XML 19 R10.htm IDEA: XBRL DOCUMENT
v3.22.2.2

Fair Value of Financial Instruments | 9 Months Ended
--- | ---
Sep. 30, 2022
Fair Value of Financial Instruments [Abstract] |
Fair Value of Financial Instruments | 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. 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. 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.

X
- References No definition available. + Details
Name: | us-gaap_InvestmentsDebtAndEquitySecuritiesAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for investments in certain debt and equity securities. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 942 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2209399 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 946 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2324412 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI https://asc.fasb.org/topic&trid=2196928 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 940 -SubTopic 320 -URI https://asc.fasb.org/subtopic&trid=2176304 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher SEC -Name Regulation S-K (SK) -Number 229 -Section 1403 -Paragraph (b) + Details
Name: | us-gaap_InvestmentsInDebtAndMarketableEquitySecuritiesAndCertainTradingAssetsDisclosureTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration