XML 21 R9.htm IDEA: XBRL DOCUMENT v3.21.2
Revenue Recognition
 6 Months Ended
Jun. 30, 2021
Revenue Recognition [Abstract]  
Revenue Recognition 3. Revenue RecognitionGift CardsWe sell gift cards, which do not have expiration dates and we do not deduct non-usage fees from outstanding gift card balances. Gift card balances are initially recorded as unearned revenue. We recognize revenue from gift cards when the gift card is redeemed by the customer. Historically, the majority of gift cards are redeemed within one year. In addition, a portion of gift cards are not expected to be redeemed and will be recognized as breakage over time in proportion to gift card redemptions (“gift card breakage rate”). The gift card breakage rate is based on company and program specific information, including historical redemption patterns, and expected remittance to government agencies under unclaimed property laws, if applicable. We evaluate our gift card breakage rate estimate annually, or more frequently as circumstances warrant, and apply that rate to gift card redemptions. Gift card liability balances are typically highest at the end of each calendar year following increased gift card sales during the holiday season; accordingly, revenue recognized from gift card liability balances is highest in the first quarter of each calendar year. The gift card liability included in unearned revenue on the condensed consolidated balance sheets was as follows: June 30, December 31, 2021 2020Gift card liability$ 87,964 $ 105,413Revenue 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 Six months ended June 30, June 30, 2021 2020 2021 2020Revenue recognized from gift card liability balance at the beginning of the year$ 8,628 $ 4,064 $ 39,494 $ 32,134Chipotle RewardsWe have a national loyalty program called Chipotle Rewards. Eligible customers who enroll in the program generally earn points for every dollar spent. After accumulating the required number of points, the customer may select a reward. We may also periodically offer promotions, which typically provide the customer with the opportunity to earn bonus points or other rewards. Earned rewards generally expire one to two months after they are issued, and points generally expire if an account is inactive for a period of six months. In June 2021, we enhanced Chipotle Rewards and introduced a new redemption feature we call the “Rewards Exchange” that provides loyalty members multiple redemption options. Previously, Chipotle Rewards points were automatically redeemed for a free entrée when the customer obtained the required number of points. The change in the Chipotle Rewards program did not have a material impact on our condensed consolidated financial statements.We defer revenue associated with the estimated selling price of points or rewards earned by customers as each point or reward is earned, net of points or rewards we do not expect to be redeemed. The estimated selling price of each point or reward earned is based on the estimated value of the product for which the point or reward is expected to be redeemed. Our estimate of points and rewards we expect to be redeemed (“rewards breakage rate”) is based on historical and other company specific data. The change in the Chipotle Rewards program in June 2021 did not materially impact our estimate of the stand-alone selling price or breakage rate of each point. The costs associated with rewards redeemed are primarily included in food, beverage, and packaging expense on our condensed consolidated statements of income and comprehensive income. We recognize loyalty revenue within food and beverage revenue on the condensed consolidated statements of income and comprehensive income when a customer redeems an earned reward. Deferred revenue associated with Chipotle Rewards is included in unearned revenue on our condensed consolidated balance sheets. Changes in our Chipotle Rewards liability included in unearned revenue on the condensed consolidated balance sheets were as follows: Three months ended Six months ended June 30, June 30, 2021 2020 2021 2020Chipotle Rewards liability, beginning balance$ 23,925 $ 13,484 $ 22,337 $ 10,584Revenue deferred 26,509 25,226 52,370 40,443Revenue recognized (25,382) (18,698) (49,655) (31,015)Chipotle Rewards liability, ending balance$ 25,052 $ 20,012 $ 25,052 $ 20,012