Chipotle Mexican Grill (CMG) Updates on December, Q4 Metrics; Reports Receipt of Grand Jury Subpoena

Chipotle Mexican Grill, Inc. is filing this report to provide an update regarding our financial and operating results in December 2015 and fourth quarter 2015, as well as other recent developments.

During the week of December 7, 2015, we experienced an incident involving norovirus at a Chipotle restaurant in Brighton, Massachusetts, which worsened the adverse financial and operating impacts we experienced from an E. coli incident associated with a number of Chipotle restaurants in October and November.

Fourth Quarter 2015 Impact

For the fourth quarter 2015, we anticipate the following:

• Comparable restaurant sales were -14.6% (negative);
• Non-recurring expenses during the fourth quarter of 2015 in the range of $14.0 to $16.0 million;
  • The estimate of non-recurring expenses includes costs to replace food in select restaurants, lab analysis of food samples and environmental swabs, increased marketing expenses, retaining expert advisory services related to epidemiology and food safety, and preliminary estimates for legal claims and related expenses.
• Restaurant level operating margins of approximately 20% to 21%; and
• Diluted earnings per share in the range of $1.70 to $1.90; final year-end accounting adjustments and related tax expenses may further impact these estimates. (The Street sees Q4 EPS of $2.55.)

December 2015 Sales Trend Detail

In a report on Form 8-K filed on December 4, we noted that comparable restaurant sales were trending at -16% at the onset of the month. Following the isolated norovirus incident during the week of December 7 in a Chipotle restaurant in Brighton, Massachusetts, which garnered national media attention, comparable restaurant sales decreased to average -34%, and then recovered to -31%. The week of December 21, 2015, the U. S. Centers for Disease Control and Prevention (CDC) announced that new illnesses related to the E. coli incident associated with Chipotle restaurants in October and November 2015 had slowed substantially, but also that it is investigating five new cases that were reported in November 2015 of the same strain of E. coli O26 but with a different DNA fingerprint. Following this announcement and related national media attention, our comparable restaurant sales trended down to -37%. For the full month of December, comparable restaurant sales were -30%. Future sales trends may be significantly influenced by further developments.

Receipt of Grand Jury Subpoena

In December 2015, Chipotle was served with a Federal Grand Jury Subpoena from the U.S. District Court for the Central District of California in connection with an official criminal investigation being conducted by the U.S. Attorney’s Office for the Central District of California, in conjunction with the U.S. Food and Drug Administration’s Office of Criminal Investigations. The subpoena requires us to produce a broad range of documents related to a Chipotle restaurant in Simi Valley, California, that experienced an isolated norovirus incident during August 2015. We intend to fully cooperate in the investigation. It is not possible at this time to determine whether we will incur, or to reasonably estimate the amount of, any fines, penalties or further liabilities in connection with the investigation pursuant to which the subpoena was issued.

Share Repurchase Authorization

This report is also filed to announce that our Board of Directors has authorized repurchases of Chipotle common stock with a total aggregate purchase price of $300 million, exclusive of commissions. These authorized repurchases are in addition to $300 million in repurchase authorizations announced on December 4, 2015, of which $116 million remained available as of December 31, 2015. During the fourth quarter 2015, we repurchased approximately 609 thousand shares of stock at an average price of $556 per share. During the month of December, we repurchased approximately 401 thousand shares of stock at an average price of $527 per share. The Board’s authorization of the repurchase program may be modified, suspended or discontinued at any time.