2014 ANNUAL REPORTAND PROXY STATEMENT

DEAR FELLOW SHAREHOLDERS: When we set as our mission to change the way people think about and eat fast food, we knew it was a big and difocult, but Yery important, goal ,n establishing this mission for &hipotle, we belieYed that we had a food culture and a people culture that would allow us to create a new fast food model, and unit economics that would enable us to do this in a way that was prootable and that would proYide outstanding returns to our shareholders 7hroughout , we haYe seen increasing eYidence that our Yision is becoming reality

(Yidence of &hipotles continued leadership and inpuence comes in many forms, from our ongoing Tuest to make the Yery best tasting food we can q made with the Yery best ingredients and prepared using classical cooking techniTues q to the strengthening of our people culture, strengthening of consumer trends that support our business model, our inpuence on the category and our performance relatiYe to the industry as a whole

'uring the year, in our pursuit for better ingredients we serYed more 5esponsibly 5aised meat (from animals raised in more humane ways and without the use of antibiotics or added hormones) than any other restaurant company We continued to use dairy products made with milk from pastured dairy cattle We remain committed to our program of using local and organically grown produce wheneYer possible $nd we continued to make signiocant progress toward our goal of serYing food made with ingredients that are not genetically modioed $ll of these moYes are consistent with our )ood with ,ntegrity mission, and contribute to making the most delicious food we can, while also making great strides to improYe the oYerall food supply 1o other restaurant company matches &hipotles commitment to using ingredients that are raised with respect for farmers, animals, and the enYironment, and our doing so helps us change the way people think about and eat fast food

,t would not be possible for us to maintain the food culture we haYe without a similarly strong and compelling people culture 7o willingly spend more money on the ingredients we use and to cook food in our restaurants using classic cooking techniTues reTuires topperforming managers and crews who are empowered to achieYe our high standards 4uite simply, we ask more of our people than others in the industry do, and that reTuires haYing Yery special people 'uring the year we continued to strengthen our people culture, adding to our ranks of 5estaurateurs, improYing our ratio of oeld leaders to restaurants, and making use of tools q most notably our restaurant plan and deYelopment tool q to improYe what is happening in our restaurants, and to giYe us a clearer picture of those improYements and the opportunities that lie ahead

&onsumer trends also point to the progress we are making toward our Yision ,n a surYey that asked more than , fast food customers to rank fast food meals, &hipotle topped the list while traditional fast food restaurants were at or near the bottom, with respondents citing kuninspiring foody as the primary reason 5esearch from inYestment analysts pointed to similar shifts in taste, with consumer sentiment moYing away from traditional fast food and casual dining chains as customers look for better Tuality food serYed in a conYenient format 7he companies that haYe lost the greatest number of customers oYer the past decade are traditional fast food chains, where the biggest gains go to fast casual restaurants

(Yen within the booming fast casual sector, &hipotles leadership is undeniable $ccording to )actiYa, more than restaurants haYe been described as the k&hipotle ofy their cuisine in news reports, demonstrating our inpuence within the category

We are changing the way people think about and eat fast food, and we haYe no doubt that the pieces are in place for us to continue to positiYely impact the industry We haYe the right food culture, the right people culture, and the right unit economic model to reinYent the category and to deliYer outstanding results for our shareholders

Sincerely,

SteYe (lls 0onty 0oran&hairman &o&(2 &o&(2

Chipotle Mexican Grill, Inc.1401 Wynkoop Street, Suite 500

'enYer, &2 000arch , 015

0 t 0

UNITED STATESSECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934For 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 ofincorporation or organization)

(IRS EmployerIdentification No.)

1401 Wynkoop Street, Suite 500 Denver, CO 80202(Address of Principal Executive Offices) (Zip Code)

Registrants telephone number, including area code: (303) 595-4000Securities registered pursuant to Section 12(b) of the Act:

Title of each class Name of each exchange on which registered

Common stock, par value $0.01 per share New York Stock ExchangeSecurities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the SecuritiesAct. Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of theAct. Yes No Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of theSecurities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was requiredto file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.405 of thischapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and postsuch files). Yes No Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (229.405 of this chapter)is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or informationstatements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or asmaller reporting company. See the definitions of large accelerated filer, accelerated filer, and smaller reportingcompany in Rule 12b-2 of the Exchange Act (check one): Large accelerated filer Accelerated filer Non-accelerated filer

(do not check if asmaller reporting

company)

Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes No As of June 30, 2014, the aggregate market value of the registrants outstanding common equity held by non-affiliates was$11.4 billion, based on the closing price of the registrants common stock on such date, the last trading day of theregistrants most recently completed second fiscal quarter. For purposes of this calculation, shares of common stock heldby each executive officer and director and by holders of 5% or more of the outstanding common stock have been excludedsince those persons may under certain circumstances be deemed to be affiliates. This determination of affiliate status is notnecessarily a conclusive determination for other purposes.As of January 30, 2015, there were 31,022,319 shares of the registrants common stock, par value of $0.01 per shareoutstanding.

DOCUMENTS INCORPORATED BY REFERENCEPart III incorporates certain information by reference from the registrants definitive proxy statement for the 2015 annualmeeting of shareholders, which will be filed no later than 120 days after the close of the registrants fiscal year endedDecember 31, 2014.

TABLE OF CONTENTS

PART I

Item 1. Business 3

Item 1A. Risk Factors 10

Item 1B. Unresolved Staff Comments 23

Item 2. Properties 24

Item 3. Legal Proceedings 24

Item 4. Mine Safety Disclosures 24

PART II

Item 5. Market for Registrants Common Equity, Related Stockholder Matters andIssuer Purchases of Equity Securities 25

Item 6. Selected Financial Data 27

Item 7. Managements Discussion and Analysis of Financial Condition and Resultsof Operations 28

Item 7A. Quantitative and Qualitative Disclosures About Market Risk 35

Item 8. Financial Statements and Supplementary Data 36

Item 9. Changes in and Disagreements With Accountants on Accounting andFinancial Disclosure 52

Item 9A. Controls and Procedures 52

Item 9B. Other Information 54

PART III

Item 10. Directors, Executive Officers and Corporate Governance 55

Item 11. Executive Compensation 55

Item 12. Security Ownership of Certain Beneficial Owners and Management andRelated Stockholder Matters 55

Item 13. Certain Relationships and Related Transactions, and DirectorIndependence 55

Item 14. Principal Accounting Fees and Services 55

PART IV

Item 15. Exhibits, Financial Statement Schedules 56

Signatures 57

PART I

Cautionary Note Regarding Forward-LookingStatementsThis report includes statements of our expectations,intentions, plans and beliefs that constitute forward-looking statements within the meaning of Section 27A ofthe Securities Act of 1933 and Section 21E of the SecuritiesExchange Act of 1934 and are intended to come within thesafe harbor protection provided by those sections. Thesestatements, which involve risks and uncertainties, relate tothe discussion of our business strategies and ourexpectations concerning future operations, margins,profitability, trends, liquidity and capital resources and toanalyses and other information that are based on forecastsof future results and estimates of amounts not yetdeterminable. Forward-looking statements include ourprojections of the number and type of restaurants weexpect to open in 2015, our expected comparablerestaurant sales results during 2015, our expectations forfood cost inflation and food costs as a percentage ofrevenue in 2015, our expectations for changes in laborcosts as a percentage of revenue in 2015, projections ofrestaurant development costs and other expenses,statements regarding the potential impact of economicuncertainty on our business, statements about possiblerepurchases of our common stock, forecasts of marketingand promotional spending as a percentage of revenue in2015, projections of our effective tax rate for 2015, andother statements of our expectations and plans. We haveused words such as may, will, should, expect,intend, plan, anticipate, believe, think, estimate,seek, expect, predict, could, project, potentialand other similar terms and phrases, including referencesto assumptions, in this report to identify forward-lookingstatements. These forward-looking statements are madebased on expectations and beliefs concerning future eventsaffecting us and are subject to uncertainties, risks andfactors relating to our operations and businessenvironments, all of which are difficult to predict and manyof which are beyond our control, that could cause ouractual results to differ materially from those mattersexpressed or implied by these forward-looking statements.Such risks and other factors include those listed in Item 1A.Risk Factors, and elsewhere in this report.

When considering forward-looking statements in this reportor that we make in other reports or statements, you shouldkeep in mind the cautionary statements in this report andfuture reports we file with the SEC. New risks anduncertainties arise from time to time, and we cannotpredict when they may arise or how they may affect us. Weassume no obligation to update any forward-looking

statements after the date of this report as a result of newinformation, future events or other developments, exceptas required by applicable laws and regulations.

ITEM 1. BUSINESS

GeneralChipotle Mexican Grill, Inc. and its subsidiaries (Chipotle,the Company, or we) operate Chipotle Mexican Grillrestaurants, which serve a focused menu of burritos, tacos,burrito bowls (a burrito without the tortilla) and salads,made using fresh ingredients. As of December 31, 2014, weoperated 1,755 Chipotle restaurants throughout the UnitedStates, as well as seven in Canada, six in England, three inFrance, and one in Germany. Additionally, our restaurantsinclude nine ShopHouse Southeast Asian Kitchenrestaurants, serving Asian-inspired cuisine, and we are aninvestor in a consolidated entity that owns and operatestwo Pizzeria Locale restaurants, a fast casual pizzaconcept, resulting in a total of 1,783 restaurants as ofDecember 31, 2014. We focus on trying to find the highestquality ingredients we can to make great tasting food; onbuilding a special people culture that is centered oncreating a team of top performers empowered to achievehigh standards; on building restaurants that areoperationally efficient and aesthetically pleasing; and ondoing all of this with increasing awareness and respect forthe environment. We have grown substantially over thepast five years, and expect to open between 190 and 205additional restaurants in 2015, including a small number ofShopHouse and Pizzeria Locale restaurants.

Our vision is to change the way people think about and eatfast food. We do this by avoiding a formulaic approach whencreating our restaurant experience, looking to fine-diningrestaurants for inspiration. We use high-quality rawingredients, classic cooking methods and a distinctive interiordesign and have friendly people to take care of eachcustomer features that are more frequently found in theworld of fine dining. Our approach is also guided by our beliefin an idea we call Food With Integrity. Our objective is tofind the highest quality ingredients we can ingredients thatare grown or raised with respect for the environment, animalsand people who grow or raise the food.

We manage our operations and restaurants based on eightregions that aggregate into one reportable segment.Financial information about our operations, including ourrevenues and net income for the years ended December 31,2014, 2013, and 2012, and our total assets as of

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December 31, 2014 and 2013, is included in our consolidatedfinancial statements and accompanying notes in Item 8.Financial Statements and Supplementary Data.Substantially all of our revenues are generated and assetsare located in the U.S. For a discussion of risks related toour international operations, see Risks Related to OurGrowth Strategy and Future Expansion Our expansion intointernational markets may present increased risks due tolower customer awareness of our brand, our unfamiliaritywith those markets and other factors in Item 1A. RiskFactors.

Our Menu and Food PreparationFood With Integrity. Serving high quality food while stillcharging reasonable prices is critical to our vision tochange the way people think about and eat fast food. Aspart of our Food With Integrity philosophy, we believe thatpurchasing fresh ingredients and preparing them by handare not enough, so we spend time on farms and in the fieldto understand where our food comes from and how it israised. Because our menu is so focused, we canconcentrate on the sources of each ingredient, and this hasbecome a cornerstone of our continuous effort to improveour food.

In all of our restaurants, we endeavor to serve only meatsthat were raised without the use of non-therapeuticantibiotics or added hormones, and in accordance withcriteria weve established in an effort to improvesustainability and promote animal welfare. We brand thesemeats as Responsibly Raised TM. One of our primary goalsis for all of our restaurants to serve meats raised to meetour standards, but we have and will continue to facechallenges in doing so. In January 2015, through an ongoingaudit of our suppliers, we identified a pork supplier that wasnot meeting our standards related to the size and conditionof the housing offered to some of the pigs, so wesuspended our purchases from this supplier. Without thissupply, we cannot get enough pork that meets ourstandards for all of our restaurants and we will not be ableto serve carnitas in about one-third of our U.S. restaurantsuntil we can find additional sources which meet ourstandards to make up the shortfall. In addition, some of ourrestaurants served conventionally raised beef and chickenfor periods during 2014, and we expect some to serveconventionally raised beef in 2015, due to supplyconstraints for our Responsibly Raised meats. More of ourrestaurants may periodically serve conventionally raisedmeats in the future due to additional supply constraints.When we become aware that one or more of ourrestaurants will serve conventionally raised meat, we

clearly and specifically disclose this temporary change onsignage in each affected restaurant so that customers canavoid those meats if they choose to do so.

We also seek to use more responsibly grown produce,meaning produce grown by suppliers who we believerespect the environment and their employees. A portion ofsome of the produce items we serve is organically grown,and/or sourced locally while in season (by which we meangrown within 350 miles of the restaurant where it isserved). A portion of our beans is organically grown and aportion is grown using conservation tillage methods thatimprove soil conditions, reduce erosion, and help preservethe environment in which the beans are grown. Ourcommitment to Food With Integrity extends to the dairyproducts we serve as well. The sour cream and cheese webuy is made with milk that comes from cows that are notgiven rBGH (recombinant bovine growth hormone). Also,milk used to make much of our cheese and all our sourcream is sourced from pasture-based dairies that providean even higher standard of animal welfare by providingoutdoor access for their cows. Further, we disclose on ourwebsite which ingredients contain genetically modifiedorganisms, or GMOs, and we are working to replaceingredients containing GMOs in our food (not includingbeverages) with non-GMO ingredients. While the meat andpoultry we serve is not genetically modified, the animalsare likely fed a diet containing GMOs. Because of theprevalence of GMOs in a number of important feed crops,most grains used as animal feed in the U.S. are geneticallymodified.

We do face challenges associated with pursuing Food WithIntegrity. In addition to the supply challenges noted above,there can be higher costs and other risks associated withpurchasing ingredients grown or raised with an emphasison quality, environmental sustainability and otherresponsible practices. Growth rate and weight gain can belower for chickens, cattle and pigs that are not fed non-therapeutic antibiotics and for cattle that are not givengrowth hormones. Crops grown organically or using otherresponsible practices can take longer to grow and cropyields can be lower. It can take longer to identify andsecure relationships with suppliers that are able to meetour criteria for meat, dairy and produce ingredients. Giventhe costs associated with what we believe are responsiblefarming practices, many large suppliers have not found iteconomical to pursue business in this area. However, webelieve that in addition to seeking great tasting andnutritious food, consumers are increasingly concernedabout where their food comes from and how it is raised.

4 2014 Annual Report

PART I(continued)

And we believe that as consumers become more educatedabout better animal welfare and farming practices as wellas social accountability, they will foster greater demand forresponsibly grown foods in the long term. We believe thatincreased demand over the long term for the types of meatand produce items we strive to serve will continue toattract the interest and capital investment of larger farmsand suppliers. We also understand that well continue to beat the forefront of this trend and must balance our interestin advancing Food With Integrity with our desire to providegreat food at reasonable prices. If we are able to continuegrowing while focusing on Food With Integrity, we believeour sourcing flexibility will improve over time, though weexpect that most of these ingredients and other rawmaterials will remain more expensive than conventionallyraised, commodity-priced equivalents.

A Few Things, Thousands of Ways. Chipotle restaurants serveonly a few things: burritos, burrito bowls, tacos and salads.But because customers can choose from four different meatsor tofu, two types of beans and a variety of extras such assalsas, guacamole, cheese and lettuce, theres enough varietyto extend our menu to provide countless choices. We plan tokeep a simple menu, but well consider additions that we thinkmake sense, such as the recent introduction in all U.S. andCanadian markets of Sofritas, our vegan protein option madewith braised organic tofu. And if customers cant findsomething on the menu thats quite what theyre after, weencourage them to let us know. If we can make it from theingredients we have, well do it.

In preparing our food, we use stoves and grills, pots andpans, cutting knives, wire whisks and other kitchen utensils,walk-in refrigerators stocked with a variety of freshingredients, herbs and spices and dry goods such as rice.Ingredients we use include chicken and steak that ismarinated and grilled in our restaurants, carnitas (seasonedand braised pork), barbacoa (spicy shredded beef) andvegetarian pinto and black beans. We add our rice, which istossed with lime juice and freshly chopped cilantro, as wellas freshly shredded cheese, sour cream, lettuce, peppersand onions, depending on each customers request. We usevarious herbs, spices and seasonings to prepare our meatsand vegetables. We also provide a variety of extras such asguacamole, salsas and tortilla chips seasoned with freshlime juice and kosher salt. In addition to sodas, fruit drinksand organic milk, most of our restaurants also offer aselection of beer and margaritas. Our food is prepared fromscratch, with the majority prepared in our restaurants whilesome is prepared with the same fresh ingredients in largerbatches in commissaries.

Food Served Fast So That Customers Can Enjoy It Slowly.Our employees spend hours preparing our food on-site, buteach customer order can be ready in seconds. Customersselect exactly what they want and how they want it byspeaking directly to the employees that prepared the foodand are assembling the order. While we think that ourcustomers return because of the great-tasting food, wealso think that they like getting food served fast withouthaving a typical fast-food experience. And while ourrestaurants often have lines, we try to serve customers asquickly as possible. We do this by focusing on what we callthe four pillars of throughput. The four pillars are havinga dedicated expeditor, who works just before the cashier toget drink and side orders and bag to-go orders; a dedicatedlinebacker, to make sure the serving line is stocked with allour ingredients so the employees on the line can focus oneach customers order; proper mise en place; and ensuringthat we have aces in their places, or the best employeesat each position during all of our peak periods. When we dothis our customers are served quickly without feelingrushed. Weve even been able to serve more than 300customers an hour at some locations. The natural flow ofour restaurant layout, including the floor plan and thedesign of our serving line, are designed to make the foodordering process intuitive and, we believe, more efficient.And we constantly strive to improve the speed of service inall of our restaurants, so that we can accommodate morecustomers and larger orders without disrupting restauranttraffic. For instance, our restaurants accept orders by fax,online or through an iPhone or Android ordering applicationin order to provide a more convenient experience byallowing customers to avoid standing in line. Byemphasizing speed of service without compromising thegenuine interactions between our customers and our crews,and by continually making improvements to our restaurantoperations, we believe that we can provide a high qualityexperience to more and more customers.

Quality Assurance and Food Safety. We are committed toserving safe, high quality food to our customers. Qualityand food safety are integrated throughout our supply chainand everything we do; from the farms that supply our foodall the way through to our front line. We have establishedclose relationships with some of the top suppliers in theindustry, and we actively maintain a limited list of approvedsuppliers from whom our distributors must purchase. Ourquality assurance department establishes and monitors ourquality and food safety programs for our supply chain. Ourtraining and risk management departments develop andimplement operating standards for food quality,preparation, cleanliness and safety in the restaurants. Our

2014 Annual Report 5

PART I(continued)

food safety programs are also designed to ensure that wecomply with applicable federal, state and local food safetyregulations.

Restaurant Management and OperationsCulture of Top Performers. In addition to our focus on thefood we serve, we have a similarly focused people culturewith an emphasis on identifying, hiring and empowering topperforming employees. We are committed to creating aperformance based culture that leads to the bestrestaurant experience possible for our employees and ourcustomers. The foundation of that culture starts with hiringthe best people in our restaurants. We make an effort tohire employees who share a passion for food and who willoperate our restaurants in a way that is consistent with ourhigh standards, yet allows each of their uniquepersonalities and strengths to contribute to our success.We believe we provide attractive career opportunities tocrew and managers who are committed to work hard,provide great customer service and have the ability to leadand empower a team of top performers. We provide handson, shoulder-to-shoulder training to develop the fullpotential of our restaurant employees. We are committedto developing our people and promoting from within, withabout 90% of salaried management and about 98% ofhourly management coming from internal promotions. Ourbest general managers, who run great restaurants anddevelop strong, empowered restaurant teams, arepromoted to Restaurateur and in that role can earnbonuses for developing people. Weve leveraged ouroutstanding Restaurateurs leadership by giving manyRestaurateurs responsibility for mentoring one or morenearby restaurants. This provides an opportunity forRestaurateurs to develop into field leadership roles onerestaurant at a time. Restaurateurs who have shown theycan successfully run four restaurants by developing teamsof empowered top performers (including at least oneRestaurateur), thereby creating a culture of high standards,constant improvement and empowerment in each of theirrestaurants, can be promoted to apprentice team leaders.

Importance of Methods and Culture. Although we havemany restaurants, we believe that our departure from theautomated cooking techniques and microwaves used bymany traditional fast-food and fast-casual restaurantshelps to set us apart. Our crews use classic cookingmethods: they marinate and grill meats, hand-cut produceand herbs, make fresh salsa and guacamole, and cook ricein small batches throughout the day. They work in kitchensthat more closely resemble those of high-end restaurantsthan they do a typical fast-food place. Despite our morelabor-intensive method of food preparation, our focused

menu creates efficiencies which allow us to serve highquality food made from ingredients typically found in finedining restaurants.

The Front Line is Key. Our restaurant and kitchen designsintentionally place crew members up front with customersto reinforce our focus on service, and our open kitchendesign allows customers to see that we prepare our foodfresh throughout each and every day. All of our restaurantemployees are encouraged to interact with customers nomatter their job, whether preparing food or servingcustomers during our busiest period. We focus onattracting and retaining people who can deliver thatexperience for each customer. We provide each customerwith individual attention and make every effort to respondto customer suggestions and concerns in a personal andhospitable way. We believe our focus on creating a positiveand interactive experience helps build loyalty andenthusiasm for our brand among general managers, crewmembers and customers alike.

Restaurant Team. Each restaurant typically has a generalmanager or Restaurateur (a position weve characterizedas the most important in the company), an apprenticemanager (in most of our restaurants), and we aim to haveone to three hourly service managers, one or two hourlykitchen managers and an average of 24 full and part-timecrew members. We generally have two shifts at ourrestaurants, which simplifies scheduling and providesstability for our employees. We tend to have moreemployees in our busier restaurants. We cross-train ourpeople so that each can work a variety of stations, allowingus to work efficiently during our busiest times, while givingour people the opportunity to develop a wider array ofskills. Consistent with our emphasis on customer service,we encourage our general managers and crew members towelcome and interact with customers throughout the day.In addition to the employees serving our customers at eachrestaurant, we also have a field support system thatincludes apprentice team leaders, team leaders or areamanagers, team directors, executive team directors orregional directors, and restaurant support officers.

Supply ChainClose Relationships with Suppliers. Maintaining the highlevels of quality we expect in our restaurants depends inpart on our ability to acquire high-quality, fresh ingredientsand other necessary supplies that meet our specificationsfrom reliable suppliers. Our 22 independently owned andoperated regional distribution centers purchase fromvarious suppliers we carefully select based on quality andtheir understanding of our mission, and we seek to develop

6 2014 Annual Report

PART I(continued)

mutually beneficial long-term relationships with suppliers.We work closely with our suppliers and use a mix offorward, fixed and formula pricing protocols, and ourdistribution centers purchase within the pricing guidelinesand protocols we have established with the suppliers. Wevetried to increase, where necessary, the number of suppliersfor our ingredients, which we believe can help mitigatepricing volatility and supply shortages, and we followindustry news, trade issues, weather, exchange rates,foreign demand, crises and other world events that mayaffect our ingredient prices. Certain key ingredients (beef,pork, chicken, beans, rice, sour cream, cheese, and tortillas)are purchased from a small number of suppliers. For adiscussion of risks related to our supply chain, see RisksRelated to Operating in the Restaurant Industry Failure toreceive frequent deliveries of higher-quality foodingredients and other supplies meeting our specificationscould harm our operations and Risks Related to ourUnique Business Strategy Our Food With Integrityphilosophy subjects us to risks in Item 1A. Risk Factors.

Distribution Arrangements. Ingredients and other suppliesare delivered to our restaurants by our independentlyowned and operated regional distribution centers.

MarketingA great dining experience in our restaurants is our mostpowerful marketing of all. But there is still a need tointroduce our brand to consumers in other ways, and tohelp them understand what makes Chipotle different thanother restaurants. Our advertising and promotionalprograms, in-store communications, and other designelements all help to communicate something about whatdifferentiates Chipotle from other fast food companies.Whether its engaging with our company via social media,participating in our local events or simply eating a burritoat one of our restaurants, each customer interactionaffords us an important opportunity to build our brand.

Our advertising has generally included print, outdoor,transit and radio ads, but we also incorporate onlineadvertising into the mix, and conduct strategic promotionsthat demonstrate our Food With Integrity mission whileconnecting us to like-minded individuals or organizations.Beyond these traditional channels, we are continuing toexplore and pioneer new avenues of branded content aimedat making consumers more curious about issues that areimportant to us, and explaining why and how we areworking to drive positive change in the nations foodsupply. In addition, we continue to generate considerablemedia coverage, with scores of publications writingfavorably about our food, restaurant concept and business.

We also recognize the need for our marketing to evolve,much as we have evolved our unique food and peoplecultures. To this end, we have been developing moreowned media, including new video and music programs, amore visible event strategy that includes our Cultivatefood, music and ideas festivals, and participation in relevantevents in markets around the country. Many of these newerprograms allow us to tell our story with more nuance thanis afforded by traditional advertising, and help forgestronger emotional connections with our customers. Wehave also increased our use of digital, mobile, and socialmedia in our overall marketing mix, giving customersgreater opportunity to access Chipotle in ways that areconvenient for them and broadening our ability to engagewith our customers individually.

Collectively, these efforts and our excellent restaurantteams have helped us create considerable word-of-mouthpublicity as our customers learn more about us and sharewith others. This approach allows us to build awareness andloyalty with relatively low advertising expenditures, even ina competitive category, and to differentiate Chipotle as acompany that is committed to doing the right thing in everyfacet of our business.

CompetitionThe fast-casual, quick-service and casual dining segmentsof the restaurant industry are highly competitive withrespect to, among other things, taste, price, food qualityand presentation, service, location, and the ambience andcondition of each restaurant. Our competition includes avariety of restaurants in each of these segments, includinglocally-owned restaurants and national and regional chains.Many of our competitors offer dine-in, carry-out anddelivery services. Among our main competitors are anumber of multi-unit, multi-market Mexican food or burritorestaurant concepts, some of which are expandingnationally. Unlike Chipotle, a number of our competitorsgrow through franchising.

Several of our competitors compete by offering menu itemsthat are specifically identified as lower in fat,carbohydrates, or calories or otherwise better forcustomers, or targeted at particular dietary preferences.Many of our competitors in the fast-casual and quick-service segment of the restaurant industry also emphasizelower-cost, value meal menu options, a strategy we donot currently pursue.

Moreover, we may also compete with companies outsidethe fast casual and quick service and casual diningsegments of the restaurant industry. For example,

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PART I(continued)

competitive pressures can come from deli sections and in-store cafs of major grocery store chains, including thosetargeted at customers who seek higher-quality food, as wellas from convenience stores, cafeterias and other diningoutlets. These competitors may have, among other things,a more diverse menu, lower operating costs, betterlocations, better facilities, better management, moreeffective marketing and more efficient operations than wedo. For more information, see Risks Related to Operatingin the Restaurant Industry Competition could adverselyaffect us in Item 1A. Risk Factors.

We believe we are well-positioned to continue to grow ourmarket position in existing and new markets given currentconsumer trends, including increasing awareness and concernamong consumers about what they eat and how it is preparedas well as the increasing prevalence of the fast-casualsegment. Some of our competitors have formats that mightresemble ours, but we believe that Chipotle has become one ofthe most recognized restaurants in the U.S. We also believe weare known for our focus on having teams of top-performingemployees using classic cooking techniques to prepare foodmade from high-quality whole ingredients in an openrestaurant kitchen to create delicious food, as well as ourcommitment to Food With Integrity. We think this uniquecombination adds up to an excellent customer experience inour restaurants, which we believe represents a significantcompetitive advantage in the segment in which we operate.

Restaurant Site SelectionWe believe site selection is critical to our success and thus wedevote substantial time and effort to evaluating eachpotential location. Our site selection process includes the useof external real estate brokers with expertise in specificmarkets, taking direction from our internal team of realestate managers. Locations proposed by real estatemanagers are reviewed by development management as partof a formal site ride, as well as in a written real estatepackage. We study the surrounding trade area, demographicand business information within that area, and availableinformation on competitors. Based on this analysis, includingutilization of predictive modeling using proprietary formulas,we determine projected sales and targeted return oninvestment. We have been successful in a number of differenttypes of locations, such as in-line or end-cap locations in stripor power centers, in regional malls and downtown businessdistricts, free-standing buildings, food courts, and airports.Our new restaurant development activity has broadened toincorporate trade areas or restaurant sites in which we havelittle or no prior experience, including smaller or moreeconomically mixed communities, highway sites, outletcenters, and on military bases.

ShopHouse Southeast Asian Kitchen andPizzeria LocaleWe believe that the fundamental principles on which ourrestaurants are based finding the very best sustainablyraised ingredients, prepared and cooked using classicalmethods in front of the customer, and served in aninteractive format by special people dedicated to providinga great dining experience can be adapted to cuisinesother than the food we serve at Chipotle.

In order to see how our model works when we use differentingredients and a different style of food, we opened ourfirst ShopHouse Southeast Asian Kitchen during 2011 andwe now have a total of nine ShopHouse restaurants.ShopHouse serves a menu that, like at Chipotle, is focused;main dishes consist of rice or noodle bowls made withsteak, chicken, meatballs made with pork and chicken, ortofu. Further, during 2013, we invested in a consolidatedentity that now owns and operates two Pizzeria Localerestaurants, a fast casual pizza concept serving a menuthat includes classic pizzas and salads, from a selection ofhigh-quality ingredients.

Notwithstanding our opening of ShopHouse and investmentin Pizzeria Locale, and our plans in 2015 for a small numberof additional ShopHouse and Pizzeria Locale restaurants,our immediate focus will remain on thoughtfully growingthe Chipotle brand.

SeasonalitySeasonal factors cause our profitability to fluctuate fromquarter to quarter. Historically, our average dailyrestaurant sales and profits are lower in the first and fourthquarters due, in part, to the holiday season and becausefewer people eat out during periods of inclement weather(the winter months) than during periods of mild or warmweather (the spring, summer and fall months). Otherfactors also have a seasonal effect on our results. Forexample, restaurants located near colleges and universitiesgenerally do more business during the academic year.Seasonal factors, however, might be moderated oroutweighed by other factors that may influence ourquarterly results, such as fluctuations in food or packagingcosts or the timing of menu price increases.

Our Intellectual Property and TrademarksChipotle, Chipotle Mexican Grill, Unburritable, FoodWith Integrity, Fresh Is Not Enough, Anymore, TheGourmet Restaurant Where You Eat With Your Hands,Responsibly Raised, ShopHouse and a number ofrelated designs and logos are U.S. registered trademarks ofChipotle. We have filed trademark applications for a

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number of other marks in the U.S. In addition to our U.S.registrations, we have registered trademarks for Chipotleand a number of other marks in Canada, the EuropeanUnion and various other countries, and have filedtrademark applications for Chipotle Mexican Grill,Chipotle and a number of other marks in variouscountries as well.

We also believe that the design of our restaurants is ourproprietary trade dress. From time to time we have takenaction against other restaurants that we believe aremisappropriating our trademarks, restaurant designs oradvertising. Although our policy is to protect and defendvigorously our rights to our intellectual property, we maynot be able to adequately protect our intellectual property,which could harm the value of our brand and adverselyaffect our business.

Information SystemsWe use an integrated architecture of applications andsystems to manage the flow of information within eachrestaurant, and within our centralized corporateinfrastructure. The restaurant structure includes a point-of-sales system that operates locally at the restaurant and isintegrated with other functions necessary to restaurantoperations. It records sales transactions, receives out ofstore orders, and authorizes, batches and transmits creditcard transactions. The system also allows employees toenter time clock information and to produce a variety ofmanagement reports. Select information that is capturedfrom this system at each restaurant is collected in thecentral corporate infrastructure, which enablesmanagement to continually monitor operating results. Theservices available within this infrastructure include supplychain, inventory, scheduling, training, human capitalmanagement, financial tools, and data protection services.We believe that our current systems will be an adequateplatform to support our continued expansion.

In addition to processing payment card transactions andcollecting and storing information about our employees, wealso collect and store information about customers as partof some of our marketing programs. We are relyingincreasingly on cloud computing and other technologiesthat result in third parties holding significant amounts ofemployee or customer information on our behalf. Thecollection and use of such information is regulated at the

federal and state levels, and the regulatory environmentrelated to information security and privacy is increasinglydemanding. A number of retailers have experienced actualor potential security breaches in which information mayhave been stolen, including a number of highly publicizedincidents with well-known retailers in recent years. SeeGeneral Business Risks We may incur costs resultingfrom security risks we face in connection with our electronicprocessing and transmission of confidential customer andemployee information in Item 1A. Risk Factors, for adiscussion of risks associated with our information systems.

EmployeesAs of December 31, 2014, we had about 53,090 employees,including about 4,590 salaried employees and about48,500 hourly employees. None of our employees areunionized or covered by a collective bargaining agreement.

Available InformationWe maintain a website at www.chipotle.com, including aninvestor relations section at ir.chipotle.com in which weroutinely post important information, such as webcasts ofquarterly earnings calls and other investor events in whichwe participate or host, and any related materials. Our Codeof Conduct is also available in this section of our website.You may access our annual reports on Form 10-K, quarterlyreports on Form 10-Q, current reports on Form 8-K andamendments to those reports, as well as other reportsrelating to us that are filed with or furnished to the SEC,free of charge in the investor relations section of ourwebsite as soon as reasonably practicable after suchmaterial is electronically filed with or furnished to the SEC.The public may also read and copy materials we file withthe SEC at the SECs Public Reference Room, which islocated at 100 F Street, NE, Room 1580, Washington, DC20549. You can obtain information on the operation of thePublic Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website that containsreports, proxy and information statements and otherinformation regarding issuers that file electronically withthe SEC at www.sec.gov.

The contents of the websites mentioned above are notincorporated into and should not be considered a part ofthis report. The references to the URLs for these websitesare intended to be inactive textual references only.

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ITEM 1A. RISK FACTORSRisks Related to our Growth Strategy andFuture ExpansionOur sales and profit growth could be adverselyaffected if comparable restaurant sales increasesare less than we expect, and we may notsuccessfully increase comparable restaurant salesor they may decrease.While future sales growth will depend to an extent on ouropening new restaurants, changes in comparablerestaurant sales (which represent the change in period-over-period sales for restaurants beginning in their 13th fullmonth of operations) will also affect our sales growth andwill continue to be a critical factor affecting profit growth.This is because the profit margin on comparable restaurantsales is generally higher, as comparable restaurant salesincreases enable fixed costs to be spread over a highersales base. Conversely, declines in comparable restaurantsales can have a significant adverse effect on profitabilitydue to the loss of the positive impact on profit marginsassociated with comparable restaurant sales increases. Weexpect 2015 full year comparable restaurant salesincreases to be in the low to mid-single digit range ascomparisons become more difficult, particularly during thefinal three quarters of the year as we begin to overlapnationwide menu price increases implemented in 2014.

Our ability to increase comparable restaurant salesdepends on many factors, including:

changes in consumer preferences and discretionaryspending, including weaker consumer spending duringperiods of economic difficulty or uncertainty;

consumer understanding and acceptance of the Chipotleexperience and perceptions of the Chipotle brand;

our ability to increase menu prices without adverselyimpacting transaction counts to such a degree that theimpact from lower transactions equals or exceeds thebenefit of the menu price increase and without tradedown by customers or other reduction in averagecheck in response to price increases;

competition, either from our competitors in therestaurant industry, or from our own restaurants in theevent customers who frequent one of our restaurantsbegin to visit one of our new restaurants instead;

executing our strategies effectively, including ourdevelopment strategy, our marketing and brandingstrategies, our initiatives to increase the speed at whichour crew serves each customer, expanded use of faxservice lines and online and other electronic ordering,and introductions of catering options and new menuitems, each of which we may not be able to accomplishor which may not have the impact we expect;

initial sales performance of new restaurants, andpotential adverse impact of new restaurants on existingrestaurant sales, which are further described belowunder Our new restaurants, once opened, may not beprofitable, and may adversely impact the sales of ourexisting restaurants;

weather, road construction and other factors limitingaccess to our restaurants; and

changes in government regulation.

As a result of these factors it is possible that we will notachieve our targeted or expected comparable restaurantsales or that the change in comparable restaurant salescould be negative. A number of these factors are beyondour control, and therefore we cannot assure that we will beable to sustain comparable restaurant sales increases.

Past declines in our comparable restaurant sales increaseshave significantly impacted our stock price. Beginning inthe second quarter of 2012, prior to which we had beenexperiencing strong comparable restaurant sales growthmomentum, our comparable restaurant sales increasesdecelerated and the price of our stock declined significantlyin the wake of this deceleration, including a decline ofnearly 22% on the trading day following our second quarter2012 earnings release. Moreover, even the expectation ofdeclining comparable restaurant sales increases has had asignificant impact on our stock price in the past. Forexample, when we announced in October 2014 that weexpect comparable restaurant sales for 2015 in the low tomid-single digit range (as opposed to the double-digitcomparable restaurant sales increases we reported for thethird quarter of 2014), the price of our common stockdeclined nearly 7% on the following trading day. Any futuredeceleration in or failure to meet market expectations forour comparable restaurant sales increases would likelyresult in another significant decline in the price of ourcommon stock.

Increasing our sales and profitability dependssubstantially on our ability to open new restaurantsin sites and on terms attractive to us, which issubject to many unpredictable factors.We had 1,783 restaurants in operation as of December 31,2014. We plan to increase the number of our restaurantssignificantly in the next three years, and plan to openbetween 190 and 205 new restaurants in 2015. However, wehave in the past experienced delays in opening somerestaurants and that could happen again as a result of anyone or more of the following factors:

our potential inability to locate and secure newrestaurant sites in locations that we believe to beattractive;

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obstacles to hiring and training qualified operatingpersonnel in the local market;

delay or cancellation of new site development bydevelopers and landlords, which may becomeincreasingly common during periods of economicuncertainty or tight credit;

difficulty managing construction and development costsof new restaurants at affordable levels, particularly incompetitive markets and when real estate developmentactivity is robust;

difficulty ramping up the growth of our internationalbusiness or new restaurant concepts, including for thereasons described below under Our expansion intointernational markets may present increased risks dueto lower customer awareness of our brand, ourunfamiliarity with those markets and other factors and ShopHouse Southeast Asian Kitchen and PizzeriaLocale may not contribute to our growth;

difficulty negotiating leases with acceptable terms; any shortages of construction materials and labor; lack of availability of, or inability to obtain, adequatesupplies of ingredients that meet our quality standards;

failures or delays in securing required governmentalapprovals (including construction, parking and otherpermits); and

the impact of inclement weather, natural disasters andother calamities.

One of our biggest challenges in opening new restaurants isstaffing. We seek to hire only top-performing employeesand to promote general managers from our crew, whichmay make it more difficult for us to staff all the restaurantswe intend to open. Constraints on our hiring newemployees are described further below under RisksRelated to Operating in the Restaurant Industry Ourbusiness could be adversely affected by increased laborcosts or difficulties in finding the right employees for ourrestaurants and the right field leaders.

Another significant challenge is locating and securing anadequate supply of suitable new restaurant sites.Competition for suitable new restaurant sites in our targetmarkets can be intense, and development and leasing costsare increasing, particularly for urban locations. Thesefactors could negatively impact our ability to driveoccupancy costs lower as a percentage of revenue, whichwould adversely impact our profitability growth. In addition,any of these factors may be exacerbated by any ongoingeconomic recovery, as developers and contractors seeincreased demand. Our decision to delay or forego asignificant number of new restaurant openings, or ourinability to open the number of new restaurants we plan,

due to any of the reasons set forth above could materiallyand adversely affect our growth strategy and our expectedresults. Moreover, as we open and operate morerestaurants our rate of expansion relative to the size of ourexisting restaurant base will decline, which will make itincreasingly difficult to maintain our past rates of sales andprofitability growth.

Our progress in opening new restaurants from quarter toquarter may also occur at an uneven rate, which may resultin quarterly sales and profit growth falling short of marketexpectations in some periods. Similarly, our growthstrategy and the substantial investment associated with thedevelopment of each new restaurant (as well as the impactof our new restaurants on the sales of our existingrestaurants) may cause our operating results to fluctuateand be unpredictable or adversely affect our profits.

Our new restaurants, once opened, may not beprofitable, and may adversely impact the sales ofour existing restaurants.Historically, many of our new restaurants have opened withan initial ramp-up period typically lasting 24 months ormore, during which they generated sales and income belowthe levels at which we expect them to normalize. This is inpart due to the time it takes to build a customer base in anew area, higher fixed costs relating to increased labor andother start-up inefficiencies that are typical of newrestaurants, and a larger proportion of our recent openingsbeing in higher rent sites than we have historicallytargeted. It may also be difficult for us to attract acustomer base if we are not able to staff our restaurantswith employees who perform to our high standards. If weare unable to build the customer base that we expect fornew restaurant locations or overcome the higher fixedcosts associated with new restaurant locations, newrestaurants may not have similar results as our existingrestaurants and may not be profitable. Moreover, our newrestaurant development activity has broadened recently toincorporate trade areas or restaurant sites in which wehave little or no prior experience, including smaller or moreeconomically mixed communities, highway sites, outletcenters, and restaurants in airports, food courts, or onmilitary sites. The risks relating to building a customer baseand managing development and operating costs may bemore significant in some or all of these types of trade areasor restaurant sites, which could have an unexpectednegative impact on our new restaurant operating results.

In addition, after several years of lowering the averagedevelopment cost, net of landlord reimbursements, for newChipotle restaurants in the U.S. from about $916,000 in

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2008 to about $800,000 in 2013, our averagedevelopments costs, net of landlord reimbursements, fornew Chipotle restaurants in the U.S. have begun toincrease. In 2014 these costs rose to about $843,000, andwe expect them to decrease slightly in 2015. In the eventwe are not able to contain increases in our averagerestaurant development costs, which could result frominflation, an increase in the proportion of higher costlocations, project mismanagement or other reasons, ournew restaurant locations could also result in decreasedprofitability.

We have now opened restaurants in nearly all majormetropolitan areas across the U.S. New restaurants openedin existing markets may adversely impact sales inpreviously-opened restaurants in the same market ascustomers who frequent our established restaurants beginto visit a newly-opened restaurant instead. This impactcould worsen as we open additional restaurants, and couldmake it more difficult for us to increase comparablerestaurant sales and profitability. Existing restaurantscould also make it more difficult to build the customer basefor newly-opened restaurants in the same market.

Our expansion into international markets maypresent increased risks due to lower customerawareness of our brand, our unfamiliarity with thosemarkets and other factors.In 2008, we opened our first restaurant outside the U.S., inToronto, Canada. In 2010 we opened our first restaurant inthe United Kingdom in London, in 2012 we opened our firstrestaurant in France in Paris, and in 2013 we opened ourfirst restaurant in Germany in Frankfurt. As of December 31,2014, 17 of our restaurants were located outside of the U.S.As a result of our small number of restaurants outside theU.S. and the relatively short time we have been operatingthose restaurants, we have lower brand awareness, lowersales and/or transaction counts, and less operatingexperience in these markets. The markets in which weveopened restaurants outside the U.S., and any additionalnew markets we enter outside the U.S. in the future, havedifferent competitive conditions, consumer tastes anddiscretionary spending patterns than our U.S. markets. As aresult, new restaurants outside the U.S. may be lesssuccessful than restaurants in our existing markets.Specifically, due to lower consumer familiarity with theChipotle brand, differences in customer tastes or spendingpatterns, or for other reasons, sales at restaurants openedoutside the U.S. may take longer to ramp up and reachexpected sales and profit levels, and may never do so,thereby affecting our overall growth and profitability. Tobuild brand awareness in international markets, we may

need to make greater investments in advertising andpromotional activity than we originally planned, whichcould negatively impact the profitability of our operationsin those markets.

We may also find it more difficult in international marketsto hire, motivate and keep qualified employees who canproject our vision, passion and culture, and labor costs maybe higher in international markets due to increasedregulation or local market conditions. In addition,restaurants outside the U.S. have had higher construction,occupancy and food costs than restaurants in existingmarkets, and we may have difficulty finding reliablesuppliers or distributors or ones that can provide us, eitherinitially or over time, with adequate supplies of ingredientsmeeting our quality standards. Markets outside the U.S.may also have regulatory differences with the U.S. withwhich we are not familiar, or that subject us to significantadditional expense or to which we are not able tosuccessfully adapt, which may have a particularly adverseimpact on our sales or profitability in those markets andcould adversely impact our overall results. Our overallresults may also be negatively affected by currency risk onthe transactions in other currencies and translationadjustments resulting from the conversion of ourinternational financial results into the U.S. dollar.

ShopHouse Southeast Asian Kitchen and PizzeriaLocale may not contribute to our growth.We believe that the fundamental principles on whichChipotle restaurants are based finding the very bestsustainably raised ingredients, prepared and cooked usingclassical methods in front of the customer, and served in aninteractive format by special people dedicated to providinga great dining experience can be adapted to cuisinesother than the food we serve at Chipotle. In order to seehow our model works when we use different ingredientsand a different style of food, we opened ShopHouseSoutheast Asian Kitchen during 2011 and now have a totalof nine ShopHouse restaurants, in Washington D.C. and theLos Angeles area. We also have a majority ownershipinterest in a company operating two fast casual PizzeriaLocale restaurants in Denver, Colorado, and we plan toinvest in and assist with the expansion of Pizzeria Locale inthe future. ShopHouse and Pizzeria Locale are new brandsand they have lower brand awareness, lower sales and lessoperating experience than most Chipotle restaurants, andmay not achieve the same restaurant economics asChipotle restaurants. Notwithstanding our opening ofShopHouse and investment in Pizzeria Locale, ourimmediate focus will remain on thoughtfully growing theChipotle brand. As a result, we do not expect ShopHouse or

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Pizzeria Locale to contribute to our growth in a meaningfulway for at least the next several years, and we maydetermine not to move forward with any further expansionof ShopHouse or Pizzeria Locale. This would limit ouroverall growth over the long term.

Our failure to manage our growth effectively couldharm our business and operating results.As described elsewhere in this report, our plans call for asignificant number of new restaurants. Our existingrestaurant management systems, financial andmanagement controls, information systems and personnelmay be inadequate to support our expansion. Managing ourgrowth effectively will require us to continue to enhancethese systems, procedures and controls and to hire, trainand retain general managers, crew and corporate staff. Wealso are continuing to attempt to improve our fieldmanagement in an effort to develop additional top-performing general managers more quickly. We may notrespond quickly enough to the changing demands that ourexpansion will impose on management, crew and existinginfrastructure, and changes to our operating structure mayresult in increased costs or inefficiencies that we cannotcurrently anticipate. Changes as we grow may have anegative impact on the operation of our restaurants, andcost increases resulting from our inability to effectivelymanage our growth could adversely impact ourprofitability. We also place a lot of importance on ourculture, which we believe has been an importantcontributor to our success. As we grow, we may havedifficulty maintaining our culture or adapting it sufficientlyto meet the needs of our operations. Our failure to fosterand maintain our corporate culture could also harm ourbusiness and operating results.

Risks Related to Operating in the RestaurantIndustry

Changes in food and supply costs could adverselyaffect our results of operations.Our profitability depends in part on our ability to anticipateand react to changes in food and supply costs. Like allrestaurant companies, we are susceptible to increases infood costs as a result of factors beyond our control, such asgeneral economic conditions, seasonal fluctuations,weather conditions, global demand, food safety concerns,generalized infectious diseases, fluctuations of the U.S.dollar, product recalls and government regulations. Thecost of many basic foods for humans and animals, includingcorn, wheat, rice and cooking oils, has increased markedlyin some years, resulting in upward pricing pressures onalmost all of our raw ingredients including chicken, beef,tortillas and rice, increasing our food costs. Food prices for

a number of our key ingredients escalated markedly atvarious points during 2013 and 2014 and we expect thatthere will be additional pricing pressures on some of thoseingredients, primarily beef, during 2015, which we expectwill be partially or fully offset by relief in dairy prices. As aresult, we expect that food costs as a percentage ofrevenue in 2015 will remain consistent with the full year2014 or will increase slightly.

We could also be adversely impacted by price increasesspecific to meats raised in accordance with oursustainability and animal welfare criteria or other fooditems we buy as part of our Food With Integrity focus, themarkets for which are generally smaller and moreconcentrated than the markets for food products that areconventionally raised and grown. Weather related issues,such as freezes or drought, may also lead to temporaryspikes in the prices of some ingredients such as produce ormeats. For instance, drought conditions in parts of the U.S.have resulted in significant increases in beef prices during2014, and we expect beef prices to remain high throughout2015. Increasing weather volatility or other long-termchanges in global weather patterns, including any changesassociated with global climate change, could have asignificant impact on the price or availability of some of ouringredients. Any increase in the prices of the ingredientsmost critical to our menu, such as chicken, beef, cheese,avocados, beans, rice, tomatoes and pork, would adverselyaffect our operating results. Alternatively, in the event ofcost increases with respect to one or more of our rawingredients, we may choose to temporarily suspend servingmenu items, such as guacamole or one or more of oursalsas, rather than paying the increased cost for theingredients. Any such changes to our available menu maynegatively impact our restaurant traffic and comparablerestaurant sales, and could also have an adverse impact onour brand.

Our business could be adversely affected byincreased labor costs or difficulties in finding theright employees for our restaurants and the rightfield leaders.Labor is a primary component of our operating costs, andwe believe good managers and crew are a key part of oursuccess. We devote significant resources to recruiting andtraining our general managers and crew. Increased laborcosts due to factors like additional taxes or requirements toincur additional employee benefits costs, including therequirements of the Patient Protection and Affordable CareAct, or the Affordable Care Act, (discussed further underRegulatory and Legal Risks The effect of recent changesto U.S. healthcare laws may increase our healthcare costs

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and negatively impact our financial results,), as well ascompetition, increased minimum wage requirements, paidsick leave or vacation accrual mandates, and any changesin our restaurant staffing structure would adversely impactour operating costs. Our success also depends in part onthe energy and skills of our employees and our ability tohire, motivate and keep qualified employees, especiallygeneral managers and crew members. As we grow, webelieve we will need to promote or hire additional top-performing field leaders to ensure we hire and motivategood managers and crew, and it may be difficult to identifyand keep those field leaders. Our failure to find and keepenough employees who are a good fit with our culturecould delay planned restaurant openings, result in higheremployee turnover or erode our employee and restaurantcultures, any of which could have a material adverse effecton our business and results of operations. Restaurantoperators have traditionally experienced relatively highemployee turnover rates. Any increase in our turnoverrates for managers or crew could be costly and couldnegatively impact our operations.

Various states in which we operate are considering or havealready adopted new immigration laws, and the U.S.Congress and Department of Homeland Security from timeto time consider or implement changes to Federalimmigration laws, regulations or enforcement programs aswell. Changes in immigration or work authorization lawsmay increase our obligations for compliance and oversight,which could subject us to additional costs and make ourhiring process more cumbersome, or reduce the availabilityof potential employees. Although we require all workers toprovide us with government-specified documentationevidencing their employment eligibility, some of ouremployees may, without our knowledge, be unauthorizedworkers. We currently participate in the E-Verifyprogram, an Internet-based, free program run by the U.S.government, to verify employment eligibility for allemployees throughout our company. However, use of E-Verify does not guarantee that we will properly identify allapplicants who are ineligible for employment. Unauthorizedworkers may subject us to fines or penalties, and we couldexperience adverse publicity that negatively impacts ourbrand and may make it more difficult to hire and keepqualified employees. For example, following an audit by theDepartment of Homeland Security of the workauthorization documents of our restaurant employees inMinnesota during 2010, we lost approximately 450employees, resulting in a temporary increase in labor costsand disruption of our operations, including slowerthroughput, as we trained new employees, as well as somedegree of negative publicity. The resulting broad-based civil

and criminal investigations by the U.S. Attorney for theDistrict of Columbia and U.S. Securities and ExchangeCommission of our compliance with work authorizationrequirements and related disclosures and statements areongoing. See Note 9. Commitments and Contingencies inour consolidated financial statements included in Item 8.Financial Statements and Supplementary Data.Termination of a significant number of employees inspecific markets or across our company would disrupt ouroperations including slowing our throughput, and could alsocause additional adverse publicity and temporary increasesin our labor costs as we train new employees. We could alsobecome subject to fines, penalties and other costs relatedto claims that we did not fully comply with allrecordkeeping obligations of federal and state immigrationcompliance laws. Our reputation and financial performancemay be materially harmed as a result of any of thesefactors.

Because we do not franchise, risks associated with hiringand maintaining a large workforce, including increases inwage rates or the cost of employee benefits, compliancewith laws and regulations related to the hiring, paymentand termination of employees, and employee-relatedlitigation, may be more pronounced for us than forrestaurant companies at which some or all of these risksare borne by franchisees or other operating contractors.

Instances of food-borne or localized illnesses couldcause the temporary closure of some restaurants orresult in negative publicity, thereby resulting in adecline in our sales, and could adversely affect theprice and availability of the meat, produce or dairywe use to prepare our food.Instances of food-borne illnesses, real or perceived,whether at our restaurants or those of our competitors,may subject us to liability to affected customers, and couldresult in negative publicity about us or the restaurantindustry that adversely affects our sales. We may be at ahigher risk for food-borne illness outbreaks than somecompetitors due to our use of fresh produce and meatsrather than frozen, and our reliance on employees cookingwith traditional methods rather than automation. The riskof illnesses associated with our food might also increase inconnection with an expansion of our catering business orother situations in which our food is served in conditions wecannot control.

On a small number of occasions one or more Chipotlerestaurants have been associated with customer illness,and on those occasions our sales have sometimes beenadversely impacted, at times even in markets beyond those

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impacted by the illness. If our customers become ill fromfood-borne or localized illnesses or if an illness is attributedto our food, even incorrectly, we could also be forced totemporarily close some restaurants, further impacting sales.In addition, reports linking nationwide or regional outbreaksof food-borne illnesses have caused us to temporarilysuspend serving some produce items in our foods or tootherwise alter our menu. Similarly, past outbreaks of E. colirelating to certain food items caused consumers to avoidcertain products and restaurant chains, Asian and Europeancountries have experienced outbreaks of avian flu, andincidents of mad cow disease have occurred in Canadianand U.S. cattle herds. These problems, other food-borneillnesses (such as hepatitis A or norovirus) and injuriescaused by food tampering have had in the past, and couldhave in the future, an adverse effect on the price andavailability of affected ingredients. A decrease in customertraffic as a result of these health concerns or negativepublicity, or as a result of a change in our menu or diningexperience or a temporary closure of any of ourrestaurants, would adversely impact our restaurant salesand profitability. Furthermore, if we react to these problemsby changing our menu or other key aspects of the Chipotleexperience, we may lose customers who do not accept thosechanges, and may not be able to attract enough newcustomers to generate sufficient revenue to make ourrestaurants profitable. Customers may also shift away fromus if we choose to pass along to consumers any higheringredient costs resulting from supply problems associatedwith outbreaks of food-borne illnesses, which would alsohave a negative impact on our sales and profitability.

Competition could adversely affect us.The fast-casual, quick-service and casual dining segmentsof the restaurant industry are highly competitive withrespect to, among other things, taste, price, food qualityand presentation, service, location and the ambience andcondition of each restaurant. Our competition includes avariety of restaurants in each of these segments, includinglocally owned restaurants and national and regional chains.Many of our competitors offer dine-in, carry-out anddelivery services. Many of our competitors have existedlonger than we have and may have a more establishedmarket presence with substantially greater financial,marketing, personnel and other resources than we have.Among our main competitors are a number of multi-unit,multi-market Mexican food or burrito restaurant concepts,some of which are expanding nationally. Some of thesecompetitors and other fast casual concepts have sought toduplicate various elements of our business operations, andmore chains may copy us to varying degrees in the future.Additionally, our newer concepts, ShopHouse Southeast

Asian Kitchen and Pizzeria Locale, operate in markets inwhich there are numerous competitors, including a numberof large and well-known brands. A number of othercompanies or individuals in the restaurant industry haverecently opened or invested in fast-casual pizza concepts.In addition, our strategy includes opening additionalrestaurants in existing markets, and as we do so sales maydecline in our previously-opened restaurants as customerswho frequent our established restaurants begin to visit anewly-opened restaurant instead.

Several of our competitors compete by offering menu itemsthat are specifically identified as low in carbohydrates, betterfor customers or otherwise targeted at particular consumerpreferences. Many of our competitors in the fast-casual andquick-service segments of the restaurant industry alsoemphasize lower-cost, value meal menu options, a strategywe do not currently pursue. Our sales may be adverselyaffected by these products and price competition.

Moreover, we may also compete with companies outside thefast casual and quick service and casual dining segments ofthe restaurant industry. For example, competitive pressurescan come from deli sections and in-store cafs of severalmajor grocery store chains, including those targeted atcustomers who want higher-quality food, as well as fromconvenience stores and other dining outlets. Thesecompetitors may have, among other things, a more diversemenu, lower operating costs, better locations, betterfacilities, better management, more effective marketing andmore efficient operations than we have.

Any of these competitive factors may adversely affect usand reduce our sales and profits.

Failure to receive frequent deliveries of higher-quality food ingredients and other supplies meetingour specifications could harm our operations.Our ability to maintain our menu depends in part on ourability to acquire ingredients that meet our specificationsfrom reliable suppliers. Shortages or interruptions in thesupply of ingredients caused by unanticipated demand,problems in production or distribution, food contamination,inclement weather, a supplier ceasing operations ordeciding not to follow our required protocols, or otherconditions could adversely affect the availability, qualityand cost of our ingredients, which could harm ouroperations. In particular, shortages of one or more of ourmenu items could force our restaurants to remove itemsfrom their menus, which may result in customers choosingto eat elsewhere. If that happens, our affected restaurantscould experience significant reductions in sales during the

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menu item shortage, and potentially thereafter ifcustomers do not return to us after the shortage isresolved. Our focus on a limited menu would make theconsequences of a shortage of a key ingredient moresevere than at other restaurants.

We have almost no long-term contracts with suppliers, and wehave relied largely on a third party distribution network with alimited number of distribution partners. If any of ourdistributors or suppliers performs inadequately, or ourdistribution or supply relationships are disrupted for anyreason, the risk of ingredient shortages may increase and ourbusiness, financial condition, results of operations or cashflows could be adversely affected. We currently depend on alimited number of suppliers for some of our key ingredients,including beef, pork, chicken, tofu, beans, rice, sour cream,cheese, and tortillas. Due to the unique nature of the productswe receive from our Food With Integrity suppliers and asdescribed in more detail below under Risks Related to OurUnique Business Strategy Our Food With Integrityphilosophy subjects us to risks, these suppliers could bemore difficult to replace if we were no longer able to rely onthem. If we have to seek new suppliers and service providerswe may be subject to pricing or other terms less favorablethan those we currently enjoy. If we cannot replace or engagedistributors or suppliers who meet our specifications in ashort period of time, that could increase our expenses andcause shortages of food and other items at our restaurants,which could cause a restaurant to remove items from itsmenu. If that were to happen and customers change theirdining habits as a result, affected restaurants couldexperience significant reductions in sales during the shortageor thereafter. Our focus on a limited menu would make theconsequences of a shortage of a key ingredient more severe.

In the first quarter of 2015, through our ongoing auditing ofsuppliers, we identified a pork supplier that was not meetingour standards and suspended purchases of pork from thissupplier. Without this supply, we do not have enough porkmeeting our specifications for all of our restaurants and alarge number of our restaurants are not serving carnitas asof February 4, 2015. This may result in lost sales fromcustomers who choose to eat elsewhere rather thansubstituting a different one of our menu items for carnitas.

Changes in customer tastes and preferences,spending patterns and demographic trends couldcause sales to decline.Changes in customer preferences, general economicconditions, discretionary spending priorities, demographictrends, traffic patterns and the type, number and locationof competing restaurants affect the restaurant industry.Our sales could be impacted by changes in consumer

preferences in response to dietary concerns, includingpreferences regarding items such as calories, sodium,carbohydrates or fat. These changes could result inconsumers avoiding our menu items in favor of other foods,and our focus on a limited menu could make theconsequences of a change in consumer preferences moresevere than our competitors may face. Our success alsodepends to a significant extent on consumer confidence,which is influenced by general economic conditions anddiscretionary income levels. Our average restaurant salesmay decline during economic downturns or periods ofuncertainty, which can be caused by various factors such ashigh unemployment, increasing taxes, interest rates, orother changes in fiscal or monetary policy, high gasolineprices, declining home prices, tight credit markets or foreignpolitical or economic unrest. Any material decline inconsumer confidence or a decline in family food away fromhome spending could cause our sales, operating results,profits, business or financial condition to decline. If we fail toadapt to changes in customer preferences and trends, wemay lose customers and our sales may deteriorate.

If we were to experience widespread difficulty renewingexisting leases on favorable terms, our revenue oroccupancy costs could be adversely affected.We lease substantially all of the properties on which weoperate restaurants, and some of our leases are due forrenewal or extension options in the next several years.Some leases are subject to renewal at fair market value,which could involve substantial increases, and a smallernumber expire without any renewal option. While wecurrently expect to pursue the renewal of substantially all ofour expiring restaurant leases, any difficulty renewing asignificant number of such leases, or any substantialincrease in rents associated with lease renewals, couldadversely impact us. If we have to close any restaurants dueto difficulties in renewing leases, we would lose revenuefrom the affected restaurants and may not be able to opensuitable replacement restaurants. Substantial increases inrents associated with lease renewals would increase ouroccupancy costs, reducing our restaurant margins.

Regulatory and Legal Risks

Governmental regulation in one or more of thefollowing areas may adversely affect our existingand future operations and results, including byharming our ability to open new restaurants orincreasing our operating costs.

Employment and Immigration RegulationsWe are subject to various federal and state laws governingour relationship with and other matters pertaining to ouremployees, including wage and hour laws, requirements to

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provide meal and rest periods or other benefits, familyleave mandates, requirements regarding workingconditions and accommodations to certain employees,citizenship or work authorization and related requirements,insurance and workers compensation rules and anti-discrimination laws. Complying with these rules subjects usto substantial expense and can be cumbersome, and canalso expose us to liabilities from claims for non-compliance.For example, a number of lawsuits have been filed againstus alleging violations of federal and state laws regardingemployee wages and payment of overtime, meal and restbreaks, employee record-keeping and related practices withrespect to our employees. We could suffer losses from, andwe incur legal costs to defend, these and similar cases, andthe amount of such losses or costs could be significant. Inaddition, several states and localities in which we operateand the federal government have from time to timeenacted minimum wage increases, paid sick leave andmandatory vacation accruals, and similar requirements andthese changes could increase our labor costs. In addition,see The effect of recent changes to U.S. healthcare lawsmay increase our healthcare costs and negatively impactour financial results below for a discussion of risks relatedto recent changes in U.S. healthcare laws.

We also are audited from time to time for compliance withcitizenship or work authorization requirements as well, andrecent audit activity and federal criminal and civilinvestigations in this area are described in more detailabove under Risks Related to Operating in the RestaurantIndustry Our business could be adversely affected byincreased labor costs or difficulties in finding the rightemployees for our restaurants and the right field leaders,as well as in Note 9 Commitments and Contingencies inour consolidated financial statements included in Item 8.Financial Statements and Supplementary Data.Unauthorized workers may subject us to fines or penalties,and if any of our workers are found to be unauthorized ourbusiness may be disrupted as we try to replace lost workerswith additional qualified employees. On the other hand, inthe event we wrongfully reject work authorizationdocuments, or if our compliance procedures are found tohave a disparate impact on a protected class such as aracial minority or based on the citizenship status ofapplicants, we could be found to be in violation of anti-discrimination laws. We could experience adverse publicityarising from enforcement activity related to workauthorization compliance, anti-discrimination compliance,or both, that negatively impacts our brand and may make itmore difficult to hire and keep qualified employees.Moreover, in addition to the criminal and civil investigationsmentioned above under Risks Related to Operating in the

Restaurant Industry Our business could be adverselyaffected by increased labor costs or difficulties in findingthe right employees for our restaurants and the right fieldleaders, the office of the U.S. Attorney for the District ofColumbia and the U.S. Securities and Exchange Commissionhave informed us that they are conducting parallelinvestigations into possible criminal and civil securities lawviolations relating to our employee work authorizationcompliance and related disclosures and statements as well.The foregoing investigations may continue to be expensiveand distracting, and could subject us to fines, reputationaldamage, and other liabilities that could be significant.

Additionally, while we do not currently have any unionizedemployees, union organizers have engaged in efforts toorganize employees of other restaurant companies. If asignificant portion of our employees were to become unionorganized, our labor costs could increase and our efforts tomaintain a culture appealing only to top performingemployees could be impaired. Potential changes in laborlaws, including the possible passage of legislation designedto make it easier for employees to unionize, could increasethe likelihood of some or all of our employees beingsubjected to greater organized labor influence, and couldhave an adverse effect on our business and financial resultsby imposing requirements that could potentially increaseour costs, reduce our flexibility and impact our employeeculture.

Americans with Disabilities Act and Similar State LawsWe are subject to the U.S. Americans with Disabilities Act,or ADA, and similar state laws that give civil rightsprotections to individuals with disabilities in the context ofemployment, public accommodations and other areas. Wehave incurred substantial legal fees in connection withADA-related complaints in the past, and we may in thefuture have to modify restaurants, for example by addingaccess ramps or redesigning certain architectural features,to provide service to or make reasonable accommodationsfor disabled persons under these laws. The expensesassociated with these modifications, or any damages, legalfees and costs associated with litigating or resolving claimsunder the ADA or similar state laws, could be material.

Nutrition and Food RegulationIn recent years, there has been an increased legislative,regulatory and consumer focus at the federal, state andmunicipal levels on the food industry including nutritionand advertising practices. Restaurants operating in thequick-service and fast-casual segments have been aparticular focus. For example, the State of California, NewYork City and a number of other jurisdictions around the

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U.S. have adop