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Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________

FORM 10-Q

______________________________

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

or

¨TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For 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 of incorporation or organization) | (IRS Employer Identification No.)
610 Newport Center Drive, Suite 1100 Newport Beach, CA | 92660
(Address of Principal Executive Offices) | (Zip Code)

Registrant’s telephone number, including area code: (949) 524-4000

______________________________

Securities registered pursuant to Section 12(b) of the Act:

Title of each class | Trading Symbol(s) | Name of each exchange on which registered
Common stock, par value $0.01 per share | CMG | New York Stock Exchange

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes  No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). x Yes ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act (check one):

 Large accelerated filer |  Accelerated filer |  Non-accelerated filer |  Smaller reporting company |  Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes x No

As of October 24, 2022, there were 27,721,112 shares of the registrant’s common stock, par value of $0.01 per share outstanding.

Table of Contents

TABLE OF CONTENTS

| PART I |
Item 1. | Financial Statements (Unaudited) | 1
| Condensed Consolidated Balance Sheets | 1
| Condensed Consolidated Statements of Income and Comprehensive Income | 2
| Condensed Consolidated Statements of Shareholders’ Equity | 3
| Condensed Consolidated Statements of Cash Flows | 4
| Notes to Condensed Consolidated Financial Statements | 5
| Note 1 - Basis of Presentation and Update to Accounting Policies | 5
| Note 2 - Recently Issued Accounting Standards | 5
| Note 3 - Revenue Recognition | 5
| Note 4 - Fair Value of Financial Instruments | 6
| Note 5 - Shareholders' Equity | 8
| Note 6 - Stock-Based Compensation | 9
| Note 7 - Income Taxes | 9
| Note 8 - Leases | 10
| Note 9 - Earnings Per Share | 10
| Note 10 - Commitments and Contingencies | 11
| Note 11 - Debt | 11
| Note 12 - Related Party Transactions | 11
Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 12
Item 3. | Quantitative and Qualitative Disclosures About Market Risk | 18
Item 4. | Controls and Procedures | 18
| PART II |
Item 1. | Legal Proceedings | 19
Item 1A. | Risk Factors | 19
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds | 19
Item 3 | Defaults upon Senior Securities | 19
Item 4 | Mine Safety Disclosures | 19
Item 5 | Other Information | 20
Item 6. | Exhibits | 21
| Signatures | 22

Table of Contents

PART I

ITEM 1. FINANCIAL STATEMENTS

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

| September 30, |  | December 31,
| 2022 |  | 2021
| (unaudited) |  |
Assets |  |  |  |  |
Current assets: |  |  |  |  |
Cash and cash equivalents | $ | 366,623 |  | $ | 815,374
Accounts receivable, net |  | 71,276 |  |  | 99,599
Inventory |  | 33,752 |  |  | 32,826
Prepaid expenses and other current assets |  | 76,439 |  |  | 78,756
Income tax receivable |  | 112,064 |  |  | 94,064
Investments |  | 417,278 |  |  | 260,945
Total current assets |  | 1,077,432 |  |  | 1,381,564
Leasehold improvements, property and equipment, net |  | 1,871,623 |  |  | 1,769,278
Long-term investments |  | 442,620 |  |  | 274,311
Restricted cash |  | 30,974 |  |  | 30,856
Operating lease assets |  | 3,309,051 |  |  | 3,118,294
Other assets |  | 63,798 |  |  | 56,716
Goodwill |  | 21,939 |  |  | 21,939
Total assets | $ | 6,817,437 |  | $ | 6,652,958
Liabilities and shareholders' equity |  |  |  |  |
Current liabilities: |  |  |  |  |
Accounts payable | $ | 167,842 |  | $ | 163,161
Accrued payroll and benefits |  | 128,495 |  |  | 162,405
Accrued liabilities |  | 156,455 |  |  | 173,052
Unearned revenue |  | 133,118 |  |  | 156,351
Current operating lease liabilities |  | 231,947 |  |  | 218,713
Total current liabilities |  | 817,857 |  |  | 873,682
Commitments and contingencies (Note 10) |  |  |  |  |
Long-term operating lease liabilities |  | 3,497,221 |  |  | 3,301,601
Deferred income tax liabilities |  | 133,255 |  |  | 141,765
Other liabilities |  | 41,723 |  |  | 38,536
Total liabilities |  | 4,490,056 |  |  | 4,355,584
Shareholders' equity: |  |  |  |  |
Preferred stock, $0.01 par value, 600,000 shares authorized, no shares issued as of September 30, 2022 and December 31, 2021, respectively |  | - |  |  | -
Common stock, $0.01 par value, 230,000 shares authorized, 37,306 and 37,132 shares issued as of September 30, 2022 and December 31, 2021, respectively |  | 373 |  |  | 371
Additional paid-in capital |  | 1,807,938 |  |  | 1,729,312
Treasury stock, at cost, 9,555 and 9,052 common shares as of September 30, 2022 and December 31, 2021, respectively |  | (4,076,555) |  |  | (3,356,102)
Accumulated other comprehensive loss |  | (8,896) |  |  | (5,354)
Retained earnings |  | 4,604,521 |  |  | 3,929,147
Total shareholders' equity |  | 2,327,381 |  |  | 2,297,374
Total liabilities and shareholders' equity | $ | 6,817,437 |  | $ | 6,652,958

See accompanying notes to condensed consolidated financial statements.

1

Table of Contents

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME

(in thousands, except per share data)

(unaudited)

| Three months ended |  | Nine months ended
| September 30, |  | September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Food and beverage revenue | $ | 2,202,336 |  | $ | 1,932,409 |  | $ | 6,394,094 |  | $ | 5,517,764
Delivery service revenue |  | 17,839 |  |  | 19,906 |  |  | 59,959 |  |  | 68,664
Total revenue |  | 2,220,175 |  |  | 1,952,315 |  |  | 6,454,053 |  |  | 5,586,428
Restaurant operating costs (exclusive of depreciation and amortization shown separately below): |  |  |  |  |  |  |  |  |  |  |
Food, beverage and packaging |  | 662,540 |  |  | 591,332 |  |  | 1,963,394 |  |  | 1,688,481
Labor |  | 557,178 |  |  | 502,757 |  |  | 1,639,044 |  |  | 1,400,932
Occupancy |  | 115,826 |  |  | 104,223 |  |  | 341,777 |  |  | 309,422
Other operating costs |  | 322,085 |  |  | 294,650 |  |  | 970,261 |  |  | 876,602
General and administrative expenses |  | 140,896 |  |  | 145,930 |  |  | 429,118 |  |  | 447,077
Depreciation and amortization |  | 71,416 |  |  | 63,191 |  |  | 212,814 |  |  | 188,395
Pre-opening costs |  | 7,618 |  |  | 5,894 |  |  | 18,219 |  |  | 14,280
Impairment, closure costs, and asset disposals |  | 6,363 |  |  | 4,658 |  |  | 15,354 |  |  | 14,592
Total operating expenses |  | 1,883,922 |  |  | 1,712,635 |  |  | 5,589,981 |  |  | 4,939,781
Income from operations |  | 336,253 |  |  | 239,680 |  |  | 864,072 |  |  | 646,647
Interest and other income (expense), net |  | 3,712 |  |  | (126) |  |  | 14,071 |  |  | (1,443)
Income before income taxes |  | 339,965 |  |  | 239,554 |  |  | 878,143 |  |  | 645,204
Provision for income taxes |  | (82,827) |  |  | (35,120) |  |  | (202,769) |  |  | (125,695)
Net income | $ | 257,138 |  | $ | 204,434 |  | $ | 675,374 |  | $ | 519,509
Earnings per share: |  |  |  |  |  |  |  |  |  |  |
Basic | $ | 9.26 |  | $ | 7.26 |  | $ | 24.20 |  | $ | 18.46
Diluted | $ | 9.20 |  | $ | 7.18 |  | $ | 24.02 |  | $ | 18.22
Weighted-average common shares outstanding: |  |  |  |  |  |  |  |  |  |  |
Basic |  | 27,773 |  |  | 28,150 |  |  | 27,907 |  |  | 28,137
Diluted |  | 27,956 |  |  | 28,475 |  |  | 28,116 |  |  | 28,520
Other comprehensive income (loss), net of income taxes: |  |  |  |  |  |  |  |  |  |  |
Foreign currency translation adjustments | $ | (2,257) |  | $ | (956) |  | $ | (3,542) |  | $ | (914)
Comprehensive income | $ | 254,881 |  | $ | 203,478 |  | $ | 671,832 |  | $ | 518,595

See accompanying notes to condensed consolidated financial statements.

2

Table of Contents

CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(in thousands)

(unaudited)

| Common Stock |  |  |  | Treasury Stock |  |  |  |  |  |  |  |
| Shares |  | Amount |  | Additional ‎Paid-In ‎Capital |  | Shares |  | Amount |  | Retained ‎Earnings |  | Accumulated Other Comprehensive Income (Loss) |  | Total
Balance, December 31, 2020 | 36,704 |  | $ | 367 |  | $ | 1,549,909 |  | 8,703 |  | $ | (2,802,075) |  | $ | 3,276,163 |  | $ | (4,229) |  | $ | 2,020,135
Stock-based compensation | - |  |  | - |  |  | 55,960 |  | - |  |  | - |  |  | - |  |  | - |  |  | 55,960
Stock plan transactions and other | 232 |  |  | 2 |  |  | 632 |  | - |  |  | - |  |  | - |  |  | - |  |  | 634
Acquisition of treasury stock | - |  |  | - |  |  | - |  | 74 |  |  | (106,036) |  |  | - |  |  | - |  |  | (106,036)
Net income | - |  |  | - |  |  | - |  | - |  |  | - |  |  | 127,101 |  |  | - |  |  | 127,101
Other comprehensive income (loss), net of income tax | - |  |  | - |  |  | - |  | - |  |  | - |  |  | - |  |  | (263) |  |  | (263)
Balance, March 31, 2021 | 36,936 |  | $ | 369 |  | $ | 1,606,501 |  | 8,777 |  | $ | (2,908,111) |  | $ | 3,403,264 |  | $ | (4,492) |  | $ | 2,097,531
Stock-based compensation | - |  |  | - |  |  | 47,670 |  | - |  |  | - |  |  | - |  |  | - |  |  | 47,670
Stock plan transactions and other | 52 |  |  | 1 |  |  | 24 |  | - |  |  | - |  |  | - |  |  | - |  |  | 25
Acquisition of treasury stock | - |  |  | - |  |  | - |  | 113 |  |  | (159,347) |  |  | - |  |  | - |  |  | (159,347)
Net income | - |  |  | - |  |  | - |  | - |  |  | - |  |  | 187,974 |  |  | - |  |  | 187,974
Other comprehensive income (loss), net of income tax | - |  |  | - |  |  | - |  | - |  |  | - |  |  | - |  |  | 305 |  |  | 305
Balance, June 30, 2021 | 36,988 |  | $ | 370 |  | $ | 1,654,195 |  | 8,890 |  | $ | (3,067,458) |  | $ | 3,591,238 |  | $ | (4,187) |  | $ | 2,174,158
Stock-based compensation | - |  |  | - |  |  | 36,693 |  | - |  |  | - |  |  | - |  |  | - |  |  | 36,693
Stock plan transactions and other | 114 |  |  | 1 |  |  | (82) |  | - |  |  | - |  |  | - |  |  | - |  |  | (81)
Acquisition of treasury stock | - |  |  | - |  |  | - |  | 57 |  |  | (103,340) |  |  | - |  |  | - |  |  | (103,340)
Net income | - |  |  | - |  |  | - |  | - |  |  | - |  |  | 204,434 |  |  | - |  |  | 204,434
Other comprehensive income (loss), net of income tax | - |  |  | - |  |  | - |  | - |  |  | - |  |  | - |  |  | (956) |  |  | (956)
Balance, September 30, 2021 | 37,102 |  | $ | 371 |  | $ | 1,690,806 |  | 8,947 |  | $ | (3,170,798) |  | $ | 3,795,672 |  | $ | (5,143) |  | $ | 2,310,908
Balance, December 31, 2021 | 37,132 |  | $ | 371 |  | $ | 1,729,312 |  | 9,052 |  | $ | (3,356,102) |  | $ | 3,929,147 |  | $ | (5,354) |  | $ | 2,297,374
Stock-based compensation | - |  |  | - |  |  | 24,077 |  | - |  |  | - |  |  | - |  |  | - |  |  | 24,077
Stock plan transactions and other | 134 |  |  | 2 |  |  | (61) |  | - |  |  | - |  |  | - |  |  | - |  |  | (59)
Acquisition of treasury stock | - |  |  | - |  |  | - |  | 230 |  |  | (345,921) |  |  | - |  |  | - |  |  | (345,921)
Net income | - |  |  | - |  |  | - |  | - |  |  | - |  |  | 158,294 |  |  | - |  |  | 158,294
Other comprehensive income (loss), net of income tax | - |  |  | - |  |  | - |  | - |  |  | - |  |  | - |  |  | 195 |  |  | 195
Balance, March 31, 2022 | 37,266 |  | $ | 373 |  | $ | 1,753,328 |  | 9,282 |  | $ | (3,702,023) |  | $ | 4,087,441 |  | $ | (5,159) |  | $ | 2,133,960
Stock-based compensation | - |  |  | - |  |  | 29,142 |  | - |  |  | - |  |  | - |  |  | - |  |  | 29,142
Stock plan transactions and other | 18 |  |  | - |  |  | (167) |  | - |  |  | - |  |  | - |  |  | - |  |  | (167)
Acquisition of treasury stock | - |  |  | - |  |  | - |  | 198 |  |  | (267,198) |  |  | - |  |  | - |  |  | (267,198)
Net income | - |  |  | - |  |  | - |  | - |  |  | - |  |  | 259,942 |  |  | - |  |  | 259,942
Other comprehensive income (loss), net of income tax | - |  |  | - |  |  | - |  | - |  |  | - |  |  | - |  |  | (1,480) |  |  | (1,480)
Balance, June 30, 2022 | 37,284 |  | $ | 373 |  | $ | 1,782,303 |  | 9,480 |  | $ | (3,969,221) |  | $ | 4,347,383 |  | $ | (6,639) |  | $ | 2,154,199
Stock-based compensation | - |  |  | - |  |  | 25,587 |  | - |  |  | - |  |  | - |  |  | - |  |  | 25,587
Stock plan transactions and other | 22 |  |  | - |  |  | 48 |  | - |  |  | - |  |  | - |  |  | - |  |  | 48
Acquisition of treasury stock | - |  |  | - |  |  | - |  | 75 |  |  | (107,334) |  |  | - |  |  | - |  |  | (107,334)
Net income | - |  |  | - |  |  | - |  | - |  |  | - |  |  | 257,138 |  |  | - |  |  | 257,138
Other comprehensive income (loss), net of income tax | - |  |  | - |  |  | - |  | - |  |  | - |  |  | - |  |  | (2,257) |  |  | (2,257)
Balance, September 30, 2022 | 37,306 |  | $ | 373 |  | $ | 1,807,938 |  | 9,555 |  | $ | (4,076,555) |  | $ | 4,604,521 |  | $ | (8,896) |  | $ | 2,327,381

See accompanying notes to condensed consolidated financial statements.

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CHIPOTLE MEXICAN GRILL, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

(unaudited)

| Nine months ended
| September 30,
| 2022 |  | 2021
Operating activities |  |  |  |  |
Net income | $ | 675,374 |  | $ | 519,509
Adjustments to reconcile net income to net cash provided by operating activities: |  |  |  |  |
Depreciation and amortization |  | 212,814 |  |  | 188,395
Deferred income tax provision |  | (8,567) |  |  | (1,024)
Impairment, closure costs, and asset disposals |  | 15,127 |  |  | 12,483
Provision for credit losses |  | (969) |  |  | 733
Stock-based compensation expense |  | 77,371 |  |  | 138,741
Other |  | (13,045) |  |  | 2,534
Changes in operating assets and liabilities: |  |  |  |  |
Accounts receivable |  | 22,891 |  |  | 21,882
Inventory |  | (1,056) |  |  | (1,996)
Prepaid expenses and other current assets |  | (3,169) |  |  | (19,343)
Operating lease assets |  | 171,464 |  |  | 151,628
Other assets |  | (1,537) |  |  | 1,901
Accounts payable |  | 10,774 |  |  | 28,712
Accrued payroll and benefits |  | (32,861) |  |  | (13,193)
Accrued liabilities |  | (16,562) |  |  | (7,407)
Unearned revenue |  | (18,141) |  |  | (2,978)
Income tax payable/receivable |  | (18,070) |  |  | (35,850)
Operating lease liabilities |  | (153,200) |  |  | (141,540)
Other long-term liabilities |  | 2,968 |  |  | 474
Net cash provided by operating activities |  | 921,606 |  |  | 843,661
Investing activities |  |  |  |  |
Purchases of leasehold improvements, property and equipment |  | (335,518) |  |  | (320,569)
Purchases of investments |  | (513,813) |  |  | (288,899)
Maturities of investments |  | 202,997 |  |  | 243,441
Proceeds from sale of equipment |  | - |  |  | 2,885
Net cash used in investing activities |  | (646,334) |  |  | (363,142)
Financing activities |  |  |  |  |
Acquisition of treasury stock |  | (629,775) |  |  | (300,733)
Tax withholding on stock-based compensation awards |  | (92,374) |  |  | (63,492)
Other financing activities |  | (586) |  |  | (2,342)
Net cash used in financing activities |  | (722,735) |  |  | (366,567)
Effect of exchange rate changes on cash, cash equivalents and restricted cash |  | (1,170) |  |  | (788)
Net change in cash, cash equivalents, and restricted cash |  | (448,633) |  |  | 113,164
Cash, cash equivalents, and restricted cash at beginning of period |  | 846,230 |  |  | 635,836
Cash, cash equivalents, and restricted cash at end of period | $ | 397,597 |  | $ | 749,000
Supplemental disclosures of cash flow information |  |  |  |  |
Income taxes paid | $ | 227,452 |  | $ | 163,069
Purchases of leasehold improvements, property, and equipment accrued in accounts payable and accrued liabilities | $ | 58,127 |  | $ | 65,311
Acquisition of treasury stock accrued in accounts payable and accrued liabilities | $ | 5,999 |  | $ | 4,498

See accompanying notes to condensed consolidated financial statements.

‎

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CHIPOTLE MEXICAN GRILL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(dollar and share amounts in thousands, unless otherwise specified)

(unaudited)

1. Basis of Presentation and Update to Accounting Policies

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 September 30, 2022, we operated 3,090 restaurants including 3,036 Chipotle restaurants within the United States, 50 international Chipotle restaurants, and four Pizzeria Locale restaurants. Pizzeria Locale is a fast casual pizza concept that is owned and operated by a consolidated entity that we are an investor in. We manage our U.S. operations based on eight regions and have aggregated our operations to one reportable segment.

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. 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 included in our annual report on Form 10-K for the year ended December 31, 2021.

2. Recently Issued Accounting Standards

In March 2020, the FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” The pronouncement provides temporary optional expedients and exceptions to the current guidance on contract modifications and hedge accounting to ease the financial reporting burden related to the expected market transition from the London Interbank Offered Rate ("LIBOR") and other interbank offered rates to alternative reference rates. The guidance was effective upon issuance and generally can be applied to applicable contract modifications through December 31, 2022. We are evaluating the impact of the transition from LIBOR to alternative reference rates but do not expect a significant impact to our consolidated financial statements.

We reviewed all other recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a significant impact to the condensed consolidated financial statements.

3. Revenue Rec ognition

Gift Cards

We 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:

| September 30, |  | December 31,
| 2022 |  | 2021
Gift card liability | $ | 101,307 |  | $ | 130,779

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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 |  | Nine months ended
| September 30, |  | September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Revenue recognized from gift card liability balance at the beginning of the year | $ | 6,311 |  | $ | 5,295 |  | $ | 54,780 |  | $ | 44,789

Chipotle Rewards

We have a loyalty program called Chipotle Rewards. Eligible customers who enroll in the program generally earn points for every dollar spent. 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 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 month to two months after they are issued, and points generally expire if an account is inactive for a period of six months.

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 reward is expected to be redeemed. Our estimate of points and rewards we expect to be redeemed is based on historical and other company specific data. The costs associated with rewards redeemed are primarily included in food, beverage, and packaging on our condensed consolidated statements of income and comprehensive income. We evaluate Chipotle Rewards point breakage annually, or more frequently as circumstances warrant.

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 |  | Nine months ended
| September 30, |  | September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Chipotle Rewards liability, beginning balance | $ | 29,381 |  | $ | 25,052 |  | $ | 25,572 |  | $ | 22,337
Revenue deferred |  | 32,621 |  |  | 26,590 |  |  | 92,495 |  |  | 78,960
Revenue recognized |  | (30,191) |  |  | (17,388) |  |  | (86,256) |  |  | (67,043)
Chipotle Rewards liability, ending balance | $ | 31,811 |  | $ | 34,254 |  | $ | 31,811 |  | $ | 34,254

4. Fair Value of Financial Instruments

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.

Our investments are comprised of U.S. Treasury securities, a corporate debt security, a convertible note receivable, an equity method investment, and non-marketable equity securities. We also maintain a deferred compensation plan with related assets held in a rabbi trust. We designate the appropriate classification of our investments at the time of purchase based upon the intended holding period.

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Held-to-Maturity Investments

U.S. Treasury Securities

As of September 30, 2022, we held $808,183 of U.S. Treasury securities with maturities of up to 25 months, of which $417,278 mature within one year. As of December 31, 2021, we held $501,288 of U.S. Treasury securities with maturities of up to 24 months, of which $260,945 mature within one year. Our investments in U.S. Treasury securities are held at amortized cost. The fair value of our held-to-maturity U.S. Treasury security investments is measured using Level 1 inputs (quoted prices for identical assets in active markets). As of September 30, 2022 and December 31, 2021, the fair value of our securities were $792,285 and $500,172, respectively. We recognize a reserve for expected credit losses when lifetime credit losses are expected by management. As of September 30, 2022, management has concluded there is no risk of non-payment with respect to our U.S. Treasury security investments.

Corporate Debt Security

On September 30, 2021, we acquired a promissory note issued by a supplier in exchange for $18,000. The promissory note has a principal balance of $18,000 and bears interest at a rate equal to the 3-month U.S. dollar LIBOR plus a fixed interest spread. Accrued interest is paid quarterly in arrears and principal is payable in accordance with an amortization schedule beginning on December 31, 2022. The promissory note matures on September 30, 2028. Our investment in the corporate debt security is held at amortized cost. We maintained a reserve for expected credit losses associated with the investment of $216 and $423 as of September 30, 2022 and December 31, 2021, respectively. We determined the fair value of the investment to be $17,300 and $18,000 as of September 30, 2022 and December 31, 2021, respectively. The fair value of the Corporate Debt Security is measured using Level 3 (unobservable) inputs. We determined the fair value using an internally-developed valuation model and unobservable inputs include credit and liquidity spreads and effective maturity.

Note Receivable

During the three months ended September 30, 2022, Cultivate Next I L.P. (the “Cultivate Fund”), a consolidated entity of Chipotle, acquired a convertible note receivable in a private company in exchange for $5,000. The note receivable accrues interest at an annual rate of 6.0% and matures on July 18, 2024. The note receivable is convertible into equity securities upon the occurrence of certain events, including the occurrence of a financing event. We have elected to measure this investment under the Fair Value Option. The investment in the note receivable is included within long-term investments on the condensed consolidated balance sheet with a carrying value of $5,000 as of September 30, 2022.

Rabbi Trust

We maintain a rabbi trust to fund obligations under a deferred compensation plan. The rabbi trust is subject to creditor claims in the event of insolvency, but the assets held in the rabbi trust are not available for general corporate purposes. Amounts in the rabbi trust are invested in mutual funds, consistent with the investment choices selected by participants in their Deferred Plan accounts, which are designated as trading securities carried at fair value and are included in other assets on the condensed consolidated balance sheets. Fair value of rabbi trust investments in mutual funds is measured using Level 1 inputs. The fair value of the investments in the rabbi trust was $19,834 and $19,330 as of September 30, 2022 and December 31, 2021, respectively. We record trading gains and losses, along with the offsetting amount related to the increase or decrease in deferred compensation to reflect our exposure to liabilities for payment under the deferred plan in general and administrative expenses on the condensed consolidated statements of income and comprehensive income.

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.

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The following table summarizes our restaurant and office assets measured at fair value by hierarchy level on a nonrecurring basis:

|  | Carrying Value
|  | September 30,
| Level | 2022 |  | 2021
Leasehold improvements, property and equipment, net | 3 | $ | 194 |  | $ | 544
Operating lease assets | 3 |  | 551 |  |  | 2,857
Total |  | $ | 745 |  | $ | 3,401

Fair value of these assets was measured using Level 3 inputs (unobservable inputs for the asset or liability). Unobservable inputs include the discount rate, projected restaurant revenues and expenses, and sublease income if we are closing the restaurant and intending to sublease the restaurant. During the three months ended September 30, 2022 and 2021, we recorded asset impairments related to restaurants and offices of $698 and $240, respectively. During the nine months ended September 30, 2022 and 2021 we recorded asset impairments related to restaurants and offices of $1,796 and $3,468, respectively. Costs are recorded within impairment, closure costs, and asset disposals on the condensed consolidated statements of income and comprehensive income. Carrying value after the impairment charges approximates fair value.

Equity Method Investment

As of September 30, 2022, we owned 4,325 shares of common stock of Tractor Beverages, Inc. (“Tractor”). Our investment represents ownership of approximately 10.3% of Tractor, and we have invested total cash consideration of $10,000. As we are a significant customer of Tractor and maintain board representation, we are accounting for our investment under the equity method. There were no impairment charges for the nine months ended September 30, 2022 or 2021 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 $12,325 and $9,251 as of September 30, 2022 and December 31, 2021, respectively. Refer to Note 12. “Related Party Transactions” for related party disclosures.

Non-Marketable Equity Securities

As of September 30, 2022, we hold warrants (the “Tractor Warrants”) to purchase 3,772 shares of common stock of Tractor. Tractor is a privately held company, and as such, the Tractor Warrants represent non-marketable equity securities, which we have elected to measure at cost, less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. The investment is included within long-term investments on the condensed consolidated balance sheets with a carrying value of $10,747 as of September 30, 2022.

As of September 30, 2022, we own 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. We have elected to measure our investment in the non-marketable equity securities of Nuro at cost, less impairments, if any, plus or minus changes resulting from observable price changes in orderly transactions for the identical or similar investment of the same issuer. As of September 30, 2022, we have recognized a cumulative gain of $5,968 related to our investment in Nuro. The investment is included within long-term investments on the condensed consolidated balance sheets with a carrying value of $15,968 as of September 30, 2022 and December 31, 2021.

As of September 30, 2022, the Cultivate Fund held additional investments in non-marketable equity securities with a carrying value of $2,000. These investments are presented within long-term investments on the condensed consolidated balance sheet as of September 30, 2022.

5. Shareholders’ Equity

We have had a stock repurchase program in place since 2008. As of September 30, 2022, we had $412,806 authorized for repurchasing shares of our common stock, which includes the $200,000 additional authorization approved by our Board of Directors on September 13, 202 2. Shares we repurchased are being held in treasury stock until they are reissued or retired at the discretion of our Board of Directors.

During the nine months ended September 30, 2022, 60 shares of common stock at a total cost of $92,374 were 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.

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6. Stock-Based Compensation

For the nine months ended September 30, 2022, we granted stock only stock appreciation rights (“SOSARs”) on 94 shares of our common stock to eligible employees. The weighted-average grant date fair value of the SOSARs was $455.08 per share with a weighted-average exercise price of $1,560.51 per share. The SOSARs vest in two equal installments on the second and third anniversary of the grant date. For the nine months ended September 30, 2022, 77 SOSARs were exercised, and 20 SOSARs were forfeited.

For the nine months ended September 30, 2022, we granted restricted stock units (“RSUs”) on 29 shares of our common stock to eligible employees. The weighted-average grant date fair value of the RSUs was $1,563.14 per share. The RSUs generally vest in two equal installments on the second and third anniversary of the grant date. For the nine months ended September 30, 2022, 23 RSUs vested and 8 RSUs were forfeited.

For the nine months ended September 30, 2022, we awarded performance share units (“PSUs”) on 24 shares of our common stock at target performance to eligible employees. These PSUs are subject to service, market and performance vesting conditions. The weighted-average grant date fair value of the PSUs was $1,569.39 per share, and the quantity of shares that will vest range from 0% to 300% of the targeted number of shares. If the defined minimum targets are not met, then no shares will vest. Further, in no event may more than 100% of the target number of PSUs vest if our 3 year total shareholder return is below the 25 th percentile of the constituent companies comprising the S&P 500 on the day of grant. For the nine months ended September 30, 2022, 55 PSUs vested, and 6 PSUs were forfeited.

On December 30, 2020, due to the impact that the novel coronavirus (COVID-19) pandemic had on the growth in comparable restaurant sales and restaurant margin relative to the trajectory of both of these performance factors prior to the pandemic, and also due to the significant shareholder value created over the three year performance period of the original award, the Compensation Committee of our Board of Directors modified the 2018 PSU award. This modification pertained to all seven recipients of this award, and resulted in an incremental compensation expense of $71,441, of which $6,145 was recognized during the nine months ended September 30, 2022, compared to $55,463 recognized during the nine months ended September 30, 2021. During the nine months ended September 30, 2022, 0.4 shares were forfeited, resulting in a reversal of $536 of expense. $1,116 remains unamortized as of September 30, 2022. The incremental compensation cost is calculated by multiplying the number of incremental shares generated through the modification by the stock price on the modification date. The stock price on the modification date of December 30, 2020 was $1,374.17.

Based on the terms of the modification, 29 PSUs vested on March 15, 2021, pursuant to the original performance condition of the 2018 PSU award. To receive all incremental shares generated through the modification, the recipients of this award must remain employed through December 31, 2022, and the incremental shares vest in four installments. The first two installments of the modification vested during 2021, which included the vesting of 33 PSUs, and the third installment of the modification vested on June 30, 2022, which included the vesting of 8 PSUs. The unamortized expense associated with the one remaining installment will be recognized over the remaining requisite service period of three months.

On July 27, 2022, we modified certain equity awards of an employee in connection with a separation agreement to allow a short-term extension of vesting of these certain equity awards that would have otherwise vested within eight months of the separation date. This modification impacted one individual and resulted in an incremental compensation expense of $6,701, which was recognized during the three months ended September 30, 2022.

The following table sets forth total stock-based compensation expense:

| Three months ended |  | Nine months ended
| September 30, |  | September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Stock-based compensation | $ | 25,587 |  | $ | 36,693 |  | $ | 78,806 |  | $ | 140,323
Stock-based compensation, net of income taxes | $ | 22,067 |  | $ | 32,527 |  | $ | 67,541 |  | $ | 125,714
Total capitalized stock-based compensation included in leasehold improvements, property and equipment, net on the condensed consolidated balance sheets | $ | 437 |  | $ | 632 |  | $ | 1,435 |  | $ | 1,582
Excess tax benefit on stock-based compensation recognized in provision for income taxes on the condensed consolidated statements of income and comprehensive income | $ | 3,711 |  | $ | 16,414 |  | $ | 24,383 |  | $ | 40,860

.

7. Income Taxes

The effective income tax rate for the three months ended September 30, 2022, was 24.4%, an increase from an effective income tax rate of 14.7% for the three months ended September 30, 2021. The increase is primarily due to a decrease in tax benefits related to option exercises and equity vesting, a reduction in return to provision benefits, and an increase in ASC 740-10 tax reserves, partially offset with a reduction in nondeductible expenses.

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The effective income tax rate was 23.1% for the nine months ended September 30, 2022, an increase from an effective income tax rate of 19.5% for the nine months ended September 30, 2021. The increase is primarily due to fewer tax benefits related to option exercise and equity vesting, a reduction in return to provision benefits, and an increase in ASC 740-10 tax reserves, partially offset with a reduction in nondeductible expenses in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

On August 16, 2022, President Biden signed into law the Inflation Reduction Act of 2022 ,which includes a 15% minimum tax on the adjusted financial statement income of corporations with a three taxable year average annual adjusted financial statement income in excess of $1 billion, a 1% excise tax on net stock repurchases made by publicly traded US corporations and several tax incentives to promote clean energy. The alternative minimum tax and the excise tax are effective in taxable years beginning after December 31, 2022. While these tax law changes have no immediate effect and are not expected to have a material adverse effect on our results of operations going forward, we will continue to evaluate its impact as further information becomes available.

8. Leases

The significant majority of our operating leases consist of restaurant locations and office space. We determine if a contract contains a lease at inception. Our leases generally have remaining terms of 1-20 years and most include options to extend the leases for additional 5-year periods. Generally, the lease term is the minimum of the noncancelable period of the lease or the lease term inclusive of reasonably certain renewal periods up to a term of 20 years.

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

| Three months ended |  | Nine months ended
| September 30, |  | September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Cash paid for operating lease liabilities | $ | 97,627 |  | $ | 90,096 |  | $ | 287,048 |  | $ | 268,038
Operating lease assets obtained in exchange for operating lease liabilities | $ | 163,916 |  | $ | 188,451 |  | $ | 373,971 |  | $ | 483,114
Derecognition of operating lease assets due to terminations or impairment | $ | 6,112 |  | $ | 41 |  | $ | 12,585 |  | $ | 2,020

9. Earnings Per Share

The following table sets forth the computations of basic and diluted earnings per share:

| Three months ended |  | Nine months ended
| September 30, |  | September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Net income | $ | 257,138 |  | $ | 204,434 |  | $ | 675,374 |  | $ | 519,509
Shares: |  |  |  |  |  |  |  |  |  |  |
Weighted-average number of common shares outstanding (for basic calculation) |  | 27,773 |  |  | 28,150 |  |  | 27,907 |  |  | 28,137
Dilutive stock awards |  | 183 |  |  | 325 |  |  | 209 |  |  | 383
Weighted-average number of common shares outstanding (for diluted calculation) |  | 27,956 |  |  | 28,475 |  |  | 28,116 |  |  | 28,520
Basic earnings per share | $ | 9.26 |  | $ | 7.26 |  | $ | 24.20 |  | $ | 18.46
Diluted earnings per share | $ | 9.20 |  | $ | 7.18 |  | $ | 24.02 |  | $ | 18.22

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

| Three months ended |  | Nine months ended
| September 30, |  | September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Stock awards subject to performance conditions |  | 61 |  |  | 75 |  |  | 60 |  |  | 74
Stock awards that were antidilutive |  | 167 |  |  | 3 |  |  | 164 |  |  | 42
Total stock awards excluded from diluted earnings per share |  | 228 |  |  | 78 |  |  | 224 |  |  | 116

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10. Commitments and Contingencies

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, amounts owed under contractor and subcontractor agreements, orders submitted for equipment for restaurants under construction, and marketing initiatives and corporate sponsorships.

Litigation

New York Legal Proceedings

As reported in our previous SEC filings, on September 10, 2019, the New York City Department of Consumer and Worker Protection (“DCWP”) filed a complaint in the City of New York Office of Administrative Trials and Hearings alleging violations at five Chipotle restaurants of New York City’s Fair Work Week law (“FWW”) and Earned Safe and Sick Time Act (“ESTA”) between November 2017 and September 2019. On April 28, 2021, DCWP amended the complaint to cover purported violations of FWW and ESTA at substantially all Chipotle restaurants in New York City, through the date the amended complaint was filed. In August 2022, Chipotle signed an agreement with New York City to resolve the proceedings and related audits. Under the settlement agreement, Chipotle paid a $1.0 million civil penalty to New York City and will pay up to approximately $20 million in compensation to individuals who were hourly employees of Chipotle restaurants covered by the settlement agreement during the relevant time period. We have accrued a liability that represents the total estimated amount we expect to pay under the settlement agreement, and we do not expect any additional losses above the amount accrued to be material to our consolidated financial statements.

Other

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, 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 these actions 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.

Accrual for Estimated Liability

In relation to various legal matters, including those discussed above, as of September 30, 2022, we had an accrued legal liability balance of $20,229 included within accrued liabilities on the condensed consolidated balance sheet.

11. Debt

As of September 30, 2022, we had a $500,000 revolving credit facility which expires in April 2026, with JPMorgan Chase Bank as administrative agent. Borrowings on the credit facility bear interest at a rate equal to LIBOR plus 1.375%, which is subject to increase due to changes in our total leverage ratio as defined in the credit agreement. We are also obligated to pay a commitment fee of 0.175% per year for unused amounts under the credit facility, which also may increase due to changes in our total leverage ratio. Further, we are subject to certain covenants defined in the credit agreement, which include maintaining a total leverage ratio of less than 3.0 x, maintaining a consolidated fixed charge coverage ratio of greater than 1.5 x, and limiting us from incurring additional indebtedness in certain circumstances. We had no outstanding borrowings under the credit facility and are in compliance with all covenants as of September 30, 2022 and December 31, 2021.

12. Related Party Transactions

As of September 30, 2022, we owned approximately 10.3% 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 customers in our restaurants. During the three months ended September 30, 2022 and September 30, 2021, purchases from the supplier were $11,506 and $9,674, respectively. During the nine months ended September 30, 2022 and September 30, 2021, purchases from the supplier were $28,330 and $22,817, respectively.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Cautionary Note Regarding Forward-Looking Statements

Certain statements in this report, including the potential future impact of COVID-19 on our results of operations, supply chain or liquidity, the number of new restaurants we expect to open this year and the number of restaurants we intend to open in the longer term, our expectation to generate positive cash flow for the foreseeable future, our plans for continuing stock buybacks and the period of time during which our cash and short-term investment will fund our operations are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. We use words such as “anticipate,” “believe,” “could,” “should,” “estimate,” “expect,” “intend,” “may,” “predict,” “project,” “target,” “remain confident” and similar terms and phrases, including references to assumptions, to identify forward-looking statements. These forward-looking statements are based on information available to us as of the date any such statements are made, and we assume no obligation to update these forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements. These risks and uncertainties include, but are not limited to, uncertainty regarding the duration and severity of the ongoing COVID-19 pandemic, the resurgence of COVID-19 infections, the circulation of novel variants of COVID-19 and its ultimate impact on our business; the ability of our third-party suppliers and business partners to fulfill their responsibilities and commitments; increasing supply costs (including beef, avocados and packaging); risks of food safety incidents and food-borne illnesses; risks associated with our reliance on certain information technology systems and potential failures or interruptions; potential negative impacts of privacy or cyber security incidents, including through our digital app; material failures of our information technology systems; the impact of competition, including from sources outside the restaurant industry; the competitive labor market and changes in the availability and cost of labor and the impact of any union organizing efforts and our responses to such efforts; the financial impact of increasing our average hourly wage; the impact of federal, state or local government regulations relating to our employees, employment practices, restaurant design and construction, and the sale of food or alcoholic beverages; our ability to achieve our planned growth, such as the availability of suitable new restaurant sites and the equipment needed to fully outfit new restaurants; the uncertainty of our ability to achieve expected levels of comparable restaurant sales due to factors such as changes in consumers' perceptions of our brand, including as a result of actual or rumored food safety concerns or other negative publicity, decreased overall consumer spending, including as a result of increasing inflation, fear of possible recession and higher gas prices, or the inability to increase menu prices or realize the benefits of menu price increases; risks associated with our digital business, including risks arising from our reliance on third party delivery services; risks relating to litigation, including possible governmental actions related to food safety incidents and potential class action litigation regarding employment laws, advertising claims or other matters; and the risk factors described in our Annual Report on Form 10-K for the year ended December 31, 2021, and in other reports filed with the SEC.

As of September 30, 2022, we operated 3,036 Chipotle restaurants throughout the United States, 50 international Chipotle restaurants, and four non-Chipotle restaurants. We manage our U.S. operations based on eight regions and have aggregated our operations to one reportable segment.

Throughout “Management’s Discussion and Analysis of Financial Condition and Results of Operations” we commonly discuss the following key operating metrics which we believe will drive our financial results and long-term growth model. We believe these metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies:

Comparable restaurant sales

Restaurant operating costs as a percentage of total revenue

New restaurant openings

Third Quarter 2022 Financial Highlights, year-over-year:

Total revenue increased 13.7% to $2.2 billion

Comparable restaurant sales increased 7.6%

Diluted earnings per share was $9.20, a 28.1% increase from $7.18, which includes a $0.31 after-tax impact from employee separation costs, impairment of certain corporate and restaurant assets, corporate restructuring costs and expenses related to the 2018 performance share COVID-19 related modification.

Sales Trends. Comparable restaurant sales increased 7.6% for the three months ended September 30, 2022. The increase is primarily attributable to an increase in menu prices, partially offset by a decrease in group size from the continued resurgence of our in-restaurant business and, to a lesser extent, lower transactions. Comparable restaurant sales and transactions represent the change in period-over-period sales or transactions for restaurants in operation for at least 13 full calendar months.

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In-restaurant sales increased 22.1% in the three months ended September 30, 2022, compared to the three months ended September 30, 2021. The increase was primarily due to menu price increases, new restaurants, and a shift in consumer behaviors related to COVID-19 from digital sales to in-restaurant sales across the country. In-restaurant sales represent food and beverage revenue generated on-premise and include revenue deferrals associated with Chipotle Rewards.

Digital sales represented 37.2% of food and beverage revenue for the three months ended September 30, 2022, compared to 42.8% for the three months ended September 30, 2021. The decrease in digital sales as a percentage of food and beverage revenue is primarily related to the increase of in-restaurant sales discussed above. D igital sales represent food and beverage revenue generated through the Chipotle website, Chipotle app or third-party delivery aggregators and includes revenue deferrals associated with Chipotle Rewards. We updated the definition of digital sales in the first quarter of 2022 to include revenue deferrals related to Chipotle Rewards. We made this change to allow for a reconciliation to total food and beverage revenue as we now present in-restaurant sales.

Restaurant Operating Costs. During the three months ended September 30, 2022, our restaurant operating costs (food, beverage and packaging; labor; occupancy; and other operating costs) were 74.7% of total revenue, a decrease from 76.5% during the three months ended September 30, 2021. The decrease was primarily attributable to sales leverage and, to a lesser extent, lower delivery expense due to lower volumes of delivery transactions. These decreases were partially offset by higher food costs as a result of inflationary pressures and, to a lesser extent, higher labor expenses as a result of wage inflation.

Restaurant Development. For the three months ended September 30, 2022, we opened 43 new restaurants, which included 38 restaurants with a Chipotlane. The Chipotlane format continues to perform very well and is helping enhance guest access and convenience, as well as increase new restaurant sales, margins, and returns. We have experienced delays in our development timelines, which included equipment and construction material shortages, construction labor challenges, as well as permitting, utilities, and inspection delays. While we expect these challenges to continue into 2023, we remain confident in the long-term opportunity to more than double the number of Chipotle restaurants in North America. We expect to open 255 to 285 new restaurants in 2023.

Cultivate Fund. In April 2022 we announced the formation of the Cultivate Fund, a venture that will make early-stage investments into strategically aligned companies that further our mission to Cultivate a Better World. The venture fund has an initial size of $50.0 million and will be financed almost entirely by Chipotle. As of September 30, 2022, we have made two investments in this fund. The investments consisted of a $5.0 million purchase of a convertible note receivable, and a $2.0 million purchase of a non-marketable equity securities.

Restaurant Activity

The following table details restaurant unit data for the periods indicated.

| Three months ended |  | Nine months ended
| September 30, |  | September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Beginning of period | 3,052 |  | 2,853 |  | 2,966 |  | 2,768
Chipotle openings | 43 |  | 41 |  | 136 |  | 137
Chipotle permanent closures | (1) |  | - |  | (3) |  | (10)
Chipotle relocations | (4) |  | (2) |  | (9) |  | (3)
Total restaurants at end of period | 3,090 |  | 2,892 |  | 3,090 |  | 2,892

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Results of Operations

Our results of operations as a percentage of total revenue and period-over-period change are discussed in the following section.

Revenue

| Three months ended |  |  |  | Nine months ended |  |
| September 30, |  | Percentage |  | September 30, |  | Percentage
| 2022 |  | 2021 |  | change |  | 2022 |  | 2021 |  | change
| (dollars in millions) |  |  |  | (dollars in millions) |  |
Food and beverage revenue | $ | 2,202.3 |  | $ | 1,932.4 |  | 14.0% |  | $ | 6,394.1 |  | $ | 5,517.8 |  | 15.9%
Delivery service revenue |  | 17.8 |  |  | 19.9 |  | (10.4%) |  |  | 60.0 |  |  | 68.7 |  | (12.7%)
Total revenue | $ | 2,220.2 |  | $ | 1,952.3 |  | 13.7% |  | $ | 6,454.1 |  | $ | 5,586.4 |  | 15.5%
Average restaurant sales (1) | $ | 2.8 |  | $ | 2.5 |  | 12.8% |  | $ | 2.8 |  | $ | 2.5 |  | 12.8%
Comparable restaurant sales increase |  | 7.6% |  |  | 15.1% |  |  |  |  | 8.9% |  |  | 20.8% |  |
(1) Average restaurant sales refer to the average trailing 12-month food and beverage sales for restaurants in operation for at least 12 full calendar months.

The significant factors contributing to the total revenue increase for the three months ended September 30, 2022 compared to the three months ended September 30, 2021, were comparable restaurant sales increases and new restaurant openings. Total revenue increased due to comparable restaurant sales increases of $138.1 million and restaurants not yet in the comparable base of $129.8 million, of which $64.3 million was due to restaurants opened in 2022.

The significant factors contributing to the total revenue increase for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, were comparable restaurant sales increases and new restaurant openings. Total revenue increased due to comparable restaurant sales increases of $470.6 million and restaurants not yet in the comparable base of $397.3 million, of which $116.7 million was due to restaurants opened in 2022.

Food, Beverage and Packaging Costs |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
| Three months ended |  |  |  | Nine months ended |  |
| September 30, |  | Percentage |  | September 30, |  | Percentage
| 2022 |  | 2021 |  | change |  | 2022 |  | 2021 |  | change
| (dollars in millions) |  |  |  | (dollars in millions) |  |
Food, beverage and packaging | $ | 662.5 |  | $ | 591.3 |  | 12.0% |  | $ | 1,963.4 |  | $ | 1,688.5 |  | 16.3%
As a percentage of total revenue |  | 29.8% |  |  | 30.3% |  | (0.5%) |  |  | 30.4% |  |  | 30.2% |  | 0.2%

Food, beverage and packaging costs decreased as a percentage of total revenue for the three months ended September 30, 2022 compared to the three months ended September 30, 2021, due to the benefit of menu price increases, partially offset by inflation across the menu, primarily related to higher costs for dairy, packaging, tortillas, and avocados.

Food, beverage and packaging costs increased as a percentage of total revenue for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, due to inflation across the menu, primarily related to higher costs for avocados, packaging, dairy, beef, and chicken, partially offset by the benefit of menu price increases.

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Labor Costs

| Three months ended |  |  |  | Nine months ended |  |
| September 30, |  | Percentage |  | September 30, |  | Percentage
| 2022 |  | 2021 |  | change |  | 2022 |  | 2021 |  | change
| (dollars in millions) |  |  |  | (dollars in millions) |  |
Labor costs | $ | 557.2 |  | $ | 502.8 |  | 10.8% |  | $ | 1,639.0 |  | $ | 1,400.9 |  | 17.0%
As a percentage of total revenue |  | 25.1% |  |  | 25.8% |  | (0.7%) |  |  | 25.4% |  |  | 25.1% |  | 0.3%

Labor costs decreased as a percentage of total revenue for the three months ended September 30, 2022 compared to the three months ended September 30, 2021, primarily due to sales leverage. This decrease was partially offset by restaurant wage inflation and, to a lesser extent, an employee retention payroll tax credit under the CARES Act for wages paid to employees who were absent from work during the COVID-19 pandemic received in 2021.

Labor costs increased as a percentage of total revenue for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to restaurant wage inflation and, to a lesser extent, an employee retention payroll tax credit received in 2021 under the CARES Act for wages paid to employees who were absent from work during the COVID-19 pandemic. These increases were partially offset by sales leverage.

Occupancy Costs

| Three months ended |  |  |  | Nine months ended |  |
| September 30, |  | Percentage |  | September 30, |  | Percentage
| 2022 |  | 2021 |  | change |  | 2022 |  | 2021 |  | change
| (dollars in millions) |  |  |  | (dollars in millions) |  |
Occupancy costs | $ | 115.8 |  | $ | 104.2 |  | 11.1% |  | $ | 341.8 |  | $ | 309.4 |  | 10.5%
As a percentage of total revenue |  | 5.2% |  |  | 5.3% |  | (0.1%) |  |  | 5.3% |  |  | 5.5% |  | (0.2%)

Occupancy costs decreased as a percentage of total revenue for the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021, primarily due to sales leverage, partially offset by increased rent expense associated with new restaurants.

Other Operating Costs

| Three months ended |  |  |  | Nine months ended |  |
| September 30, |  | Percentage |  | September 30, |  | Percentage
| 2022 |  | 2021 |  | change |  | 2022 |  | 2021 |  | change
| (dollars in millions) |  |  |  | (dollars in millions) |  |
Other operating costs | $ | 322.1 |  | $ | 294.7 |  | 9.3% |  | $ | 970.3 |  | $ | 876.6 |  | 10.7%
As a percentage of total revenue |  | 14.5% |  |  | 15.1% |  | (0.6%) |  |  | 15.0% |  |  | 15.7% |  | (0.7%)

Other operating costs include, among other items, marketing and promotional costs, delivery expense, bank and credit card processing fees, restaurant utilities, technology costs, and maintenance costs. Other operating costs decreased as a percentage of total revenue for the three and nine months ended September 30, 2022 compared to the three and nine months ended September 30, 2021, due to sales leverage and, to a lesser extent, lower delivery expenses associated with lower volume of delivery transactions. These decreases were partially offset by inflation across the board, most notably higher utilities primarily related to inflation in natural gas and electricity.

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General and Administrative Expenses

| Three months ended |  |  |  | Nine months ended |  |
| September 30, |  | Percentage |  | September 30, |  | Percentage
| 2022 |  | 2021 |  | change |  | 2022 |  | 2021 |  | change
| (dollars in millions) |  |  |  | (dollars in millions) |  |
General and administrative expense | $ | 140.9 |  | $ | 145.9 |  | (3.4%) |  | $ | 429.1 |  | $ | 447.1 |  | (4.0%)
As a percentage of total revenue |  | 6.3% |  |  | 7.5% |  | (1.2%) |  |  | 6.6% |  |  | 8.0% |  | (1.4%)

General and administrative expenses decreased in dollar terms for the three months ended September 30, 2022 compared to the three months ended September 30, 2021, primarily due to an $11.2 million decrease in stock-based compensation, mostly attributable to the impact of the December 2020 modification of 2018 performance awards related to COVID-19 in the prior year. This decrease was partially offset by a $5.9 million increase in outside services expense related to corporate initiatives.

General and administrative expenses decreased in dollar terms for the nine months ended September 30, 2022 compared to the nine months September 30, 2021, primarily due to a $60.4 million decrease in stock-based compensation, mostly attributable to the impact of the December 2020 modification of 2018 performance awards related to COVID-19 in the prior year. This decrease was partially offset by increases of $16.1 million in employee wages primarily due to headcount growth, $15.4 million of outside services expense related to corporate initiatives; and $13.4 million a ssociated with the biennial All Managers’ Conference that was held in March 2022.

Depreciation and Amortization

| Three months ended |  |  |  | Nine months ended |  |
| September 30, |  | Percentage |  | September 30, |  | Percentage
| 2022 |  | 2021 |  | change |  | 2022 |  | 2021 |  | change
| (dollars in millions) |  |  |  | (dollars in millions) |  |
Depreciation and amortization | $ | 71.4 |  | $ | 63.2 |  | 13.0% |  | $ | 212.8 |  | $ | 188.4 |  | 13.0%
As a percentage of total revenue |  | 3.2% |  |  | 3.2% |  | 0.0% |  |  | 3.3% |  |  | 3.4% |  | (0.1%)

Depreciation and amortization remained flat as a percentage of revenue for the three months ended September 30, 2022 compared to the three months ended September 30, 2021, primarily due to sales leverage offset by increased depreciation expense associated with new restaurants.

Depreciation and amortization decreased as a percentage of revenue for the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021, primarily due to sales leverage, partially offset by increased depreciation expense associated with new restaurants.

Impairment, Closure Costs, and Asset Disposals

| Three months ended |  |  |  | Nine months ended |  |
| September 30, |  | Percentage |  | September 30, |  | Percentage
| 2022 |  | 2021 |  | change |  | 2022 |  | 2021 |  | change
| (dollars in millions) |  |  |  | (dollars in millions) |  |
Impairment, closure costs, and asset disposals | $ | 6.4 |  | $ | 4.7 |  | 36.6% |  | $ | 15.4 |  | $ | 14.6 |  | 5.2%
As a percentage of total revenue |  | 0.3% |  |  | 0.2% |  | 0.1% |  |  | 0.2% |  |  | 0.3% |  | (0.1%)

Impairment, closure costs, and asset disposals increased in dollar terms for the three months ended September 30, 2022, compared to the three months ended September 30, 2021, primarily due to asset impairment charges for certain corporate assets.

Impairment, closure costs, and asset disposals increased in dollar terms for the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021, primarily due to higher charges related to the replacement of leasehold improvements. This increase was partially offset by elevated impairments of operating lease assets in the comparable period. These elevated impairments were primarily the result of the COVID-19 pandemic negatively impacting our near-term restaurant level cash flow forecasts.

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Provision for Income Taxes

| Three months ended |  |  |  | Nine months ended |  |
| September 30, |  | Percentage |  | September 30, |  | Percentage
| 2022 |  | 2021 |  | change |  | 2022 |  | 2021 |  | change
| (dollars in millions) |  |  |  | (dollars in millions) |  |
Provision for income taxes | $ | (82.8) |  | $ | (35.1) |  | 135.8% |  | $ | (202.8) |  | $ | (125.7) |  | 61.3%
Effective income tax rate |  | 24.4% |  |  | 14.7% |  | n/m* |  |  | 23.1% |  |  | 19.5% |  | n/m*
*Not meaningful |  |  |  |  |  |  |  |  |  |  |  |  |  |  |

The effective income tax rate for the three months ended September 30, 2022, was 24.4%, an increase from an effective income tax rate of 14.7% for the three months ended September 30, 2021. The increase is primarily due to a decrease in tax benefits related to option exercises and equity vesting, a reduction in return to provision benefits, and an increase in ASC 740-10 tax reserves, partially offset with a reduction in nondeductible expenses.

The effective income tax rate for the nine months ended September 30, 2022, was 23.1%, an increase from an effective income tax rate of 19.5% for the nine months ended September 30, 2021. The increase is primarily due to fewer tax benefits related to option exercises and equity vesting, a reduction in return to provision benefits, and an increase in ASC 740-10 tax reserves, partially offset with a reduction in nondeductible expenses in the nine months ended September 30, 2022 compared to the nine months ended September 30, 2021.

Seasonality

Seasonal factors cause our profitability to fluctuate from quarter to quarter. Historically, our average daily restaurant sales and net income are lower in the first and fourth quarters due, in part, to the holiday season and because fewer people eat out during periods of inclement weather (the winter months) than during periods of mild or warm weather (the spring, summer and fall months). Other factors also have a seasonal effect on our results. For example, restaurants located near colleges and universities generally do more business during the academic year. Seasonal factors, however, might be moderated or outweighed by other factors that may influence our quarterly results, such as unexpected publicity impacting our business in a positive or negative way, worldwide health pandemics, fluctuations in food or packaging costs, or the timing of menu price increases or promotional activities and other marketing initiatives. The number of trading days in a quarter can also affect our results, although, on an overall annual basis, changes in trading days do not have a significant impact.

Our quarterly results are also affected by other factors such as the amount and timing of non-cash stock-based compensation expense and related tax rate impacts, litigation, settlement costs and related legal expenses, impairment charges and non-operating costs, timing of marketing or promotional expenses, the number and timing of new restaurants opened in a quarter, and closure of restaurants. New restaurants typically have higher operating costs following opening because of the expenses associated with their opening and operating inefficiencies in the months immediately following opening. Accordingly, results for a particular quarter are not necessarily indicative of results to be expected for any other quarter or for any year.

Liquidity and Capital Resources

As of September 30, 2022, we had a cash and marketable investments balance of $1.2 billion, excluding restricted cash of $31.0 million and non-marketable investments of $51.7 million. After funding the current operations in our restaurants and support centers, the first planned use of our cash flow from operations is to provide capital for the continued investment in new restaurant construction. In addition to continuing to invest in our restaurant expansion, we expect to utilize cash flow from operations to: repurchase additional shares of our common stock subject to market conditions; invest in, maintain, and refurbish our existing restaurants; and for general corporate purposes. As of September 30, 2022, $412.8 million remained available for repurchases of shares of our common stock, which includes the $200.0 million additional authorization approved by our Board of Directors on September 13, 2022. Under the remaining repurchase authorizations, shares may be purchased from time to time in open market transactions, subject to market conditions. Additionally, as of September 30, 2022, we had $500.0 million of undrawn borrowing capacity under a line of credit facility.

We believe that cash from operations, together with our cash and investment balances, will be sufficient to meet ongoing capital expenditures, working capital requirements and other cash needs for the foreseeable future. Assuming no significant declines in comparable restaurant sales, we expect we will generate positive cash flow for the foreseeable future. Should our business deteriorate due to changing conditions, there are actions we can take to further conserve liquidity.

We have not required significant working capital because customers generally pay using cash or credit and debit cards and because our operations do not require significant receivables, nor do they require significant inventories due, in part, to our use of various fresh ingredients. In addition, we generally have the right to pay for the purchase of food, beverages and supplies sometime after the receipt of those items, within ten days, thereby reducing the need for incremental working capital to support our growth.

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Cash Flows

Cash provided by operating activities was $921.6 million for the nine months ended September 30, 2022, compared to $843.7 million for the nine months ended September 30, 2021. The increase was primarily due to higher net earnings partially offset by net cash used by changes in operating assets and liabilities.

Cash used in investing activities was $646.3 million for the nine months ended September 30, 2022, compared to $363.1 million for the nine months ended September 30, 2021. The change was primarily associated with a $265.4 million increase in U.S. Treasury security purchases net of U.S. Treasury security maturities and, to a lesser extent, increased capital expenditures of $15.0 million primarily related to costs associated with new restaurant development.

Cash used in financing activities was $722.7 million for the nine months ended September 30, 2022, compared to $366.6 million for the nine months ended September 30, 2021. The change was primarily due to increased treasury stock repurchases of $329.0 million and, to a lesser extent, $28.9 million of elevated payments of tax withholdings related to stock compensation for the nine months ended September 30, 2022.

Critical Accounting Estimates

Critical accounting estimates are those that we believe are both significant and that require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and we might obtain different estimates if we used different assumptions or factors. We had no significant changes to our critical accounting estimates as described in our annual report on Form 10-K for the year ended December 31, 2021.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Commodity Price Risks

We are exposed to commodity price risks. Many of the ingredients we use to prepare our food, as well as our packaging materials and utilities to run our restaurants, are ingredients or commodities that are affected by the price of other commodities, exchange rates, foreign demand, weather, seasonality, production, availability and other factors outside our control. We work closely with our suppliers and use a mix of forward pricing protocols under which we agree with our supplier on fixed prices for deliveries at some time in the future, fixed pricing protocols under which we agree on a fixed price with our supplier for the duration of that protocol, formula pricing protocols under which the prices we pay are based on a specified formula related to the prices of the goods, such as spot prices or based on changes in industry indices, and range forward protocols under which we agree on a price range for the duration of that protocol. Generally, our pricing protocols with suppliers can remain in effect for periods ranging from one to 24 months, depending on the outlook for prices of the particular ingredient. In some cases, we have minimum purchase obligations. We have tried to increase, where practical, the number of suppliers for our ingredients, which we believe can help mitigate pricing volatility, and we follow industry news, trade issues, exchange rates, foreign demand, weather, crises and other world events that may affect our ingredient prices. Increases in ingredient prices could adversely affect our results if we choose for competitive or other reasons not to increase menu prices at the same rate at which ingredient costs increase, or if menu price increases result in customer resistance. We also could experience shortages of key ingredients if our suppliers need to close or restrict operations due to the impact of the COVID-19 outbreak or due to industry-wide shipping and freight delays.

Changing Interest Rates

We are exposed to interest rate risk through fluctuations of interest rates on our investments. As of September 30, 2022, we had $1.3 billion in cash and cash equivalents, current and long-term investments, and restricted cash, nearly all of which are interest bearing. Changes in interest rates affect the interest income we earn, and therefore impact our cash flows and results of operations.

Foreign Currency Exchange Risk

A portion of our operations consist of activities outside of the U.S. and we have currency risk on the transactions in other currencies and translation adjustments resulting from the conversion of our international financial results into the U.S. dollar. However, a substantial majority of our operations and investment activities are transacted in the U.S., and therefore our foreign currency risk is not material at this date.

ITEM 4. CONTROLS AND PROCEDURES

We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) that are designed to ensure that information required to be disclosed in Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

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Evaluation of Disclosure Controls and Procedures

As of September 30, 2022, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.

Changes in Internal Control over Financial Reporting

There were no changes during the fiscal quarter ended September 30, 2022, in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

For information regarding legal proceedings, see Note 10. “Commitments and Contingencies” in our condensed consolidated financial statements included in Item 1. “Financial Statements.”

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

Purchases of Equity Securities by the Issuer

The table below reflects shares of common stock we repurchased during the third quarter of 2022.

|  |  | Total Number of Shares Purchased |  |  | Average Price Paid Per Share |  | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1) |  | Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
July |  |  | 44,435 |  | $ |  | 1,321.16 |  | 44,435 |  | $ | 260,962,007
| Purchased 7/1 through 7/31 |  |  |  |  |  |  |  |  |  |  |
August |  |  | 7,111 |  | $ |  | 1,618.67 |  | 7,111 |  | $ | 249,451,614
| Purchased 8/1 through 8/31 |  |  |  |  |  |  |  |  |  |  |
September |  |  | 22,774 |  | $ |  | 1,609.11 |  | 22,774 |  | $ | 412,805,710
| Purchased 9/1 through 9/30 |  |  |  |  |  |  |  |  |  |  |
Total |  |  | 74,320 |  | $ |  | 1,437.87 |  | 74,320 |  |  |

(1) Shares were repurchased pursuant to repurchase programs announced on April 26, 2022.

(2) The September total includes an additional $200.0 million in authorized repurchases approved on September 13, 2022 and announced October 25, 2022. There is no expiration date for this program. The authorization to repurchase shares will end when we have repurchased the maximum amount of shares authorized, or we have determined to discontinue such repurchases.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFE TY DISCLOSURES

Not applicable.

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ITEM 5. OTHER INFORMATION

None.

‎

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ITEM 6. EXHIBITS

EXHIBIT INDEX

|  | Description of Exhibit Incorporated Herein by Reference
Exhibit Number | Exhibit Description | Form | File No. | Filing Date | Exhibit Number | Filed Herewith
31.1 | Certification of Chief Executive Officer of Chipotle Mexican Grill, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | - | - | - | - | X
31.2 | Certificate of Chief Financial Officer of Chipotle Mexican Grill, Inc. pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | - | - | - | - | X
32.1 | Certification of Chief Executive Officer and Chief Financial Officer of Chipotle Mexican Grill, Inc. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 | - | - | - | - | X
101.INS | Inline XBRL Instance Document (the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document) | - | - | - | - | X
101.SCH | Inline XBRL Taxonomy Extension Schema Document | - | - | - | - | X
101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | - | - | - | - | X
101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase Document | - | - | - | - | X
101.LAB | Inline XBRL Taxonomy Extension Label Linkbase Document | - | - | - | - | X
101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase Document | - | - | - | - | X
104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) | - | - | - | - | X

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

CHIPOTLE MEXICAN GRILL, INC.
By: | /S/ J OHN R. H ARTUNG
Name: | John R. Hartung
Title: | Chief Financial Officer (principal financial officer and duly authorized signatory for the registrant)

Date: October 26, 2022

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