CMGChipotle Mexican Grill

Please discuss the business reasons for changes in operating margin when changes in restaurant level operating margin are discussed in the results sections for the three months and full year ended December 31, 2023. Refer to Item 10(e) of Regulation S-K.

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We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff.

We acknowledge the Staff’s comment and we commit to include in future SEC filings a discussion of the business reasons for changes in operating margin to the extent we include in the filing a discussion of changes in restaurant level operating margin. Read in the reply ↗

We note per the risk factor on page 9 and the discussion of costs on page 23 that you implemented several menu price increases in 2022. Please quantify and discuss the extent to which changes in food and beverage revenue are attributable to changes in prices pursuant to Item 303(b)(2)(iii) of Regulation S-K. This comment also applies to Form 10- Qs.

We acknowledge the Staff’s comment and undertake to include the requested quantification in future SEC filings to the extent Chipotle’s statement of income presents material changes from period to period in our food and beverage revenue, including menu price increases, if applicable. By way of example, using Chipotle’s Form 10-K for the fiscal year ended December 31, 2022 as a model, in future filings we intend to include disclosures such as the following in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Results of Operations” to describe the material

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changes from period to period in food and beverage revenue presented on Chipotle’s income statement:

The significant factors contributing to the total revenue increase for the year ended December 31, 2022 compared to the year ended December 31, 2021, were comparable restaurant sales increase of $568.6 million and restaurants not yet in the comparable base of $519.4 million, of which $210.5 million was due to restaurants opened in 2022. Comparable restaurant sales increased 8.0% as a result of an increase in the average check of 7.1% and, to a lesser extent, an increase in transactions of 0.9%. The increase in average check was driven by a 12.0% benefit from menu price increases, which was partially offset by a decrease in check mix.

In future filings, our disclosures of quantitative information describing factors that resulted in material changes in revenue from period-to-period would be substantially similar to the disclosures above, with appropriate adjustments to reflect the material factors for the relevant period, if any.

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Please provide a comparable analysis of material changes in your cash flows from operating, investing, and financing activities between the periods presented. In your analysis, please explain the underlying reasons affecting the comparability of your cash flows. Refer to Item 303 of Regulation S-K.

to the Staff’s comment, we propose to revise our disclosures in future filings to provide a comparable analysis of material changes in our cash flows from operating, investing, and financing activities between the periods presented. Our proposed disclosure for future filings would be substantially similar to the disclosures attached as Exhibit A to this letter, with appropriate adjustments to reflect the material changes in cash flows for the relevant periods presented in the filing.

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Exhibit A includes additions to the original disclosure included in our Form 10-K for the Fiscal Year Ended December 31, 2021, that was reviewed by the Staff.

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Please expand your disclosure to clarify how you determined the tax effect of non-GAAP adjustments in calculating the adjusted net income, adjusted diluted earnings per share, and adjusted effective income tax rate non-GAAP measures in each reporting period presented. Refer to Question 102.11 of the Non-GAAP Financial Measures Compliance and Disclosure Interpretations.

We respectfully advise the Staff that we determine the tax effect of non-GAAP adjustments based on the nature of the underlying non-GAAP adjustments and their relevant jurisdictional tax rates. In our original disclosure included in our Form 8-K dated February 8, 2022, in consideration of Question 102.11 we presented income taxes as a separate adjustment in calculating adjusted net income, adjusted diluted earnings per share, and the adjusted effective income tax rate in each reporting period presented.

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In response to the Staff’s comment, we propose to revise our disclosures in future earnings releases and related Forms 8-K to provide a description of how we determined the tax effect of non-GAAP adjustments.

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Your presentation of restaurant level operating margin excluding general and administration expenses, depreciation and amortization, and pre-operating costs appears to be a non-GAAP financial measure. Please revise your disclosure to: • Provide the non-GAAP disclosures required in Item 10(e)(1)(i) of Regulation S-K.

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Your restaurant level operating margin should be reconciled to income from operations as presented in your consolidated statements of income. • Present the most directly comparable GAAP operating margin with equal or greater prominence to this non-GAAP measure on page 1. Refer to Item 10(e)(1)(i)(A) of Regulation S-K.

to the Staff’s comment, we propose to revise our disclosures in future earnings releases to provide the non-GAAP disclosures required in Item 10(e)(1)(i) of Regulation S‑K, including a reconciliation of restaurant level operating margin to income from operations. Our proposed disclosure for future earnings releases would be substantially similar to the disclosures attached as Exhibit A to this letter, with appropriate adjustments for events applicable to the periods covered by the earnings release.

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Exhibit A is marked to show the changes from the original disclosure included in our Form 8-K dated April 21, 2021 that was reviewed by the Staff. Additionally, we will present GAAP income from operations with equal or greater prominence than non-GAAP restaurant level operating margin.

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We note the recent amendment to your bylaws pursuant to which you adopted an exclusive forum provision. Please confirm that in future filings, including as required by Form 10-Q and Form 10-K, you will include appropriate disclosure describing the provision, discussing the risks of the provision to investors, and addressing any uncertainty about the enforceability of the provision.

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In light of the significant promotional activities begun in the first quarter of 2016, such as coupons issued for free products, please revise your revenue recognition policy to describe your accounting for such promotions and sales incentives. Also, to the extent that amounts recognized for such incentives are material, please disclose the amount in accordance with ASC 605-50-50-1.

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Your discussion in MD&A should also be revised to discuss the extent of the contribution of these incentives/promotions to the change in revenue and operating income.

At times, we issue coupons that may be redeemed by customers for free or discounted food. Beginning in the first quarter of 2016 we issued coupons for free food with expiration dates in the second quarter of 2016. For coupons issued in the first quarter of 2016 that remained outstanding as of March 31, 2016, we recognized a liability on the balance sheet for the estimated cost of food that is expected to be, but not yet, redeemed based on company-specific historical redemption rates for similar promotions.

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The amount of the accrued liability for free food offers was approximately $4 million as of March 31, 2016. We do not recognize any revenue on free food coupons issued to or redeemed by customers.

We will revise our accounting policy in future filings to describe our accounting for our promotions and sales incentives beginning with our next 10-Q filing, to include additional disclosures similar to the following:

The Company recognizes revenue, net of discounts and incentives, when payment is tendered at the point of sale. The Company recognizes a liability for offers of free food by estimating the cost to satisfy the offer based on company–specific historical redemption patterns for similar promotions. These costs are recognized in other operating costs in the consolidated statement of operations and in accrued liabilities in the consolidated balance sheet. The Company reports revenue net of sales and other sales related taxes collected from customers and remitted to governmental taxing authorities.

Additionally, we will discuss the contribution of these promotions to revenue and operating income, to the extent that they are material and practical to quantify, in future filings in Management’s Discussion and Analysis of Financial Condition and Results of Operations under the Other Operating Costs caption, as appropriate. An example of such an expanded disclosure that we will include in our next 10-Q filing, if material, is as follows:

Other operating costs include, among other items, marketing and promotional costs, bank and credit card fees, and restaurant utilities and maintenance costs. Other operating costs as a percentage of revenue increased for the three and six months ended June 30, 2016 due primarily to an increase in marketing and promotional spend, which contributed $XX million and $XX million to the increase, as well as lower average restaurant sales, and expenses for kitchen supplies and repairs and maintenance as we enhance food safety protocols in our restaurants. We will continue to invest in marketing and promotional activities in order to regain customers after the recent food-borne illness incidents.

As previously stated, promotional offers of free food do not directly impact revenue. Furthermore, given the unusual sales trends resulting from the food borne-illness incidents, we were unable to calculate or accurately estimate any indirect impact that promotional activity had on revenue. Consequently, we do not believe any further disclosure quantifying the potential impact of promotional activity on revenue would have been appropriate in our Form 10-Q for the period ended March 31, 2016. In future filings, we will disclose any quantifiable, material impacts of promotional offers on changes in revenue.

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We note your disclosure of the factors for which fluctuations in income statement line items are attributed; however, in addition to discussing the factors for the change (or lack thereof), please quantify the factors for the change, particularly when more than one factor is attributed to the change.

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For example, you state that certain increases were “primarily” attributed to one factor, and “partially offset” by another factor or you indicate an increase was “additionally” attributed to more than one factor without quantifying each factor. These disclosures should be presented in a manner so as to allow investors to discern the relative contribution of each of the multiple components cited to the total change. For example, when food, beverage and packaging costs increased as a percentage of revenue primarily due to food testing and waste costs, as well as higher expense for pre-cut product, offset by lower beef costs, please quantify these changes or provide the actual cost figures necessary to put these changes in proper context. Please revise accordingly.

to the Staff’s comments, we will in future filings, particularly when there is more than one material factor contributing to a change, to the extent practicable, quantify those factors. With respect to the example in your comment regarding the change in food, beverage and packaging costs, we do not believe quantifying these amounts would have been useful to the reader as each factor was individually immaterial.

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Additionally, it was not practical to separately describe each immaterial change; however, we described the components in order of impact to provide the reader a general sense of the relative contribution of each change.

The Company hereby acknowledges the following:

· the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

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