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In this quarterly report on Form 10-Q, Chipotle Mexican Grill, Inc., a Delaware corporation, together with its subsidiaries, is collectively referred to as “Chipotle,” “we,” “us,” or “our.”

We develop and operate restaurants that serve a relevant menu of burritos, burrito bowls, quesadillas, tacos, and salads, made using fresh, high-quality ingredients. As of June 30, 2026, we owned 4,186 restaurants including 4,074 Chipotle restaurants within the United States, and 112 international Chipotle restaurants. Additionally, we had 15 international partner-operated restaurants. Partner-operated restaurants represent Chipotle restaurants over which Chipotle does not have a controlling financial interest and for which Chipotle does not directly manage day-to-day operations. This includes restaurants operated by third parties pursuant to license or franchise agreements and restaurants in which Chipotle holds a minority, non-controlling ownership interest. We manage our U.S. operations based on 12 regions and aggregate our operations to one reportable segment. Additional details on the nature of our business and our reportable operating segment are included in Note 14. "Segment Reporting".

We have prepared the accompanying unaudited condensed consolidated financial statements in accordance with U.S. generally accepted accounting principles for interim financial statements and pursuant to the rules and regulations of the Securities and Exchange Commission (the "SEC"). In the opinion of management, the accompanying unaudited condensed consolidated financial statements reflect all adjustments consisting of normal recurring adjustments necessary for a fair presentation of our financial position and results of operations. Interim results of operations are not necessarily indicative of the results that may be achieved for the full year. The financial statements and related notes do not include all information and footnotes required by U.S. generally accepted accounting principles for annual reports. This quarterly report should be read in conjunction with the consolidated financial statements, footnotes and management’s discussion and analysis included in our Annual Report on Form 10-K for the year ended December 31, 2025.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2024-03, "Disaggregation of Income Statement Expenses (Subtopic 220-40)." The ASU requires public entities to disaggregate, in a tabular presentation, certain income statement expenses into different categories, such as purchases of inventory, employee compensation, depreciation, and intangible asset amortization. The guidance is effective for fiscal years beginning after December 15, 2026, with early adoption permitted, and may be applied retrospectively. We are currently evaluating the impact of adopting the new ASU on our disclosures.

In September 2025, the FASB issued ASU No. 2025-06, "Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements for Internal-Use Software" to modernize the accounting guidance for the costs incurred to obtain or develop software for internal use. The ASU removes all the references to various stages of a software development project. Under the new guidance, public entities shall begin capitalizing software costs when 1) management has authorized and committed to funding the software project and 2) it is probable that the project will be completed and the software will be used to perform the function intended. The guidance is effective for fiscal years beginning after December 15, 2027, with early adoption permitted, and can be applied on a prospective, retrospective, or modified prospective basis. We are currently evaluating the impact of adopting the new accounting guidance on our consolidated financial statements.

In May 2026, the FASB issued ASU No. 2026-02, "Environmental Credits and Environmental Credit Obligations (Topic 818)." The ASU provides recognition, measurement, presentation, and disclosure requirements for entities that generate, purchase, or receive environmental credits or have a regulatory compliance obligation that may be settled with environmental credits. The guidance is effective for fiscal years beginning after December 15, 2027, with early adoption permitted, and shall be applied on a retrospective basis. We are currently evaluating the impact of adopting the new accounting guidance on our consolidated financial statements.

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Gift Cards

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

			June 30, 2026						December 31, 2025
Gift card liability			$	135,791					$	174,600

Revenue recognized from the redemption of gift cards that was included in unearned revenue at the beginning of the year was as follows:

			Three months ended June 30,												Six months ended June 30,
			2026						2025						2026						2025
Revenue recognized from gift card liability balance at the beginning of the year			$	15,710					$	14,629					$	71,946					$	67,598

Chipotle Rewards

Changes in our Chipotle Rewards liability included in unearned revenue on the condensed consolidated balance sheets were as follows:

			Three months ended June 30,												Six months ended June 30,
			2026						2025						2026						2025
Chipotle Rewards liability, beginning balance			$	67,340					$	58,389					$	63,799					$	56,806
Revenue deferred			60,243						45,690						110,367						87,258
Revenue recognized			(47,005)						(42,207)						(93,588)						(82,192)
Chipotle Rewards liability, ending balance			$	80,578					$	61,872					$	80,578					$	61,872

Deferred Licensing Revenue

The deferred licensing revenue included in unearned revenue on the condensed consolidated balance sheets was as follows:

			June 30, 2026						December 31, 2025
Deferred licensing revenue			$	2,426					$	1,976

Assets and Liabilities Measured at Fair Value on a Recurring Basis

The carrying value of our cash and cash equivalents, restricted cash, accounts receivable, and accounts payable approximate fair value because of their short-term nature.

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The following tables show our cash, cash equivalents, and debt investments by significant investment category:

			June 30, 2026
			Adjusted cost						Unrealized Gains						Unrealized Losses						Fair Value						Cash and Cash Equivalents						Current Investments						Long-term Investments
Cash			$	99,722					$	-					$	-					$	99,722					$	99,722					$	-					$	-
Level 1
Money market funds			128,477						-						-						128,477						128,477						-						-
U.S. Treasury securities			438,864						472						12						439,324						-						438,864						-
Subtotal			567,341						472						12						567,801						128,477						438,864						-
Level 3
Corporate debt security(1)			12,801						33						-						12,834						-						5,000						7,801
Notes receivable(2)			15,252						1,748						-						17,000						-						5,794						11,206
Subtotal			28,053						1,781						-						29,834						-						10,794						19,007
Total			$	695,116					$	2,253					$	12					$	697,357					$	228,199					$	449,658					$	19,007

			December 31, 2025
			Adjusted cost						Unrealized Gains						Unrealized Losses						Fair Value						Cash and Cash Equivalents						Current Investments						Long-term Investments
Cash			$	62,637					$	-					$	-					$	62,637					$	62,637					$	-					$	-
Level 1
Money market funds			208,871						-						-						208,871						208,871						-						-
Time deposits			79,037						-						-						79,037						79,037						-						-
U.S. Treasury securities			776,272						3,655						-						779,927						-						676,816						99,456
Corporate debt securities			13,446						20						-						13,466						-						13,446						-
Subtotal			1,077,626						3,675						-						1,081,301						287,908						690,262						99,456
Level 3
Corporate debt security(1)			14,401						33						-						14,434						-						3,800						10,601
Notes receivable(2)			13,946						583						-						14,529						-						4,529						10,000
Subtotal			28,347						616						-						28,963						-						8,329						20,601
Total			$	1,168,610					$	4,291					$	-					$	1,172,901					$	350,545					$	698,591					$	120,057

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

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

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Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

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

For the six months ended June 30, 2026 and 2025, nonrecurring fair value measurements resulting in asset impairments were not material.

The following table summarizes our equity investments:

			June 30, 2026						December 31, 2025
Equity method investments			$	28,524					$	28,216
Other investments			78,072						77,066
Total			$	106,596					$	105,282

Equity Method Investments

As of June 30, 2026 and December 31, 2025, we owned 6,487 shares of common stock of Tractor Beverages, Inc. (“Tractor”). As of June 30, 2026, our investment represents ownership of approximately 11.9% of Tractor, and we have invested total cash consideration of $14,872. As we are a significant customer of Tractor and maintain board representation, we are accounting for our investment under the equity method. As of June 30, 2026, there were no impairment charges associated with this equity method investment. The investment in common stock is included within other assets on the condensed consolidated balance sheets with a carrying value of $15,557 and $15,996 as of June 30, 2026 and December 31, 2025, respectively. Refer to Note 13, "Related Party Transactions" for related party disclosures.

Other Investments

As of June 30, 2026, we held 5,819 shares of the Series B Preferred Stock of Hyphen Technologies, Inc. ("Hyphen"). Hyphen is a privately held company, and as such, the preferred shares comprising our investment are illiquid and fair value is not readily determinable. As of June 30, 2026, we have recognized a cumulative gain of $6,782 related to our investment in Hyphen. The investment in Series B Preferred Stock is included within long-term investments on the condensed consolidated balance sheet with a carrying value of $31,782 as of June 30, 2026 and December 31, 2025, respectively.

As of June 30, 2026, we owned 766 shares of the Series C Preferred Stock of Nuro, Inc. (“Nuro”). Our investment represents a minority interest and we have determined that we do not have significant influence over Nuro. Nuro is a privately held company, and as such, the preferred shares comprising our investment are illiquid and fair value is not readily determinable. As of June 30, 2026, we have recognized a cumulative net loss of $200 related to our investment in Nuro due to observable transactions. The investment is included within long-term investments on the condensed consolidated balance sheets with a carrying value of $9,800 as of June 30, 2026 and December 31, 2025, respectively.

As of June 30, 2026, we held additional investments in other entities through the Cultivate Next Fund. These additional investments are included within long-term investments on the condensed consolidated balance sheets with a carrying value of $36,490 and $35,484 as of June 30, 2026 and December 31, 2025, respectively.

We have had a stock repurchase program in place since 2008. During the three months ended June 30, 2026 and 2025, we repurchased $630,725 and $435,894 of stock at an average price per share of $32.55 and $50.16, respectively. During the six months ended June 30, 2026 and 2025, we repurchased $1,331,572 and $989,580 of stock at an average price of $34.35 and $52.32, respectively. As of June 30, 2026, we had $1,679,097 authorized for repurchasing shares of our common stock. All shares of common stock that we repurchase are immediately retired and not held as treasury stock.

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Shares of common stock are netted and surrendered as payment for minimum statutory withholding obligations in connection with the vesting of outstanding stock awards. Shares surrendered by the participants in accordance with the applicable award agreements and plan are deemed repurchased by us but are not part of publicly announced share repurchase programs. During the three months ended June 30, 2026 and 2025, these shares had a total cost of $1,400 and $417, respectively. During the six months ended June 30, 2026 and 2025, these shares had a total cost of $49,397 and $33,319, respectively.

Pursuant to the 2022 Stock Incentive Plan, we grant stock options, stock-only stock appreciation rights ("SOSARs"), restricted stock units ("RSUs"), and performance stock units ("PSUs") to employees and non-employee directors. SOSARs and RSUs generally vest in two equal installments on the second and third anniversary of the grant date. PSUs are subject to service, market, and performance vesting conditions, and the quantity of shares that vest will range from 0% to 300% of the targeted number of shares.

In response to the departure of our former Chief Executive Officer in August 2024, we granted retention RSUs to key executives. These awards have various vesting terms, and vest over one, two or three years from the grant date. During the six months ended June 30, 2026 and 2025, expense recognized for the retention RSUs was $3,936 and $24,090, respectively. The impact of these employee retention awards are reflected in the tables below.

Total stock-based compensation expense was as follows:

			Three months ended June 30,												Six months ended June 30,
			2026						2025						2026						2025
Stock-based compensation			$	27,124					$	37,959					$	55,757					$	76,139
Stock-based compensation, net of income taxes			$	22,256					$	31,725					$	45,338					$	63,536
Total capitalized stock-based compensation included in leasehold improvements, property and equipment, net on the condensed consolidated balance sheets			$	606					$	410					$	1,239					$	989
Excess tax benefit/(shortfall) on stock-based compensation recognized in provision for income taxes on the condensed consolidated statements of income and comprehensive income			$	(406)					$	1,406					$	841					$	11,587

SOSARs

A summary of SOSAR award activity was as follows (in thousands, except per share data):

			Shares						Weighted-Average Exercise Price per Share						Weighted-Average Remaining Contractual Life (Years)						Aggregate Intrinsic Value
Outstanding, January 1, 2026			10,598						$	38.80					4.0						$	53,211
Granted			3,120						39.16
Exercised			(511)						20.25
Forfeited			(383)						50.41
Outstanding, June 30, 2026			12,824						39.28						4.1						27,667
Exercisable, June 30, 2026			6,789						32.74						2.5						27,469
Vested and expected to vest, June 30, 2026			12,266						38.99						4.0						27,636

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Non-Vested Stock Awards (RSUs)

A summary of RSU award activity was as follows (in thousands, except per share data):

			Shares						Weighted-Average Grant Date Fair Value per Share
Outstanding, January 1, 2026			3,643						$	49.64
Granted			2,018						38.95
Vested			(1,195)						42.47
Forfeited			(291)						49.59
Outstanding, June 30, 2026			4,175						46.53
Vested and expected to vest, June 30, 2026			3,649						46.72

Non-Vested Performance Stock Awards (PSUs)

A summary of PSU award activity was as follows (in thousands, except per share data):

			Shares						Weighted-Average Grant Date Fair Value per Share
Outstanding, January 1, 2026			2,088						$	46.89
Granted			687						42.04
Vested			(758)						32.14
Forfeited			(153)						53.88
Outstanding, June 30, 2026			1,864						50.52
Vested and expected to vest, June 30, 2026*			880						43.50

*The vested and expected to vest total above represents outstanding base PSUs, adjusted for expected payout amounts in line with current and future estimated performance levels.

The effective income tax rate for the three months ended June 30, 2026, was 24.3%, a decrease from an effective income tax rate of 24.5% for the three months ended June 30, 2025. The decrease was primarily driven by an increase in U.S. federal income tax credits, partially offset by a reduction in tax benefits related to option exercises and equity vesting.

The effective income tax rate for the six months ended June 30, 2026, was 24.8%, an increase from an effective income tax rate of 23.7% for the six months ended June 30, 2025. The increase was primarily driven by a reduction in tax benefits related to option exercises and equity vesting and other discrete income tax items, partially offset by an increase in U.S. federal income tax credits.

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

			Three months ended June 30,												Six months ended June 30,
			2026						2025						2026						2025
Cash paid for operating lease liabilities			$	143,385					$	127,994					$	284,675					$	254,660
Operating lease assets obtained in exchange for operating lease liabilities			$	235,161					$	193,832					$	467,191					$	339,165
Derecognition of operating lease assets due to terminations or impairment			$	1,783					$	467					$	3,231					$	820

The following table sets forth the computations of basic and diluted earnings per share (in thousands, except per share data):

			Three months ended June 30,												Six months ended June 30,
			2026						2025						2026						2025
Net income			$	403,547					$	436,127					$	706,371					$	822,726
Shares:
Weighted-average number of common shares outstanding (for basic calculation)			1,277,363						1,344,955						1,287,792						1,349,737
Dilutive stock awards			1,701						5,281						2,670						5,741
Weighted-average number of common shares outstanding (for diluted calculation)			1,279,064						1,350,236						1,290,462						1,355,478
Basic earnings per share			$	0.32					$	0.32					$	0.55					$	0.61
Diluted earnings per share			$	0.32					$	0.32					$	0.55					$	0.61

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

Purchase Obligations

We enter into various purchase obligations in the ordinary course of business, generally of a short-term nature. Those that are binding primarily relate to commitments for food purchases and supplies, capital projects, corporate assets, information technology, marketing initiatives and corporate sponsorships, and other miscellaneous items.

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Litigation

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

Shareholder Actions

As reported in previous SEC filings, Chipotle and several of its current and former executive officers are defendants in Michael Stradford v. Chipotle et. al., a purported shareholder class action in the U.S. District Court for the Central District of California, alleging that statements and omissions by Chipotle regarding portion sizes were materially false and misleading, resulting in the market price of Chipotle’s stock being artificially inflated during the claimed class period, as well as allegations regarding purportedly improper insider trading by the individual defendants in the case. The case seeks damages on behalf of the purported class in an unspecified amount, interest, an award of reasonable costs and attorneys’ fees, and other relief as determined to be appropriate by the court. On December 18, 2025, the court issued an order granting Chipotle’s motion to dismiss the first amended complaint, with leave to amend, and on January 20, 2026, plaintiffs filed a second amended complaint repeating substantially the same allegations as the original complaints. Chipotle has filed a motion to dismiss the second amended complaint.

Also as reported in previous SEC filings, two shareholder derivative actions were filed in the U.S. District Court for the Central District of California alleging that members of Chipotle’s Board of Directors ("Board") and former executive officers breached their fiduciary duties by making or allowing Chipotle to make the allegedly false and misleading statements that are the subject of the Stradford matter described above. The complaint further alleges that the defendants breached their fiduciary duties by causing Chipotle to repurchase stock at inflated prices and by engaging in improper insider sales of Chipotle stock. The shareholder derivative actions have been consolidated into a single lawsuit captioned In re Chipotle Mexican Grill, Inc. Stockholder Derivative Litigation, and seek damages in an unspecified amount as well as interest, an award of reasonable costs and attorneys’ fees, and other relief as determined to be appropriate by the court. The consolidated derivative action has been stayed pending further proceedings in the Stradford matter.

Chipotle intends to continue to defend these cases vigorously, but it is not possible at this time to reasonably estimate the outcome of or any potential liability from these cases.

Accrual for Estimated Liability

In relation to various legal matters, we had an accrued legal liability balance of $29,642 and $11,438 included within accrued liabilities on the condensed consolidated balance sheets as of June 30, 2026 and December 31, 2025, respectively.

As of June 30, 2026 and December 31, 2025, we had a $500,000 revolving credit facility with JPMorgan Chase Bank as administrative agent. Borrowings on the credit facility bear interest at a rate equal to the Secured Overnight Financing Rate plus 1.125%, which is subject to increase based on changes in our total leverage ratio as defined in the credit agreement. We are also obligated to pay a commitment fee of 0.115% per year for unused amounts under the credit facility, which also may increase based on changes in our total leverage ratio. We are subject to certain covenants defined in the credit agreement, which include maintaining a total leverage ratio of less than 3.0x, maintaining a minimum consolidated fixed charge coverage ratio of 1.5x, and limiting us from incurring additional indebtedness in certain circumstances. We had no outstanding borrowings under the credit facility and were in compliance with all covenants as of June 30, 2026 and December 31, 2025, respectively.

As of June 30, 2026, we owned approximately 11.9% of the common stock outstanding of Tractor. As we are a significant customer of Tractor and maintain board representation, we are accounting for our investment under the equity method. Accordingly, we have identified Tractor as a related party. We purchase product from the supplier for sale to guests in our restaurants. During the three months ended June 30, 2026 and 2025, purchases from the supplier were $15,515 and $13,568, respectively. During the six months ended June 30, 2026 and 2025, purchases from the supplier were $28,889 and $24,982, respectively.

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We have a single reportable segment, the U.S. segment, that is comprised of our operations in the United States. Segment information is prepared and managed on the same basis as described in our Annual Report on Form 10-K for the year ended December 31, 2025. Our Chief Executive Officer, who is our Chief Operating Decision Maker ("CODM"), does not evaluate asset information by reportable segment as asset information is provided to the CODM on a consolidated basis. Therefore, we do not disclose total assets by our reportable segment.

The following table presents selected financial information with respect to our single reportable segment:

			Three months ended June 30,												Six months ended June 30,
			2026						2025						2026						2025
Food and beverage revenue			$	3,252,958					$	2,984,846					$	6,258,048					$	5,791,920
Delivery service revenue			15,696						15,584						31,141						30,954
U.S. segment total revenue			3,268,654						3,000,430						6,289,189						5,822,874
Less:
Food, beverage and packaging			963,680						862,005						1,851,738						1,680,550
Labor			818,024						741,232						1,607,109						1,446,528
Occupancy			168,589						149,967						333,137						295,923
Marketing			99,324						83,044						203,928						168,931
Other operating costs, excluding marketing			389,384						336,679						755,599						658,003
Depreciation and amortization			87,210						82,684						173,161						162,175
Other segment items(1)			25,005						16,637						44,900						29,491
U.S. segment income from operations			717,438						728,182						1,319,617						1,381,273
Reconciliation:
Corporate and other unallocated expenses(2)			197,980						172,726						405,324						348,333
Other income from operations(3)			6,137						3,601						8,365						5,367
Interest and other income, net			7,677						18,355						16,419						40,608
Total consolidated income before income taxes			$	533,272					$	577,412					$	939,077					$	1,078,915

(1)Other segment items consist of pre-opening costs, impairment, closure costs, and asset disposals related to the U.S. segment.

(2)Corporate and other unallocated expenses represent corporate overhead expenses that have not been allocated to our reportable segment, including general and administrative expenses.

(3)Amounts reflect the net income from operations related to our operations in Canada, Europe, and international partner-operated restaurants.

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