Chipotle Mexican Grill, Inc.

Human capital and workforce · Talent acquisition and retention

The aggressive pace at which we open new restaurants can make it increasingly difficult to recruit and hire sufficient numbers of qualified employees to manage and work in our restaurants. We have experienced and may continue to experience challenges in hiring and retaining restaurant employees and in maintaining full restaurant staffing in various locations, which has resulted in longer wait times for guest orders and decreased employee and guest satisfaction.

Human capital and workforce · Key personnel dependence and succession

Our ability to continue to grow our business depends substantially on the contributions and abilities of our executive leadership team and other key management personnel. A failure to maintain appropriate organizational capability to support our strategic initiatives or a failure to effectively manage our leadership succession could jeopardize our ability to meet our business performance expectations and growth targets.

Supply chain and procurement · Raw material availability and cost volatility

The prices for some of our ingredients, such as beef, avocados and other produce fluctuate due to factors beyond our control, such as limited sources, seasonal shifts, climate conditions, inclement weather, natural disasters, inflation, military and geopolitical conflicts and industry demand.

Core operations · Operational disruption and business continuity

Our business is dependent on frequent and consistent deliveries of ingredients that comply with our Food with Integrity specifications. We may experience shortages, delays or interruptions in the supply of ingredients and other supplies to our restaurants due to higher or more lucrative demand from other sources; inclement weather or natural disasters; animal disease outbreaks (such as avian flu); social or labor unrest.

Supply chain and procurement · Raw material availability and cost volatility

Supply chain risk could increase our costs and limit the availability of ingredients and supplies that are critical to our restaurant operations. The markets for some of our ingredients, such as beef, avocado and other produce, are particularly volatile due to factors beyond our control such as limited sources, seasonal shifts, climate conditions, recent inflationary trends, military and geopolitical conflicts and industry demand.

Reputation and brand · Esg environmental social governance performance

We are subject to evolving disclosure obligations promulgated by governmental and regulatory organizations relating to sustainability factors. We previously announced that we had set science-based targets validated by the Science Based Targets Initiative to reduce absolute Scope 1, 2 and 3 greenhouse gas emissions 50% by 2030 from a 2019 base year, and achievement of this goal is subject to risks and uncertainties, many of which are outside of our control.

Reputation and brand · Product recalls and public safety

Food safety risks cannot be completely eliminated. Any report, legitimate or rumored, of food-borne illness caused by pathogens such as E. coli, hepatitis A, norovirus, listeria, Campylobacter, Clostridium perfringens or salmonella, or other food safety issues, such as food tampering or contamination, at one of our restaurants could adversely affect our reputation and have a negative impact on our sales.

Stakeholder relations · Investor relations and market confidence

We believe the market price of our common stock generally has traded at a higher price-earnings ratio than stocks of most of our peer companies as well as the overall market. The trading market for our common stock has been volatile at times, including because of adverse publicity events. If we fail to meet market expectations for our operating results in the future, any resulting decline in the price of our common stock could be significant.

Capital structure and performance · Financial performance volatility

Our quarterly financial results may fluctuate significantly and could fail to meet investors' expectations for various reasons, including negative publicity about the safety of our food, employment-related issues, fluctuations in supply costs, labor availability and wages, timing of new restaurant openings, impact of inclement weather and natural disasters, and variations in general economic conditions.

Industry regulation · Safety and environmental regulations

Our business is subject to extensive federal, state, local and international laws and regulations relating to preparation, sale and labeling of food, employment practices, privacy and data security, health and sanitation, building and zoning requirements, environmental matters, and public company compliance. Compliance with these laws and regulations can be costly and any failure to comply could result in revocation of required licenses, administrative enforcement actions, fines and civil and criminal liability.

Data and privacy · Data protection and privacy laws

Complex local, state, federal and international laws and regulations apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data. These privacy and data protection laws and regulations are quickly evolving, with new or modified laws and regulations proposed and implemented frequently.

Legal and litigation · Litigation and legal proceedings

We have been and will continue to be subject to litigation and other legal proceedings that may adversely affect our business, including claims brought by employees, guests, government agencies, suppliers, distributors, shareholders, job applicants or others. These proceedings may involve allegations of illegal, unfair or inconsistent employment practices, food safety issues, data security or privacy breaches, discrimination against guests or job applicants, and other concerns.

Legal and litigation · Employment and labor law compliance

We have had lawsuits filed against us alleging violations of federal and state laws regarding employee wages and payment of overtime, meal and rest breaks, pay transparency to applicants and related practices. We incur legal costs to defend these types of cases, and we could incur losses from these and similar cases, and the amount of such costs and losses could be material.

Cybersecurity and data protection · Data breaches and cyber attacks

Many of our information technology systems contain personal, financial or other information that is entrusted to us by our guests, business partners and employees. Similar to many other restaurant companies, we have in the past experienced, and we expect to continue to experience, cyber-attacks, including phishing, and other attempts to breach, or gain unauthorized access to, our systems and databases.

Technology infrastructure · Technology systems and infrastructure failure

We are heavily dependent on information technology systems for administrative functions, point-of-sale and payment processing in our restaurants, digital ordering and delivery business, and various other processes and transactions. If any of our critical IT systems were to become unreliable, unavailable, compromised or otherwise fail, and we were unable to recover in a timely manner, we could experience an interruption in our operations that could have a material adverse impact on our profitability.

Cybersecurity and data protection · Data breaches and cyber attacks

We could experience a cybersecurity or privacy incident, which generally refers to any intentional attack or an unintentional event that results in unauthorized access to personal information or systems to disrupt operations, corrupt data or steal confidential information or intellectual property, or a ransomware attack. Any such incident that compromises the information of our guests or employees or disrupts our business operations could result in widespread negative publicity, damage to our reputation, a loss of guests, disruption of our business and legal liabilities.

Economic and market conditions · Consumer spending and confidence

Restaurant dining generally is dependent upon consumer discretionary spending, which may be affected by general economic conditions that are beyond our control. Increasing or prolonged high inflation, international, domestic and regional economic conditions, consumer income levels, financial market volatility, a slow or stagnant pace of economic growth, mass layoffs, rising energy costs, rising interest rates may have a negative effect on consumer confidence and discretionary spending.

Natural and catastrophic events · Climate change and environmental impact

There is growing concern that climate change and global warming has caused and may continue to cause more severe, volatile weather or extended droughts, which could increase the frequency and duration of weather impacts on our operations. Adverse weather conditions have in the past and may again impact guest traffic at our restaurants and, in more severe cases such as hurricanes, tornadoes, wildfires or other natural disasters, cause temporary restaurant closures.

Innovation and product development · Time to market and commercialization risks

Our growth depends on our ability to open new restaurants at an aggressive rate and operate them profitably as soon as possible. The cost of opening new restaurants has continued to increase due to construction labor inflation and increased costs of materials and equipment. It can take up to 36 months to ramp up the sales and profitability of a new restaurant.

Market position and competition · Competitive pressure and market share loss

The restaurant industry is highly competitive with respect to taste preferences, price, food quality and selection, customer service, brand reputation, digital engagement, advertising and promotional initiatives, and the location, attractiveness and maintenance of restaurants. We also compete with non-traditional market participants, such as convenience meals, meal kit delivery services, and ghost or dark kitchens.