Chipotle Mexican Grill (CMG) 2024 10-K Analysis (Filed 2025) | Explained for Beginners - Finvincio

Intro

This post is based on the company’s official 10-K filing and investor relations (IR) materials. It summarizes only objective facts and the logical implications that directly follow from them. Personal opinions and forecasts have been minimized. The goal is to help readers understand and interpret the materials more easily.

👉 1. Business Overview
👉 2. Financial Highlights
👉 3. Valuation
👉 4. Risk
👉 5. MD&A (Management’s Discussion and Analysis)
👉 6. Summary

1. Business Overview 💼

Chipotle Mexican Grill, Inc. (CMG) is a fast-casual restaurant company that owns and operates Chipotle Mexican Grill restaurants. In its 2024 Form 10-K, Chipotle describes its core mission as Cultivating a Better World by serving real food made with wholesome ingredients and without artificial colors, flavors, or preservatives.

“Food with Integrity is the center of Chipotle’s brand and operating model.”

🌯 What Chipotle Sells

Chipotle’s menu focuses on customizable items such as burritos, burrito bowls (a burrito without the tortilla), quesadillas, tacos, and salads.

Business model: Company-owned restaurants (most revenue comes directly from restaurant sales)
Guest focus: Strong in-restaurant experience plus a large digital ordering business

📍 Store Footprint and Operating Structure

As of December 31, 2024, Chipotle owned and operated 3,644 restaurants in the United States and 82 international restaurants. It also had three international licensed restaurants.

For reporting purposes, Chipotle aggregates operations into one reportable segment. (A “reportable segment” is how a company groups parts of its business for financial reporting.)

Metric (as of Dec 31, 2024)	What it means for investors
3,644 U.S. restaurants	Large domestic scale; U.S. is the core revenue engine
82 international restaurants (+ 3 licensed)	International is smaller today, but provides optional growth over time
One reportable segment	Financials are mainly driven by overall restaurant performance

🧭 Strategy: The 5 Core Priorities

Chipotle says it aims to “win today while we grow our future” using five key strategies:

Run great restaurants: A people-accountable culture delivering Food with Integrity and strong in-restaurant + digital experiences
Use technology and innovation: Improve growth and productivity in restaurants, support centers, and the supply chain
Strengthen the brand: Stay visible, relevant, and loved to attract new guests and deepen engagement
Develop people and leadership: Train and retain talent at every level
Expand access and convenience: Open new restaurants in North America and internationally

🥑 “Food with Integrity”: Sourcing and Standards

A major part of Chipotle’s positioning is food sourcing. The company highlights:

Animal welfare and sustainability standards for animal products used in Chipotle-owned restaurants
Branding certain meats as “Responsibly Raised®”
Efforts to use responsibly grown produce aligned with its internal standards

For beginners: this matters because “Food with Integrity” is not just marketing. It can influence ingredient costs, supply reliability, and brand loyalty.

🚚 Purchasing and Supply Chain

Chipotle’s ability to deliver consistent food quality depends on reliable ingredient sourcing. The company works with 26 independently owned and operated regional distribution centers that purchase from suppliers selected based on quality standards, mission alignment, and pricing availability.

Supplier diversification: Chipotle says it has worked to increase the number of suppliers to help reduce pricing volatility and dependence on a small group of vendors
External factors monitored: trade tariffs, weather, exchange rates, foreign demand, geopolitical crises, and other events that can affect ingredient prices and availability
Concentration risk: certain key ingredients still come from a small number of suppliers

🧼 Quality Assurance and Food Safety

Chipotle emphasizes that food safety is a top priority and describes a multi-layered approach, including:

Tools designed to reduce or eliminate pathogens while maintaining food quality
Enhanced restaurant handling procedures and sanitation protocols
Food safety certifications and inspections (internal and third-party)
Supplier-focused interventions before ingredients reach restaurants
Ingredient traceability (the ability to track ingredients through the supply chain)

Chipotle also maintains a Food Safety Advisory Council made up of food safety authorities to help evaluate and improve its programs.

📲 Digital Business and Innovation

Chipotle’s digital channel is a major growth driver. Digital sales are defined as food and beverage revenue generated through the Chipotle website, Chipotle app, or third-party delivery platforms (and include certain accounting deferrals tied to Chipotle Rewards).

Digital Sales Mix	Share of Food & Beverage Revenue
2024	35.1%
2023	37.4%

Chipotle continues to expand Chipotlanes (drive-through pickup lanes for digital orders) and invest in technology that modernizes back-of-house operations and improves the employee experience.

👥 Human Capital: People, Hiring, and Culture

Chipotle describes employees as its most important asset and highlights staffing, training, and internal promotion as core strengths.

Workforce (as of Dec 31, 2024)	Count
Total employees worldwide	130,504
Contract workers	1,328
Employees in the U.S.	127,820
International employees (Canada, France, Germany, U.K.)	2,684
U.S. restaurant employees	126,233
U.S. support centers & field leadership	1,587

Union status: Chipotle reported no union petitions or campaigns in 2024 and continued bargaining with one restaurant that voted in 2022 to form a union
Internal promotions: Over 85% of in-restaurant leadership roles were filled through internal promotions in 2024

🧠 Talent and Training Highlights

Hiring technology: Chipotle introduced a virtual hiring assistant called “Ava Cado”, which the company said nearly doubled application flow and helped improve application completion
Leadership development: Programs include Cultivate University and additional training across restaurant leadership levels
Promotion scale: Chipotle reported promoting over 23,000 employees in 2024

🤝 Culture and Inclusivity

Chipotle frames inclusivity as a continuous effort rather than a one-time initiative. As of December 31, 2024, it reported its workforce was 48.9% male and 49.8% female.

For beginners: a large restaurant workforce means hiring, training, retention, and employee engagement can materially impact service quality and costs.

🏛️ Regulation, Seasonality, and Competition

Regulation: Chipotle operates under federal, state, and local rules (especially related to food safety, labor, and restaurant operations)
Seasonality: The company notes seasonal factors affect results (details are discussed in the MD&A section of the 10-K)
Competition: Chipotle competes across fast-casual, quick-service, and casual dining, including restaurants emphasizing quality ingredients and convenient formats (dine-in, carry-out, online, catering, delivery)

™️ Brand and Intellectual Property

Chipotle highlights registered trademarks such as “Chipotle,” “Chipotle Mexican Grill,” “Food with Integrity,” “Responsibly Raised,” and “Chipotle Rewards”. It also notes trademark registrations in multiple regions and efforts to protect restaurant design elements as trade dress.

📌 Quick Glossary (Beginner-Friendly)

Reportable segment: The way a company groups its operations for financial reporting
Traceability: The ability to track ingredients through the supply chain
Chipotlane: Chipotle’s drive-through pickup lane designed for digital orders

🧾 Plain English ✅

Chipotle’s business is simple to understand: it runs thousands of restaurants that sell a focused menu, and it tries to stand out through ingredient standards, food safety programs, digital convenience, and strong employee development. For investors, the key idea is that Chipotle is not only a restaurant chain—its strategy depends on running consistent operations at scale while protecting the brand through quality, safety, and technology.

2. Financial Highlights 📊

“In 2024, Chipotle grew revenue and profits while keeping margins strong and generating solid cash flow.”

Units: All dollar amounts are rounded to millions ($m). Percentages are rounded to one decimal place. EPS is shown to one decimal.

Key Takeaways (2024 vs. 2023) ✅

Revenue: $11,314m (up 14.6% year-over-year).
Operating income: $1,916m (up 23.0%), with an operating margin of 16.9%.
Net income: $1,534m (up 24.9%).
Cash generation: Operating cash flow was $2,105m (up 18.0%).
Capital return: Financing cash outflow reflects significant share repurchases (buybacks).

Income Statement Summary 💵

	2024	2023
Total Revenue	$11,314m	$9,872m
Cost of Goods Sold (Food, beverage & packaging)	$3,375m	$2,913m
Gross Profit	$7,939m	$6,959m
SG&A (General & administrative)	$697m	$634m
Operating Income	$1,916m	$1,558m
Non-operating (Interest & other income, net)	$94m	$63m
Income Before Tax	$2,010m	$1,621m
Income Tax Expense	$476m	$392m
Net Income	$1,534m	$1,229m
Diluted EPS	$1.1	$0.9

Note: Chipotle reports “Interest and other income, net” as a combined line item, so it is shown here as non-operating income.

Balance Sheet Summary 🧾

	2024	2023
Cash & Cash Equivalents	$749m	$561m
Accounts Receivable (net)	$144m	$116m
Inventory	$49m	$39m
Total Current Assets	$1,781m	$1,621m
Property & Equipment, net	$2,390m	$2,170m
Goodwill	$22m	$22m
Total Assets	$9,204m	$8,044m
Accounts Payable	$211m	$198m
Total Current Liabilities	$1,169m	$1,031m
Total Liabilities	$5,549m	$4,982m
Total Shareholders’ Equity	$3,656m	$3,062m

Cash Flow Statement Summary 💸

	2024	2023
Net Cash Provided by Operating Activities	$2,105m	$1,783m
Net Cash Used in Investing Activities	$-838m	$-946m
Net Cash Used in Financing Activities	$-1,074m	$-661m
Net Change in Cash (incl. restricted cash)	$192m	$177m
Cash, Cash Equivalents & Restricted Cash (End of Year)	$778m	$586m

Key Financial Ratios 📈

	2024	2023
ROE	45.7%	45.3%
ROA	17.8%	16.4%
Gross Margin	70.2%	70.5%
Operating Margin	16.9%	15.8%
Pre-Tax Margin	17.8%	16.4%
Net Margin	13.6%	12.4%
Debt-to-Equity	151.8%	162.7%
Current Ratio	1.52x	1.57x
Quick Ratio	1.34x	1.37x
Fixed Assets / Long-Term Capital	29.7%	30.9%

Beginner note: Margins tell you how much profit a company keeps from each $1 of revenue. Chipotle’s net margin improved in 2024, meaning it kept more profit after all costs and taxes.

3. Valuation 💰

Here are the valuation ratios. These numbers don’t tell you by themselves if the stock is cheap or expensive. Investors typically compare them with peers, the broader market, or with their own view of intrinsic value (DCF). It’s up to each investor to judge whether these multiples signal undervaluation or overvaluation.

Market context: Based on a market capitalization of $47.5 billion, the following multiples are calculated using the company’s 2024 financial statements and the current share price.

Metric	Chipotle Mexican Grill (CMG)
P/E (Trailing)	31.0
Forward P/E	29.9
P/S	4.2
P/B	13.0
EV / EBITDA	20.1
Free Cash Flow Yield (%)	3.2%
Dividend Yield (%)	0.0%

🔍 How to Read These Numbers (Plain English)

Trailing vs. Forward P/E: The forward multiple is slightly lower, suggesting analysts expect earnings growth relative to the most recent year.
High P/B ratio: Chipotle trades well above book value, which is common for asset-light, brand-driven restaurant businesses with strong profitability and returns on capital.
EV / EBITDA around 20×: This indicates the market is assigning a premium valuation to Chipotle’s operating cash earnings, reflecting its scale, pricing power, and consistent margins.
Free Cash Flow Yield near 3%: The business generates substantial free cash flow, but at the current valuation, the implied cash return is modest. This means the investment case depends more on future growth than near-term cash yield.
No dividend focus: Chipotle does not pay a meaningful dividend, choosing instead to reinvest in operations and return capital primarily through share repurchases.

Forward P/E is shown as a consensus estimate (average from major financial data providers) for reference.

Analysis date: 2025-12-16

4. Risks ⚠️

Editorial Note: In order to enhance readability, we have omitted broad, market-wide risks that generally affect all companies. The following discussion is focused solely on the risks that are specific to this company and the industry in which it operates.

🥗 Food Safety and Food-Borne Illness Could Damage the Brand

Food safety incidents (or even rumors) could harm brand trust, reduce restaurant traffic, and increase costs.
Risks can arise from restaurant handling (improper cooking/holding), infected employees or guests, or supplier contamination.
Chipotle notes it may face higher exposure than some peers because it uses more fresh, unprocessed ingredients, handles raw chicken, relies on traditional cooking methods, and uses fewer preservatives.
Delivery and catering can add risk because food may be transported or stored outside Chipotle’s control.
Emerging concerns in the food supply (for example, PFAS—a category of industrial chemicals sometimes called “forever chemicals”—or microplastics) could reduce consumer confidence in the restaurant industry and impact sales.

Plain English: If customers worry the food is unsafe, they may stop buying quickly. Even a single incident can create negative publicity and hurt sales for a period of time.

⭐ Brand Reputation and Relevance Must Be Maintained

Chipotle’s results depend on protecting the Chipotle brand, which can be harmed by food safety issues, safety incidents near restaurants, privacy incidents, or controversies involving employees, guests, or partners.
The company notes that social and digital media can spread negative stories rapidly, sometimes before the company can investigate and respond.
Guest perceptions—such as concerns about entrée portion sizes—could also weaken brand value.

Plain English: A restaurant brand is built on trust and consistency. If trust is damaged, it can take time and money to rebuild guest traffic.

🍽️ Intense Competition and Changing Consumer Preferences

The restaurant industry is highly competitive on taste, price, service, digital experience, advertising, and restaurant locations.
Chipotle also competes with non-traditional options such as grocery “convenience meals,” meal kits, and “ghost kitchens” (delivery-focused kitchens without a traditional dining area).
The company notes that competitors’ quality-related claims may reduce Chipotle’s differentiation, even if those claims are not accurate.

Plain English: If competitors win customers on convenience, value, or marketing, Chipotle may need to spend more or innovate faster to keep sales growth strong.

🤖 Technology and Automation Investments May Not Deliver Expected Benefits

Chipotle is investing in tools such as a dual-sided plancha (cooking grill), automated produce slicers, an automated make line for bowls and salads, and Autocado (an automated avocado processing device).
The company states there is no guarantee these initiatives will be widely deployed or that they will materially improve employee experience, guest experience, or financial performance.
Chipotle is also investing in digital ordering and guest engagement, and interruptions or underperformance could hurt results.

Plain English: Automation can reduce labor pressure and speed up service, but it can also be expensive and difficult to roll out across thousands of restaurants.

🚗 Third-Party Delivery Risks: Profitability and Guest Experience

Chipotle notes that over 15% of 2024 food and beverage revenue came from delivery orders that rely on third-party delivery companies.
Delivery economics may be pressured if the delivery fee collected is less than the actual delivery cost, or if delivery partners raise fees.
If delivery partners prioritize competitors or provide poor service (late, incomplete orders), customers may blame Chipotle, harming reputation and sales.
Failures or interruptions in ordering and payment platforms used by third parties (or Chipotle’s own digital channels) could reduce sales and hurt brand perception.

Plain English: Delivery can drive growth, but Chipotle does not fully control the last-mile experience. Poor delivery performance can still damage the brand.

👥 Hiring, Retention, and Workforce Planning Challenges

Rapid restaurant expansion can make it harder to recruit, train, and retain enough qualified employees and managers.
Workforce planning is more complex due to predictive scheduling (“fair workweek”) rules and “just cause” termination laws in certain locations.
Labor shortages or higher turnover can lead to longer wait times, temporary digital make line closures, and lower guest satisfaction.
Chipotle also notes potential impacts from changes in immigration laws that could reduce the pool of authorized workers.
The company notes that unionization efforts, if successful, could reduce flexibility and disrupt operations.

Plain English: Restaurants are people-driven. If staffing is tight, service slows down, customer satisfaction can drop, and costs may rise.

💼 Employment and Labor Law Compliance Risks

Chipotle is subject to extensive laws on wages, overtime, meal and rest breaks, scheduling, discrimination, workplace conditions, and documentation.
The company notes it has faced lawsuits and claims related to employment practices (such as wage-and-hour issues), which can be costly to defend and resolve.
Certain jurisdictions impose additional requirements (fair workweek, paid time off, “just cause”), and non-compliance could lead to penalties and operational constraints.

Plain English: With a large hourly workforce, small compliance failures can become expensive, especially if claims turn into large group or class-type cases.

💸 Rising Labor Costs Could Pressure Restaurant Margins

Chipotle highlights exposure to rising wages and benefits, including mandated minimum wage increases.
The company notes that higher menu prices may be needed to offset costs, but price increases depend on whether guests still feel the meal offers good value versus competitors.
Chipotle points to regulatory changes such as California’s $20/hour minimum wage for certain restaurant workers in 2024, which may increase over time.

Plain English: If wages rise faster than menu prices can, profitability can be squeezed.

🔐 Cybersecurity, Data Privacy, and IT System Reliability

Chipotle’s systems handle sensitive information and support critical functions like payments, digital ordering, and rewards programs.
The company notes ongoing risks from cyber threats such as phishing (tricking users into revealing access), malware, ransomware, and social engineering.
Third-party providers and partners can also be a source of exposure because Chipotle shares data and relies on their platforms.
Privacy rules (for example, GDPR in Europe and CCPA/CPRA in California) are evolving and can increase compliance costs and potential liabilities.
IT failures—whether from outages, disasters, vendor issues, or system transitions—could disrupt operations and reduce sales if recovery is not timely.

Plain English: Digital ordering and payments are essential. If systems go down or data is compromised, sales and brand trust could be affected.

🥑 Ingredient Cost Inflation and Supply Disruptions

Key ingredient prices (such as beef, avocados, and produce) can swing due to seasonality, climate, inflation, disease outbreaks, or commodity market conditions.
Chipotle sources certain items internationally, which could increase exposure to tariffs or trade-related cost increases.
Shortages or disruptions can occur due to extreme weather, labor issues, supplier disruptions, transportation problems, or supplier financial distress.
Chipotle notes that some ingredients have limited suppliers, which can increase disruption risk.

Plain English: If key ingredients get more expensive or harder to source, Chipotle may face margin pressure or may need to change menu availability temporarily.

🏗️ Execution Risk in Aggressive Restaurant Growth Plans

Chipotle’s growth strategy relies on opening new restaurants at a fast pace and reaching profitability as new locations ramp.
The company notes buildout costs have risen due to construction labor inflation and materials/equipment costs.
New restaurants can take up to 36 months to reach targeted sales and profitability levels.
Growth depends on site availability, lease terms, permits, contractor availability, and utility hookups, which can create delays and added costs.
Chipotle also notes it must maintain existing restaurants through remodels and upkeep; costs or disruptions could impact results.

Plain English: Expanding to thousands of additional restaurants is complex. Delays or higher buildout costs can reduce returns on new locations.

🌍 Partner and International Expansion Risks

Chipotle’s international strategy includes licensed restaurants operated by partners (for example, in the Middle East).
The company notes it cannot fully control partner-operated restaurants, and failures in food quality, service, compliance, or workplace culture could damage the brand.

Plain English: Customers expect the same experience everywhere. If a partner location performs poorly, the brand can still take the hit.

📌 Quick Risk Takeaway (Plain English) 🧾

Brand trust and food safety are central—any issue can quickly reduce customer traffic.
Labor is a major pressure point: hiring, retention, compliance, and wage inflation can affect profitability.
Digital + delivery are growth drivers but introduce dependency on technology and third parties.
Supply chain volatility (avocados, produce, proteins) can pressure costs or disrupt operations.
Rapid restaurant expansion increases execution risk, costs, and operational complexity.

5. MD&A (Management’s Discussion and Analysis) 🧭

🏪 Business Overview and Operating Footprint

As of December 31, 2024, Chipotle owned 3,644 restaurants in the U.S. and 82 international restaurants, plus 3 international licensed restaurants.
Management reports one reportable segment and manages U.S. operations across ten regions.

📌 Key Operating Metrics Management Tracks

Management highlights the following operating metrics as key drivers of financial performance and long-term growth:

Comparable restaurant sales (sales growth at restaurants open at least 13 full calendar months)
Food, beverage, and packaging as a % of total revenue
Labor as a % of total revenue
Occupancy as a % of total revenue (rent and related restaurant occupancy costs)
Other operating costs as a % of total revenue
New restaurant openings

📈 2024 Performance Highlights (Year-over-Year)

Total revenue increased 14.6% to $11.3 billion.
Comparable restaurant sales increased 7.4%.
Diluted EPS was $1.11, up 24.7% from $0.89.

🍽️ Sales Trends and Digital Mix

Management reports comparable restaurant sales growth of 7.4%, driven by higher transactions (+5.3%) and a higher average check (+2.1%).
Comparable restaurant sales means the period-over-period change in total revenue for restaurants open for at least 13 full calendar months.
Digital sales represented 35.1% of total food and beverage revenue.
For 2025, management expects comparable restaurant sales growth in the low to mid-single digit range.

🏗️ Restaurant Development and Expansion Plans

During 2024, the company opened 304 restaurants, including 257 with a Chipotlane (a drive-thru pickup lane for digital orders).
For 2025, management expects to open approximately 315 to 345 company-owned restaurants.
Management expects at least 80% of new company-owned restaurants to include a Chipotlane.
During 2024, three licensed restaurants opened in the Middle East.

📊 Results of Operations (2024 vs. 2023) — Management’s Main Drivers

Food and beverage revenue increased 14.7% to $11,247.4 million.
Delivery service revenue decreased 1.6% to $66.5 million.
Total revenue increased 14.6% to $11,313.9 million.
Average restaurant sales increased to $3.213 million (trailing 12-month food and beverage revenue for restaurants open at least 12 full calendar months).

🥑 Food, Beverage, and Packaging Costs

These costs were 29.8% of total revenue in 2024 (vs. 29.5% in 2023).
Management attributes the increase in cost percentage mainly to:
- Higher ingredient usage to support consistent and generous portions
- Ingredient inflation, especially avocados
- Protein mix shift tied to promotional offerings (e.g., Smoked Brisket) and marketing initiatives
Management notes the increase was partially offset by benefits from menu price increases.

👥 Labor Costs

Labor costs were 24.7% of total revenue in 2024, flat versus 2023.
Management reports that sales leverage (higher sales spreading fixed labor costs) helped, but was mostly offset by restaurant wage inflation.
Management notes wage inflation included impacts from minimum wage increases in California.

Plain English: Management says labor costs stayed steady as a share of revenue because higher sales helped absorb wage increases.

🏠 Occupancy Costs

Occupancy costs were 5.0% of total revenue in 2024 (vs. 5.1% in 2023).
Management attributes the improvement mainly to sales leverage, partially offset by higher occupancy expenses tied to both existing and new restaurants.

🧾 Other Operating Costs

Other operating costs were 13.9% of total revenue in 2024 (vs. 14.5% in 2023).
Management attributes the improvement primarily to sales leverage and lower delivery expenses.

🏢 General and Administrative Expenses

G&A was 6.2% of total revenue in 2024 (vs. 6.4% in 2023).
Management cites key drivers of higher G&A dollars including:
- Wages
- Conferences, including the biennial All Managers’ Conference
- Legal contingencies (costs related to legal matters and potential losses)
- Outside services supporting corporate initiatives
- Stock-based compensation (non-cash pay tied to equity awards)

🧯 Impairment, Closure Costs, and Asset Disposals

These costs were 0.2% of total revenue in 2024 (vs. 0.4% in 2023).
Management attributes the change primarily to a gain on the sale of corporate equipment and differences in charges related to certain leasehold improvements.

💵 Interest and Other Income, Net

Interest and other income, net increased to $93.9 million in 2024 (from $62.7 million in 2023).
Management attributes the increase mainly to higher interest income from larger investment balances in U.S. Treasury securities, money market funds, and time deposits.

🧾 Income Taxes

Provision for income taxes increased to $476.1 million in 2024 (from $391.8 million in 2023).
Effective tax rate was 23.7% in 2024 (vs. 24.2% in 2023).
Management attributes the lower effective tax rate mainly to lower nondeductible expenses and lower income tax reserves, partially offset by lower tax benefits from option exercises and equity vesting.

Effective tax rate means total income tax expense divided by pre-tax income for the period.

🗓️ Seasonality and Quarterly Variability

Management states profitability can vary by quarter due to seasonal factors (for example, lower average daily sales in the first and fourth quarters).
Results may also vary with weather, publicity events, inflation, food costs, timing of menu price changes, marketing spend, trading days, and non-cash items like stock-based compensation.
Management notes that new restaurants typically have higher operating costs soon after opening, and quarterly results are not necessarily indicative of full-year results.

💰 Liquidity and Capital Resources

As of December 31, 2024, the company reported $2.2 billion of cash and marketable investments, $85.2 million of non-marketable investments, and $29.8 million of restricted cash.
Management states planned uses of cash flow include:
- Investing in new restaurant construction
- Share repurchases (buying back shares), subject to market conditions
- Maintaining and refurbishing existing restaurants
- General corporate purposes
As of December 31, 2024, management reports $1.0 billion remained available under share repurchase authorizations (including additional authorization approved on December 17, 2024).
Management reports $500.0 million of undrawn borrowing capacity under a line of credit facility.
Management believes cash from operations plus cash/investments will be sufficient for capital expenditures and working capital needs for the foreseeable future (assuming no significant declines in comparable restaurant sales).

🏗️ Capital Expenditures and Restaurant Investment

Total capital expenditures were $593.6 million in 2024.
Management reports average development and construction cost per new restaurant of about $1.5 million, or about $1.3 million net of landlord reimbursements.
For 2025, management expects total capital expenditures of about $683.7 million, including:
- Approximately $502.7 million for new restaurant construction (before landlord reimbursements)
- Approximately $149.0 million for investments in existing restaurants (remodeling, equipment, hardware, and technology)
- Additional spending for corporate initiatives, including technology investments

💳 Cash Flow Summary (Management Discussion)

Operating cash flow was $2.1 billion in 2024 (vs. $1.8 billion in 2023), driven mainly by higher net earnings and changes in operating assets and liabilities.
Investing cash flow used was $837.5 million in 2024 (vs. $946.0 million in 2023), primarily reflecting changes in investment purchases and maturities, partially offset by higher capital expenditures.
Financing cash flow used was $1.1 billion in 2024 (vs. $660.7 million in 2023), primarily due to higher share repurchases.

Operating cash flow is cash generated by the core business operations. Investing cash flow relates to investments and capital spending. Financing cash flow includes transactions like share repurchases.

🧮 Critical Accounting Estimates Highlighted by Management

Leases: Management explains that operating lease assets and liabilities depend on estimates such as the lease term and the incremental borrowing rate (an estimated interest rate used to discount future lease payments). Changes in these assumptions can change reported lease balances and expenses.
Impairment of long-lived assets: Management tests restaurant assets for impairment when indicators arise, using estimated future cash flows and fair value models that depend on assumptions (discount rate, revenue/expense projections, and sublease income).
Stock-based compensation: Management uses valuation models (such as Black-Scholes and Monte Carlo simulation) that rely on assumptions like volatility and expected life of awards; changes can affect expense.
Income taxes: Management highlights judgment involved in applying tax laws and setting reserves for uncertain tax positions; outcomes can differ from estimates.

Plain English: Management says some reported numbers depend on estimates (like lease terms, impairment assumptions, and tax reserves). If assumptions change, reported expenses and balances can change too.

6. Summary ✅

Chipotle’s 2024 10-K describes a large, scaled restaurant business with a clear operating model built around Food with Integrity, a focused menu, and a strong digital ordering channel. In 2024, the company reported double-digit revenue growth and faster growth in earnings, supported by higher transactions and a higher average check. Management highlighted continued expansion through new restaurant openings, with most new locations including a Chipotlane to support digital convenience.

The filing also emphasizes that key execution areas for the business include food safety and brand trust, labor availability and labor costs, and the reliability of technology and third-party delivery systems. Management notes that ingredient costs and supply disruptions can affect margins, and that rapid expansion increases operational complexity and buildout costs. Overall, the 10-K presents a business focused on growing sales through restaurant execution and expansion, while managing operational and compliance risks that come with running thousands of locations and a large workforce.

📝 Disclaimer
This article is intended for educational purposes only. It does not constitute financial, investment, or legal advice. All investment decisions involve risks, and readers should conduct their own research or consult with a licensed financial advisor.

👉 Chipotle Mexican Grill (CMG) 2024 10-K Key Highlights (Filed 2025) | Explained for Beginners