

Over 15%16% of our 20242025 food and beverage revenue consisted of delivery orders for which we are reliant on third-party delivery companies. Depending on which ordering platform a guest uses – our brand platform or the third-party delivery service platform – the delivery fee we collect from the guest may be less than the actual delivery cost. AsIf thewe increase our menu prices on third-party delivery industryplatforms consolidates,to cover higher delivery companiesfees, gainwe greatermay leveragenot inbe negotiatingcompetitive thewith termsother ofrestaurant contractsoptions andoffered increasingon pricing,that which in turn could negatively impact our profits from this channel.platform. If the third-party delivery companies we utilizeuse increase the fees they charge users or give greater priority or promotions on their platforms to other restaurants, our delivery business and our sales may be negatively impacted. In addition, if a third-party delivery driver fails to deliver an order on time, fails to deliver the complete order or otherwise provides a bad guest experience, our guest may attribute that negative experience to Chipotle and our reputation and sales could be adversely impacted. The ordering and payment platforms used by these third parties, our mobile app or our online ordering site have been and could again be interrupted by technological failures, user errors, cyber-attacks or other factors, which could adversely impact sales through these channels and negatively impact our overall sales and reputation.

If we are not able to hire, developtrain and retain qualified restaurant employees and/or appropriately plan our workforce, our growth plan and profitability could be adversely affected.

The aggressive pace at which we open new restaurants can make it increasingly difficult to recruit and hire sufficient numbers of qualified employees to manage and work in our restaurants, to train employees to deliver a consistently high-quality product and guest experience and to maintain an effective system of internal controls for a dispersed workforce, which could materially harm our business and results of operations. Maintaining appropriate staffing in our restaurants requires precise workforce planning, which has become more complex due to predictive scheduling laws (also called “fair workweek” or “secure scheduling”) and “just cause” termination legislation in certain geographic areas where we operate. The market for qualified talent continues to be competitive and we must continue to offer competitive wages, benefits and workplace conditions to retain qualified employees. We have experienced and may continue to experience challenges in hiring and retaining restaurant employees and in maintaining full restaurant staffing in various locations, which hasmay have resulted in longer wait times for guest orders, temporary closures of the digital make line and decreased employee and guest satisfaction. A shortage of qualified candidates who meet legal work authorization requirements, failure to hire, train and retain new restaurant employees in a timely manner or higher than expected turnover levels could affect our ability to open new restaurants, grow sales at existing restaurants or meet our labor cost objectives. Anticipated changesChanges in immigration laws and regulations could decrease the poolnumber of potential candidates with legal work authorization, cause disruption indisrupt the workforce for all companies that rely on hourly workers and increase the costs, time and requirements to hire new employees. In addition, our failure to adequately monitor and proactively respond to employee dissatisfaction could lead to poor guest satisfaction, higher turnover, litigation and unionization efforts, which could negatively impact our financial results. We have experienced labor union efforts to organize groups of our employees from time to time and, if successful, those organizational efforts may decrease our operational flexibility and disrupt our normal operations, which could adversely affect our business.

In addition, some jurisdictions in which we operate have implemented fair workweek or “secure scheduling” legislation, which impose complex requirements related to scheduling for certain restaurant employees; sick pay and paid time off legislation, which requires employers to provide paid time off to employees; and/or “just cause” termination legislation, which restricts companies’ ability to terminate employees or reduce employees’ hours unless they can prove “just cause” or a “bona fide economic reason” for the termination or reduction in hours. Additional jurisdictions are considering similar types of legislation. All of theseThese regulations impose additional obligations on us, which could increase our operating costs, and our failure to comply with any of these regulations could subject us to penalties and other legal liabilities, which could adversely affect our ability to attract and retain employees and our results of operations, and potentially cause us to close or reduce operating hours of some restaurants in these jurisdictions.liabilities. For example, in 2022 we settled a complaint alleging that we violated New York City’s Fair Workweek law and Earned Safe and Sick Time Act, and we havecurrently undergoneare severalcooperating auditswith a second audit by New York City of our compliance with employment law requirements, which could result in additional liabilities. Our potential liability exposure for these employment laws and regulations may be higher than our restaurant peers becausebecause, we have more employees, since we areas one of the largest restaurant companies that owns and operates all our restaurants,restaurants whilein the U.S. and Canada, we have more employees than most of our restaurant peerspeers, which franchise some or a significant portion of their operations.

Our profitability has been and could continue to be adversely impacted by increases in labor costs, including wages and health benefits, which are some of our most significant costs,costs. includingIncreases increasescould be triggered by federal, state and local laws governing matters such as minimum wages, meal and rest breaks and changes to eligibility for overtime pay; regulations regarding scheduling and benefits; increased health care and workers’ compensation insurance costs; and higher wages and benefit costs necessary to attract, hire and retain high-quality employees with the right skill sets in a highly competitive job market. In addition, state and local laws may require wage increasesincreases, and standardsrestrictions on working hours and other factors that would restrict our flexibility to respond to market conditions and increase our costs without corresponding benefits. For example, in 2024 California required national restaurant chains, including Chipotle, to pay a minimum $20 per hour wage to California restaurant workers, which minimum wage may be increased annually by a state-appointed council. Other states, counties and cities are considering similar regulations. Our ability to offset higher labor costs by increasing menu prices depends on the willingness of our guests to pay the higher prices and the perceived value of our meals relative to competitors. If competitive or inflationary pressures or other factors prevent us from offsetting higher labor costs by increased menu prices, our profitability may decline.

Our ability to continue to grow our business depends substantially on the contributions and abilities of our executive leadership team and other key management personnel. Changes in senior management could result in significant changes in strategic direction and initiatives. A failure to maintain appropriate organizational capability to support our strategic initiatives, a failure to implement appropriate leadership development programs and build adequate bench strength with key skillsets, or a failure to effectively manage our leadership succession, could jeopardize our ability to meet our business performance expectations and growth targets. If we are unable to attract, develop, retain and incentivize sufficiently experienced and capable management personnel, our business and financial results may suffer.

Breaches or other unauthorized access, theft, modification or destruction of guest and/or employee personal,personal information, or Chipotle confidential or other materialproprietary information that is stored in our information technology systems or by third parties on our behalf could damage our reputation and expose us to potential liabilities.liabilities and loss of revenue.

As our reliancedependence on technology has grown, the scope and severity of potential risks from cybercyber-attacks and security threats hashave increased. We expect that the rapid evolution and increased adoption of artificial intelligence have heightened and will continue to heighten those risks. Many of our information technology systems and the systems of our third-party business partners (whether cloud-based or hosted in proprietary servers), including those used for our point-of-sale, web and mobile platforms, online and mobile payment systems, delivery services and rewards programs and administrative functions, contain personal, financial or other information that is entrusted to us byof our guests, business partnersemployees, and employees.business Manypartners, of our information technology systems also containand confidential information about our business, such as business strategies, financial results, development initiatives and designs,initiatives, and confidential information about third parties, such as suppliers. Similar to many other restaurant companies, we have in the past experienced, and we expect to continue to experience, cyber-attacks, including phishing, and other attempts to breach, or gain unauthorized access to, our systems and databases.databases Toand date,we expect the number and frequency of these attacksattempts haveto notincrease hadas athe materialscope impactand onscale of our operations,technology butfootprint weand cannotdigital provideoperations assurance that they will not have an impact in the future.increases.

Our third-party providers’ and business partners’ information technology systems and databases are subject to similar risks. The number and frequency of these attempts varies from year to year and increases as the scope and scale of our technology footprint and digital operations increases. In addition, we provide guest and employee data, as well as confidential information important to our business to third parties. Individualsindividuals performing work for us and theseour thirdthird-party partiesbusiness alsopartners may access some of this data, including on personally owned digital devices. To the extent we, a third party or any such an individual were to experience a breach of our or their information technology systems that results in the unauthorized access, theft, use, destruction or other compromises of guests’ or employees’ data or confidential information of Chipotle stored in or transmitted through such systems,Chipotle, including through cyber-attacks or other external or internal methods, it could resulthave inan adverse impact on our reputation and brand and we could experience a material loss of revenues from the potential adverse impact to our reputation and brand,revenues, a decrease in our ability to retain guests or attract new ones, the imposition of potentially significant costs (including loss of data or payment for recovery of data) and liabilities, loss of business, loss of business partners and licensees and the disruption to our supply chain,chain and business and plans. Unauthorized access, theft, use, destruction or other compromises are becoming increasingly sophisticated and may occur through a variety of methods, including attacks using malicious code, vulnerabilities in software, hardware or other infrastructure (including systems used by our supply chain), system misconfigurations, phishing, deepfakes, ransomware, malware or social engineering. The rapid evolution and increased adoption of artificial intelligence technologies may intensify our cybersecurity risks. Our logging capabilities, or the logging capabilities of third parties, are not always complete or sufficiently granular, affecting our ability to fully understand the scope of security breaches.

Given the increasing complexity and sophistication of techniques used by bad actors to obtain unauthorized access to or disable information technology systems, and the fact that cyberattacks are being made by groups and individuals with a wide range of expertise and motives, it is increasingly difficult to anticipate andanticipate, defend against cyberattacks, and adetect cyberattacks. A cyberattack could occur and persist for an extended period of time before beingwe detected.detect it. Moreover, the extent of a particular cyber incident and the steps that we may need to take to investigate the incident may not be immediately clear, and it may take a significant amount of time before such investigation can be finalized and completed and reliable information about the incident is known. During the pendency of any such investigation, we may not know the extent of the harm or how best to remediate it, and we may be required to disclose incidents before their full extent is known.

Such security breaches also could result in a violation of applicable U.S. and international privacy, cyber and other laws or trigger data breach notification laws, including newunder the SEC’s disclosure rules promulgated by the SEC,rules, and subject us to private third party or securities litigation and governmental investigations and proceedings, any of which could result in our exposure to material civil or criminal liability. These risks also exist in companies that license our brand, that we partner with or invest in that use separate information systems.

Complex local, state, federal and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data. These privacyprivacy, consumer protection, and data protection laws and regulations are quickly evolving, with new or modified laws and regulations proposed and implemented frequently and existing laws and regulations subject to new or different interpretations and enforcement. Complying with these laws and regulations can beis costly and can delay or impede the development of new services.services or the continued use of existing services or data.

If we fail or are perceived to have failed to comply with applicable privacyprivacy, consumer protection, and data protection laws, or fail to properly respond to or honor consumerindividual requests under any of the foregoing privacysuch laws, we couldmay be subject toface enforcement actions andactions, regulatory investigations, and oversight, consent orders limiting our ability to use data or requiring data or model disgorgement, or claims for damages by guests and other affected individualsparties. orThe parties,matters orcould incurresult finesin andregulatory damagefines, tocivil ouractions, brandreputational reputation,harm, any of which could havematerially a material adverseadversely effect on our operations, financial performance, and business. The amount and scope of insurance we maintain may not cover all types of claims that may arise.

The prices for some of our ingredients, such as beef, avocados and other produce fluctuate due to factors beyond our control, such as limited sources, seasonal shifts, climate conditions,conditions or inclement weather, natural disasters, inflation, military and geopolitical conflicts and industry demand, including as a result of animal disease outbreaks, international commodity markets, food safety concerns, product recalls and government regulation. In addition, we source some ingredients (including avocados, tomatoes, beef, pork, limeslimes, peppers and peppersspices), restaurant equipment, packaging and paper products outside the U.S. (including from Mexico, Canada and China), which could subject them to increased tariffs, trade sanctions or taxes. We try to mitigate future price risk through forward contracts, strong partnerships with key suppliers, directly managing key raw material procurement and diversifying our supply base and countries of origin; however, these activities may not fully insulate us from increases in costs, which could have an adverse impact on our profitability.

We also could be adversely impacted by price increases specific to meats raised in accordance with our Responsibly Raised animal welfare criteria, and ingredients grown in accordance with our Food with Integrity specifications, the markets for which are generally smaller and more concentrated than the markets for conventionally raised or grown ingredients. Any increase in the prices of the ingredients most critical to our menu, such as chicken, beef, dairy (for cheese, sour cream and queso), avocados, tomatoestortillas and pork, would have a particularly adverse effect on our operating results. If the cost of one or more ingredients significantly increases, we may choose to temporarily suspend serving menu items that use those ingredients, such as guacamole or one of our proteins, rather than pay the increased cost. Any such changes to our available menu may negatively impact our restaurant traffic and could adversely impact our sales and brand.

Our business is dependent on frequent and consistent deliveries of ingredients that comply with our Food with Integrity specifications, such as dairy (for cheese, sour cream and queso), and beef, pork and chicken that meets our Responsibly Raised requirements. We may experience shortages, delays or interruptions in the supply of ingredients and other supplies to our restaurants due to higher or more lucrative demand from other sources; inclement weather or natural disasters; animal disease outbreaks (such as avian flu); social or labor unrest; shortages of agricultural workers (including due to changes in immigration laws); operational disruptions at our suppliers, distributors or transportation providers (including due to cyberattacks, malware or ransomware); financial distress or insolvency of suppliers or distributors, or the inability of suppliers or distributors to manage adverse business conditions; or other conditions beyond our control. OngoingSeveral global conflictsstates have disruptedadopted, and couldothers continueare considering adopting, extended producer requirement (EPR) laws covering end-of-life management of packaging, which aim to disruptreduce somewaste shippingand routes,encourage whichsustainable product design through fees and processing requirements. We could result inincur shortages of or delaysincreased ofcosts for certain ingredientsfood andpackaging packaging.we use due to changes made by our suppliers to comply with these EPR laws. In addition, we have a single or a limited number of suppliers for some of our ingredients, including lemon and lime juice, tomatoes and adobo. Although we believe we have potential alternative suppliers and sufficient reserves of ingredients, shortages or interruptions in our supply of ingredients could adversely affect our financial results.

If our supply chain capacity does not expand to matchsupport our new restaurant growth, our long-term growth goals could be impaired or delayed.

We have set aggressive goals for the number of new restaurants we plan to open over the next few years. Even in the absence of extraordinary disruptions, we may not be able to increase the capacity of our supply chain to keep pace with our growth and fully meet our future business needs. We have experienced and may in the future experience limited available supplies of Responsibly Raised proteins and ingredients that meet our Food with Integrity specifications. In addition, we rely on independent third-party distributors to maintain an inventory of our ingredients and supplies, and deliver them to our restaurants on a timely, as needed basis. There can be no assurance that our suppliers or distributors will be able to accommodate our planned growth or continue to supply required ingredients at preferential prices or at all. AnThe inability of our suppliers to accommodate our growth in a timely or cost-effective manner could impair our growth and have an adverse effect on our business, financial condition, results of operations, and prospects.

We have been and will continue to be subject to litigation and other legal proceedings that may adversely affect our business, including claims brought by employees, guests, government agencies, suppliers, distributors, shareholders, job applicants or others. These proceedings may be in the form of private actions, administrative proceedings, government enforcement or regulatory actions and litigation on a class or collective basis on behalf of what can be a large group of potential claimants. These legal proceedings have involved, and in the future may involve, allegations of illegal, unfair or inconsistent employment practices, including those governing wage and hour, employment of minors, discrimination, harassment, wrongful termination, fair scheduling, pay disclosure and vacation and family leave laws; food safety issues including food-borne illness, food contamination and adverse health effects from consumption of our food products; data security or privacy breachesincidents or violations of related laws; discrimination against guests or job applicants; personal injury in our restaurants; marketing and advertising claims, including claims that our Food with Integrity, marketingmarketing, nutrition, or sustainability claims are misleading or inaccurate or that price-related disclosures are misleading; infringement of patent, copyright or other intellectual property rights; violation of the federal securities laws; workers’ compensation; or other concerns. We are party to a number of pendingmultiple lawsuits and governmental audits alleging violations of federal and state employment laws, including wage and hour and predictive scheduling claims, and we could be involved in similar or even more significant litigation and legal proceedings in the future. Even if the allegations against us are unfounded or we ultimately are held not liable, the costs to defend ourselves may be significant and the proceedings may divert management's attention away from operating our business, all of which could negatively impact our financial condition and results of operations. A judgment significantly ingreater excess ofthan any applicable insurance coverage or third-party indemnity could materially adversely affect our financial condition or results of operations. In addition, adverse publicity resulting from claims may damage our reputation.

•privacy and data security (including regulations governing the protection of personal information, advertising and marketing, access by children, biometrics, surveillance, artificial intelligence, health-related information and financial information), such as California Privacy Rights Act and CCPA in California and privacy-related legislation in a growing number of other states, and international laws such as GDPR in the European Union and Personal Information Protection and Electronic Documents Act in Canada;

Our growth depends on our ability to open new restaurants at an aggressive rate and operate them profitably as soon as possible. The cost of opening new restaurants has continued to increase due to construction labor inflation and increased costs of materials and equipment. In addition, we incur substantial startup expenses each time we open a new restaurant, and it can take up toaround 36 months to ramp up the sales and profitability of a new restaurant, during which time costs may be higher as we train new employees and build up a guest base. If we are unable to build the guest base that we expect or fail to overcome the higher startup expenses associated with new restaurants, our new restaurants may not be as profitable as our existing restaurants. In addition, the opening of new storesrestaurants may negatively impact the profitability of existing storesrestaurants that are located nearby.

Our ability to open and profitably operate new restaurants also is subject to various risks, such as the identification and availability of desirable locations; the negotiation of acceptable lease terms; the need to obtain all required governmental permits (including zoning approvals and liquor licenses) and comply with other regulatory requirements; the availability of capable contractors and subcontractors; increases in the cost and decreases in the availability of labor and building material; changes in weather, natural disasters, pandemics or other acts of God that could delay construction and adversely affect guest traffic; our ability to hire and train qualified management and restaurant employees; and general economic and business conditions. At each potential location, we compete with other restaurants and retail businesses for desirable development sites, construction contractors, management personnel, hourly employees and other resources. If we are unable to successfully manage these risks, we could face increased costs and lower than anticipated sales and earnings in future periods. Our timeline for completing construction also has gotten longer, due to landlord reluctance to commit to building in light of fluctuating interest rates, tight money supply and general economic conditions, and due to backlogs and long wait times for us to obtain required permits and utility hookups.

As of December 31, 2024,2025, we owned and operated over 3,7004,000 Chipotle restaurants and we plan to open a significant number of new restaurants in the next several years, working towards our long-term goal of 7,000 restaurants in Norththe America.U.S. and Canada. Our existing restaurant management systems, back-office technology systems and processes, financial and management controls, information systems and staffing may not be adequate to support our growing business. To effectively manage a larger number of restaurants, we may need to upgrade and expand our infrastructure and information systems, automate more processes that currently are manual or require manual intervention and hire, train and retrain restaurant employees and corporate support staff, all of which may result in increased costs and at least temporary inefficiencies. We also believe our culture is an important contributor to our success, and as we continue to grow it may be increasingly difficult to imbedembed and maintain our culture across the company. Our failure to sufficiently invest in our infrastructure and information systems and maintain our strong staffing and culture could harm our brand and operating results.

Our global growth strategy includes expanding our existing restaurant footprint and introducing Chipotle in new international jurisdictions in which we currently do not operate. The success of our strategy will depend on our identifying and partnering with new business partners, including licensees, joint venture partners, suppliers and distributors, and may include identifying suitable acquisition targets in these new jurisdictions that align with our core values. InAs 2024,of theDecember first31, licensed2025, we had 14 international partner-operated Chipotle restaurants opened in Kuwaitthe andMiddle DubaiEast in partnership with international franchise retail operatorthe Alshaya Group, and therewe arehave plans to open more licensedpartner-operated Chipotle restaurants in other areas in the Middle East.East, Mexico and Asia. We believe guests expect the same high quality food and excellent customer service at partner-operated restaurants operated by licensees and joint venture partners as they receive in Chipotle-owned and operated restaurants. We provide extensive training to our business partners and we require compliance with specific food quality and safety standards and guest service levels in our agreements with business partners; however, we do not have direct control over the restaurantspartner-operated operated by third-party partners,restaurants, and the quality and service in those restaurants may be less than the quality and service of Chipotle-operatedChipotle-owned restaurants. Failure of our business partners to adhere to our high food quality and operating standards, comply with applicable law, adhere to high ethical standards, and create a culture of respect in theirthe partner-operated restaurants could damage our brand reputation, domestically and internationally, and impair our international expansion plans. New partnerships and/or acquisitions also may divert management’s attention from other initiatives and/or day-to-day operations, which could adversely affect our business and results of operations.

We are subject to evolving public disclosure requirements and expectations,obligations, including with respect to sustainability matters, thatwhich could expose us to numerous risks and could adversely affect our reputation and results of operations.

We are subject to evolving disclosure obligations promulgated by governmental and regulatory organizations relating to sustainability factors that impact our business. These disclosure obligations are complex and not always consistent, making compliance difficult and uncertain. In addition, investors, guests and other stakeholders increasingly are focusing on sustainability matters and related disclosures. We have incurred and expect to continue to incur increased expenses and management time and attention to comply with these disclosure obligations and stakeholder expectations. For example, measuring Scope 1, 2 and 3 greenhouse gas emissions relating to our business, developing reduction plans and initiatives, and creating and disclosing achievable reduction goals can be costly, difficult and time consuming and is subject to evolving reporting standards, including California’s Climate Corporate Data Accountability Act,Act California’s Greenhouse Gases:and Climate-Related Financial Risk BillAct, and similar proposals by other national, local and international regulatory agencies. We may also communicate certain initiatives, goals and strategies regarding environmental sustainability and human capital management related matters, such as workforce metrics, responsible sourcing and social investments in our SEC filings or in other public disclosures. We previously announced that we had set science-based targets validated by the Science Based Targets Initiative to reduce absolute Scope 1, 2 and 3 greenhouse gas emissions 50% by 2030 from a 2019 base year, and achievement of this goal is subject to risks and uncertainties, manyincluding the challenge of whichlowering areemissions outsidefrom a 2019 base year as the number of ourrestaurants control.we operate has increased significantly since 2019 and continues to increase. Achievement of this goal may prove to be more difficult and costly than we anticipate.

There is growing concern that climate change and global warming has caused and may continue to cause more severe, volatile weather or extended droughts, which could increase the frequency and duration of weather impacts on our operations. Adverse weather conditions have in the pastimpacted and may again impact guest traffic at our restaurants and, in more severe cases such as hurricanes, tornadoes, wildfires or other natural disasters, cause temporary restaurant closures, all of which negatively impact our restaurant sales. In addition, our supply chain is subject to increased costs caused by the effects of climatesevere, changevolatile weather, extended droughts and diminished energy and water resources. Increasing weather volatility and changes in global weather patterns could reduce crop size and crop quality, or destroy crops altogether, which could result in decreased availability or higher pricing for our produce and other ingredients. We may be forced to source ingredients from new geographic regions, which could impact quality and taste, and increase our costs. These factors are beyond our control and may be unpredictable. Climate change and government regulation relating to climate change mitigation also could result in construction delays for new restaurants and interruptions to the availability or increases in the cost of utilities. The ongoing and long-term costs of these impacts related to climate change and other sustainability-related issues could have a material adverse effect on our business and financial condition if we are not able to mitigate them.

As of December 31, 2024,2025, we owned 3,6443,938 Chipotle restaurants throughout the United States, and 82104 international Chipotle restaurants. Additionally, we had three14 international licensedpartner-operated restaurants. We manage our U.S. operations based on ten11 regions and aggregate 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 increaseddecreased 7.4%1.7%

•Diluted earnings per share was $1.11,$1.14, a 24.7%2.7% increase from $0.89$1.11 Sales Trends. Comparable restaurant sales increaseddecreased 7.4%1.7% for the year ended December 31, 2024.2025. The increasedecrease is attributable to higherlower transactions of 5.3%2.9%, andpartially offset by a 2.1%1.2% increase in average check. Comparable restaurant sales represent the change in period-over-period total revenue for company-owned restaurants in operation for at least 13 full calendar months. Digital sales represented 35.1%36.7% of total food and beverage revenue. For 2025,2026, management is anticipating comparable restaurant sales growth in the low to mid-singlebe digitabout range.flat.

Restaurant Development. During the year ended December 31, 2024,2025, we opened 304334 company-owned restaurants, which included 257 restaurants with a Chipotlane. We expect to open approximately 315350 to 345 company-owned370 restaurants in 2025.2026, which includes 10 to 15 international partner-operated restaurants. We expect that at leastaround 80% of our new company-owned restaurants will include a Chipotlane.

Licensing.Partner-Operated Restaurants. During the year ended December 31, 2024,2025, three11 licensedpartner-operated restaurants were opened in the Middle East.

The following table details licensedpartner-operated restaurant unit data for the years indicated.

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

Labor costs remainedincreased flat0.4% as a percentage of total revenue for the year ended December 31, 20242025 compared to the year ended December 31, 2023.2024. The 1.1%increase was primarily due to a 0.7% impact from lower sales volumes and 0.4% from restaurant wage inflation. This increase is partially offset by a 0.5% benefit from salesmenu leverageprice was mostly offset by 0.9% due to restaurant wage inflation, of which 0.4% was due to minimum wage increases for our restaurants in California.increases.

Occupancy costs decreasedincreased 0.1%0.2% as a percentage of total revenue for the year ended December 31, 20242025 compared to the year ended December 31, 2023,2024. primarilyThe increase was due to 0.3%the ofimpact from lower sales leveragevolumes, partiallyas a 0.1% benefit from menu price increases was offset by 0.2% of increased occupancy expense, of which 0.1% was associated with existing restaurants and 0.1% wasexpenses associated with new restaurants.

Other operating costs decreasedincreased 0.6%0.8% as a percentage of total revenue for the year ended December 31, 20242025 compared to the year ended December 31, 2023,2024. primarilyThe increase was due to the impact from several items, primarily 0.5% of higher marketing and promotional activities, 0.2% of lower sales leveragevolumes, and 0.2% of lowerinflation deliveryin expenses.natural gas and electricity. This increase was partially offset by a 0.2% benefit from menu price increases.

Interest and other income, net increaseddecreased in dollar terms for the year ended December 31, 20242025 compared to the year ended December 31, 2023,2024, primarily due to increased interest income from higherlower investment balances in U.S. Treasury securities,securities and money market funds and timedecreased deposits.interest income due to lower interest rates in the current year.

The effective income tax rate decreased 0.5%0.1% for the year ended December 31, 20242025 compared to the year ended December 31, 2023,2024, primarily due to increases in U.S. federal income tax credits of 0.3% and lower nondeductible expenses of 0.6% and income tax reserves of 0.4%.0.2%. These decreases were partially offset by a 0.6%0.4% reduction in tax benefits related to option exerciseexercises and equity vesting.

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, disease outbreak, epidemic or endemic, the impact of inflation and consumer sentiment on consumer spending, fluctuations in food or packaging costs, the timing of holidays, 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.

As of December 31, 2024,2025, we had a cash and marketable investments balance of $2.2$1.1 billion, non-marketable investments of $85.2$106.0 million, and $29.8$35.4 million of restricted cash. 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 December 31, 2024,2025, $1.0$1.7 billion remained available for repurchases of shares of our common stock, which includes the $300.0 million additional authorization approved by our Board of Directors on December 17, 2024.stock. Under the remaining repurchase authorizations, shares may be purchased from time to time in open market transactions, subject to market conditions.

As of December 31, 2024,2025, we had $500.0 million of undrawn borrowing capacity under a line ofrevolving credit facility.

We have not required significant working capital because guests generally pay using cash or credit and debit cards and because our operations do not require significant receivables,receivables nor do they requireor significant inventoriesinventories, due,partly in part,due 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.

Cash provided by operating activities was $2.1 billion for the year ended December 31, 2024,2025, compared to $1.8$2.1 billion for the year ended December 31, 2023.2024. The increasebalance was primarilyflat as an increase in operating cash flows due to higherthe nettiming earningsof and,tax-related topayments, aincluding lesserthe extent,impacts netof cashH.R.1 - One Big Beautiful Bill Act, was offset by other changes in non-tax operating assets and liabilities.

Cash used in investing activities was $35.1 million for the year ended December 31, 2025, compared to $837.5 million for the year ended December 31, 2024, compared to $946.0 million for the year ended December 31, 2023.2024. The change was primarily associated with aan $121.2$895.3 million decrease in investment purchases net of investment maturities. This was partially offset by increased capital expenditures of $32.9$72.7 million primarily related to costs associated with new restaurant development.

Cash used in financing activities was $2.5 billion for the year ended December 31, 2025, compared to $1.1 billion for the year ended December 31, 2024, compared to $660.7 million for the year ended December 31, 2023.2024. The change was primarily due to increased repurchases of common stock of $409.2$1.4 million.billion.

Operating lease assets and liabilities are recognized at the lease commencement date, which is the date we control the use of the property. Operating lease liabilities represent the present value of lease payments not yet paid. We made the policy election to combine lease and non-lease components. We consider fixed common area maintenance (“CAM”) part of our fixed future lease payments; therefore, fixed CAM is also included in our operating lease liability. Operating lease assets represent our right to use an underlying asset and are based upon the operating lease liabilities adjusted for prepayments, initial direct costs, lease incentives, and impairment of operating lease assets. To determine the present value of lease payments not yet paid, we estimate incremental borrowing rates corresponding to the reasonably certain lease term. As we have no outstanding debt nor committed credit facilities, secured or otherwise,debt, we estimate this rate based on prevailing financial market conditions, comparable company and credit analysis, and management judgment. If the estimate of our incremental borrowing rate was changed, our operating lease assets and liabilities could differ materially.

The fair value measurement for asset impairment is generally based on Level 3 inputs. We first compare the carrying value of the asset (or asset group, referred interchangeably throughout as asset) to the asset’s estimated future undiscounted cash flows. If the estimated undiscounted future cash flows are less than the carrying value of the asset, we determine if we have an impairment loss by comparing the carrying value of the asset to the asset's estimated fair value. The estimated fair value of the asset is generally determined using the income approach to measure the fair value, which is based on the present value of estimated future cash flows. Key inputs to the income approach for restaurant assets include the discount rate, projected revenue and expenses, and sublease income if we are closingto the restaurant.extent applicable. In certain cases, management uses other market information, when available, to estimate the fair value of an asset. The impairment charges represent the excess of each asset’s carrying amount over its estimated fair value and are allocated among the long-lived asset or assets of the group.

We recognize compensation expense for equity awards over the requisite service period based on the award’s fair value. Under our stock incentive plans, we issue stock-only stock appreciation rights ("SOSARs"), restricted stock units ("RSUs"), and performance stock units ("PSUs"). We use the Black-Scholes valuation model to determine the fair value of our SOSARs, and we use thea Monte Carlo simulation model to determine the fair value of PSUs that contain market conditions. Both of these models require assumptions to be made regarding our stock price volatility, the expected life of the award and expected dividend rates. The volatility and the expected life assumptions are based on our historical data. Similarly, the compensation expense of performance share awardsPSUs is based in part on the estimated probability of achieving levels of performance associated with particular levels of payout for performance shares.PSUs. We determine the probability of achievement of future levels of performance by comparing the relevant performance level with our internal estimates of future performance. Those estimates are based on a number of assumptions, including but not limited to growth in restaurant cash flow dollars, average restaurant level operating margin, and growth in new restaurant openings, and different assumptions may have resulted in different conclusions regarding the probability of achieving future levels of performance relevant to the payout levels for the awards. If we change our estimates of stock price volatility or expected lives of our SOSARs, or if we change our assumptions regarding the probability of achieving future levels of performance with respect to performance share awards,PSUs, our stock-based compensation expense and results of operations may be materially impacted.

For a description of risk factors that could impact our business, including risks and uncertainties related to consumer sentiment and changes in discretionary spending; potential increases in the costs of ingredients and restaurant equipment, including due to tariffs, trade sanctions or taxes; competitor discounting; and macroeconomic and geopolitical conditions,conditions; and food safety and foodborne illnesses, see Part I, Item 1A. "Risk Factors" of our Annual Report on Form 10-K for the year ended December 31, 2025.

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 in 2026, and the number with Chipotlanes, the number of new international partner-operated restaurants we expect to open, our anticipated comparable restaurant sales for 2026, the expected impact of tariffs on our food, beverage and packaging costs during the 2026 secondthird quarter and on an ongoing basis, our expectation to generate positive cash flow for the foreseeable future, our expectations for utilization of cash flow from operations, our ability to manage prices, risks and volatility in our supply chain, our plans for continuing stock buybacks and the volume of buybacks, and the period of time during which our cash and short-term investment will fund our operations. We use words such as “anticipateanticipate,”, “believebelieve,”, “couldcould,”, “shouldshould,”, “maymay,”, “approximatelyapproximately,”, “estimateestimate,”, “expectexpect,”, “intendintend,”, “projectproject,”, “targettarget,”, "goalgoal," 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, financialfinancial, and competitive information available to us as of the date of this filing and wespeak only as of the date they are made. We assume no obligation to update these forward-looking statements.statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. 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: wage inflation and state or local regulations mandating higher minimum wages; the competitive labor market, which impacts our ability to attract and retain qualified employees; the impact of any union organizing efforts and our responses to such efforts; increases in ingredient and other operating costs due to inflation, global conflicts, severe weather, our Food with Integrity philosophy, tariffstariffs, or trade restrictions; intermittent supply shortages relating to our Food with Integrity philosophy, rapid expansionexpansion, limited time offerings, and supply chain disruptions; risks and impacts of food safety incidents and food-borne illnesses; our reliance on certain information technology systems and potential material failures, interruptionsinterruptions, or outages; risks that our investments in new technology and technological innovations may not generate returns; privacy and cyber securitycybersecurity risks, including breaches, unauthorized access, theft, modification, destructiondestruction, or ransom 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 impact of government laws and 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, construction materialsmaterials, and contractors and restaurant equipment; the expected costs and risks related to our international expansion, including through partner-operated restaurants in the Middle East, AsiaAsia, and Mexico; our ability to achieve expected levels of comparable restaurant sales due to factors such as changes in guests' perceptions of our brand, including as a result of negative publicity or social media posts and decreased consumer spending,spending or restaurant visits, or the inability to increase menu prices or realize the benefits of menu price increases; failure to meet market expectations for our financial performance or any announced guidance and the impact thereof; the potential impact of activist shareholder actions or tactics; failure to attract or retain key executive talent; the impact of our brand, marketing, promotional, advertisingadvertising, and pricing strategies, digital platform and menu innovations; our reliance on third party delivery services and the ITinformation technology infrastructure; and enforcement and litigation risks, including possible governmental actions and potential class action litigation related to food safety incidents, cybersecurity incidents, employment or privacy laws, advertising claims, contract disputesdisputes, or other matters. In addition, many of the foregoing risks and uncertainties are, or could be, exacerbated by any worsening of the global business and macroeconomic environment. These statements also are subject to other risk factors described from time to time in our SEC reports, including our annual report on Form 10-K and quarterly reports on Form 10-Q, all of which are available on the investor relations page of our website at ir.Chipotle.com.

As of MarchJune 31,30, 2026, we owned 3,9834,074 Chipotle restaurants throughout the United States and 107112 international Chipotle restaurants. Additionally, we had 1415 international partner-operated restaurants. We manage our U.S. operations based on 12 regions and aggregate our operations to one reportable segment.

FirstSecond Quarter 2026 Financial Highlights, year-over-year:

•Diluted earnings per share was $0.23, a 17.9% decrease from $0.28 Sales Trends. Comparable restaurant sales increased 0.5%2.2% for the three months ended MarchJune 31,30, 2026. The increase is attributable to ana 1.2% increase in transactionsaverage ofcheck 0.6%, partially offset byand a 0.1%1.0% decreaseincrease in average check.transactions. Comparable restaurant sales represent the change in period-over-period total revenue for company-owned restaurants in operation for at least 13 full calendar months. Digital sales represented 38.6%38.3% of total food and beverage revenue.revenue Forfor full-yearthe three months ended June 30, 2026, managementan isincrease anticipatingfrom comparable35.5% restaurantfor salesthe tothree bemonths aboutended flat.June 30, 2025.

Restaurant Development. During the three months ended MarchJune 31,30, 2026, we opened 49100 company-owned restaurants, which included 4280 restaurants with a Chipotlane. We expectalso toopened open approximately 350 to 370 restaurants in 2026, which includes 10 to 15one international partner-operated restaurants. We expect around 80% of our new company-owned restaurants will include a Chipotlane.restaurant.

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

Food, beverage and packaging costs increased 0.4%0.8% as a percentage of total revenue for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The increase was driven by 0.9%1.4% of inflation, primarily from beef and freight, and 0.4%0.5% of higher protein and produce usage. These increases were partially offset by 0.7% of lower dairy and avocado costs and, to a lesser extent, a 0.3%0.5% benefit from menu price increases.increases and 0.5% of lower avocado and dairy costs.

Labor costs increased 1.1%0.3% as a percentage of total revenue for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The increase was primarily driven by a 0.4% impact from costs related to certain legal proceedings, 0.3% from wage inflation,inflation 0.3%and fromperformance-based lower average restaurant sales volumes,bonuses and 0.2% from higherrestaurant benefitslabor expense, including performance-based bonuses.execution. These increases were partially offset by a 0.2%0.4% benefit from menu price increases.

Occupancy costs increased 0.3%0.2% as a percentage of total revenue for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025. The increase was primarily due to 0.2% of expense associated with new restaurants and 0.1% of expense from existing restaurants.

Other operating costs increased 1.2%0.9% as a percentage of total revenue for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The increase was due to the impact from several items, primarily 0.4%driven by a 0.3% increase in marketing and promotional activities, 0.2% increase in utilities,activities and 0.2%inflation higheracross deliveryseveral expenseitems, associatedmost withnotably increasedinsurance deliveryclaims, sales.maintenance, Thisand increaseutility was partially offset by a 0.1% benefit from menu price increases.costs.

Depreciation and amortization increaseddecreased 0.1% as a percentage of total revenue for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. Increased depreciation expense was2025, primarily due to newsales restaurant openings. This wasleverage, partially offset by theincreased benefitdepreciation ofexpense menuassociated pricewith increases.new restaurants.

Interest and other income, net decreased in dollar terms for the three and six months ended MarchJune 31,30, 2026 compared to the three and six months ended MarchJune 31,30, 2025, primarily due to a decrease in interest income resulting from lower balances of interest bearing securities. The decrease in interest bearing securities is associated with increased repurchases of our common stock.

The effective income tax rate increaseddecreased 2.5%0.2% for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025. The increasedecrease was primarily driven by a 1.7%0.6% increase in U.S. federal income tax credits, partially offset by a 0.3% reduction in tax benefits related to option exercises and equity vesting, a 0.4% reduction in tax credits, and a 0.4%0.1% increase in other discrete income tax items.

As of MarchJune 31,30, 2026, we had a cash and marketable investments balance of $864.4$667.1 million, non-marketable investments of $103.4$107.9 million, and $35.7restricted millioncash of restricted$35.6 cash.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: invest in, maintain, and refurbish our existing restaurants; repurchase additional shares of our common stock subject to market conditions; and for general corporate purposes. As of MarchJune 31,30, 2026, $1.0$1.7 billion 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.

As of MarchJune 31,30, 2026, we had $500.0 million of undrawn borrowing capacity under a revolving credit facility.

Cash provided by operating activities was $651.4$1.3 millionbillion for the threesix months ended MarchJune 31,30, 2026, compared to $557.1$1.1 millionbillion for the threesix months ended MarchJune 31,30, 2025. The increase was primarily due to timing of tax-related payments, includingand the receipt ofto a $64.9lesser million federal tax refund related to the 2018 tax year. This activity was partially offset byextent other changes in non-tax operating assets and liabilities.

Cash used in investing activities was $8.1$53.4 million for the threesix months ended MarchJune 31,30, 2026, compared to cash provided by investing activities of $6.1$8.1 million for the threesix months ended MarchJune 31,30, 2025. The change was primarily due to increased capital expenditures of $35.5$92.2 million, mainly related to costs associated with new restaurant development and the purchase of new equipment for existing restaurants. We expect continued elevated costs associated with purchases of new equipment for existing restaurants through 2027. This was partially offset by a $17.6$29.8 million increase in maturities of investments.

Cash used in financing activities was $747.5$1.4 millionbillion for the threesix months ended MarchJune 31,30, 2026, compared to $585.2$1.0 millionbillion for the threesix months ended MarchJune 31,30, 2025. The change was primarily due to increased repurchases of common stock of $147.2$357.9 million.