CMG

MKT CAP $35.3BP/E 25.6DIV YIELD —FCF YIELD 4.44%REV TTM $12.4B +7.3%NET INCOME $1.4B −7.9%NET CASH $228.2M52W 27.90 – 42.36SEC XBRL · TTM TO Invalid Date

How CMG rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

35%

of sentences unchanged

Added

new sentences

Dropped

117

sentences removed

Length

−631

words, now 8,043

New in FY2025

Food safety is our top priority, and we dedicate significant resources to ensuring that our food products are safe; however, even strong preventative controls and interventions from farm to restaurant cannot completely eliminate food safety risks.
Incidents of food-borne illnesses have occurred and may continue to occur in our and other restaurants resulting from the failure of restaurant employees to properly cook or maintain ingredients; employees or guests entering a restaurant while infected with communicable diseases; or contaminated ingredients resulting from the failure of a supplier, distributor or employee to execute food safety preventive controls.
Any report, legitimate or rumored, of food-borne illness caused by pathogens such as E. coli, hepatitis A, norovirus, listeria, Campylobacter, Clostridium perfringens or salmonella, or other food safety issues, such as food tampering, contamination or natural or foreign objects, at one of our restaurants could adversely affect our reputation and have a negative impact on our sales.
In addition, instances of food-borne illness or food safety issues that occur solely at competitors’ restaurants or at suppliers or distributors (even if we do not work with them) could result in negative publicity about the restaurant industry and adversely impact our sales.
We may have higher risk for food safety incidents than some of our competitors because we use fresh, unprocessed produce, handle raw chicken in our restaurants, rely on employees cooking with traditional methods and don't use artificial preservatives or frozen ingredients in our menu items.
The risk of illnesses associated with our food also may increase due to our delivery and catering businesses, in which our food is transported, stored and/or served in conditions that are not under our control.
In addition, real or perceived concerns about pervasive chemicals and substances in the U.S. food supply chain, such as phthalates, per- and polyfluoroalkyl substances ("PFAS"), microplastics or heavy metals, have been the subject of increased regulatory scrutiny and lawsuits against us and other restaurant companies, which could impact consumers’ confidence in the restaurant industry and reduce restaurant sales.
Failure to maintain the value and reputation of the Chipotle brand could negatively impact our financial results .
Incidents that could erode trust in our brand include actual or perceived food safety or food-borne illnesses; allegations of unethical or unprofessional behavior by employees and/or guests; privacy breaches or violations of privacy laws; safety-related incidents occurring in or around our restaurants; guest perceptions regarding smaller entrée portion sizes; or other events or incidents described in this risk factors section.
Social media, video-sharing, networking, and gaming and messaging platforms dramatically increase the speed and reach at which negative publicity is disseminated, often before we have a meaningful opportunity to investigate, respond to and address an issue.
Additionally, consumer demand for our products and our brand value could diminish significantly if we, our employees or business partners fail to comply with applicable laws and regulations, take positions or actions that may be considered controversial, fail to deliver a consistently positive guest experience or fail to foster an inclusive and welcoming environment.
The restaurant industry is highly competitive on factors such as taste, price, food quality and selection, customer service, brand reputation, digital engagement, advertising and promotional initiatives, and the location, attractiveness and maintenance of restaurants.
We also compete with non-traditional market participants, such as “convenience meals” in the form of entrées, side dishes or meal preparation kits from grocery stores, meal kit delivery services, and “ghost” or “dark” kitchens, where meals are prepared at separate takeaway premises rather than a restaurant.
Delivery aggregators and food delivery services, which provide consumers with convenient access to a broad range of competing restaurant chains and food retailers, particularly in urbanized areas, may direct potential customers to other restaurants based on paid placements, online reviews and other factors, and may form a closer relationship with our guests.
If guest tastes or dietary preferences change, if our marketing efforts are unsuccessful, or if we are unable to compete successfully with other restaurant concepts, our business could be adversely affected.
The use of these claims by competitors, even if such claims are not accurate or comparable, may lessen our differentiation and make it more difficult for us to compete.
Over 16% of our 2025 food and beverage revenue consisted of delivery orders for which we are reliant on third-party delivery companies.
Depending on which ordering platform a guest uses – our brand platform or the third-party delivery platform – the delivery fee we collect from the guest may be less than the actual delivery cost.
If we increase our menu prices on third-party delivery platforms to cover higher delivery fees, we may not be competitive with other restaurant options offered on that platform.
If the third-party delivery companies we use increase the fees they charge users or give greater priority or promotions on their platforms to other restaurants, our delivery business and our sales may be negatively impacted.
Risks Related to Human Capital If we are not able to hire, train and retain qualified restaurant employees and/or appropriately plan our workforce, our growth plan and profitability could be adversely affected.
We have experienced and may continue to experience challenges in hiring and retaining restaurant employees and in maintaining full restaurant staffing in various locations, which may have resulted in longer wait times for guest orders, temporary closures of the digital make line and decreased employee and guest satisfaction.
Changes in immigration laws could decrease the number of potential candidates with legal work authorization, disrupt the workforce for companies that rely on hourly workers and increase the costs, time and requirements to hire new employees.
In addition, our failure to adequately monitor and proactively respond to employee dissatisfaction could lead to poor guest satisfaction, higher turnover, litigation and unionization efforts, which could negatively impact our financial results.
These regulations impose additional obligations on us, which could increase our operating costs, and our failure to comply with any of these regulations could subject us to penalties and other legal liabilities.
For example, in 2022 we settled a complaint alleging that we violated New York City’s Fair Workweek law and Earned Safe and Sick Time Act, and we currently are cooperating with a second audit by New York City of our compliance with employment law requirements, which could result in additional liabilities.
Our potential liability for these employment laws and regulations may be higher than our restaurant peers because, as one of the largest restaurant companies that owns and operates all our restaurants in the U.S. and Canada, we have more employees than most of our restaurant peers, which franchise some or a significant portion of their operations.
Our profitability has been and could continue to be adversely impacted by increases in labor costs, including wages and health benefits, which are some of our most significant costs.
Increases could be triggered by federal, state and local laws governing matters such as minimum wages, meal and rest breaks and changes to eligibility for overtime pay; regulations regarding scheduling and benefits; increased health care and workers’ compensation insurance costs; and higher wages and benefit costs necessary to attract, hire and retain high-quality employees with the right skill sets in a highly competitive job market.
In addition, state and local laws may require wage increases, restrictions on working hours and other factors that would restrict our flexibility to respond to market conditions and increase our costs without corresponding benefits.
A failure to maintain appropriate organizational capability to support our strategic initiatives, a failure to implement appropriate leadership development programs and build adequate bench strength with key skillsets, or a failure to effectively manage our leadership succession, could jeopardize our ability to meet our business performance expectations and growth targets.
Risks Related to Cybersecurity, Data Privacy and IT Systems We are heavily dependent on information technology systems and failures or interruptions in our IT systems could harm our ability to effectively operate our business and/or result in the loss of guests or employees.
We are heavily dependent on information technology systems, including for point-of-sale and payment processing in our restaurants, digital ordering and order delivery, tracing ingredients back to suppliers and growers, digital Hazard Analysis and Critical Control Points monitoring, monitoring and managing our supply chain, our guest rewards program, payroll processing, sales forecasting, marketing initiatives, business analytics and various other processes and transactions.
Although we have operational safeguards in place and we take efforts to ensure that our third-party providers have implemented proper safeguards and controls, we cannot guarantee that breaches or failures caused by these third-party systems or platforms will not occur.
Failures may be caused by factors such as power outages, natural disasters and other catastrophic events, physical theft, computer and network failures, inadequate or ineffective redundancy, problems with transitioning to upgraded or replacement systems or platforms, flaws in third-party software or services, or errors or improper use by our employees or our third-party service providers.
We continue to invest in and utilize emerging technologies that have potential to make business tasks easier, more efficient and less labor intensive, including artificial intelligence and machine learning.
These new technologies may not deliver the expected efficiencies and could expose us to new risks, including risks related to cybersecurity, data privacy, inaccuracies, hallucinations, bias or discrimination and claims of intellectual property infringement.
Breaches or other unauthorized access, theft, modification or destruction of guest and/or employee personal information, or Chipotle confidential or proprietary information that is stored in our information technology systems or by third parties could damage our reputation and expose us to potential liabilities and loss of revenue.
As our dependence on technology has grown, the scope and severity of potential risks from cyber-attacks and security threats have increased.
We expect that the rapid evolution and increased adoption of artificial intelligence have heightened and will continue to heighten those risks.

and 54 more.

Gone since FY2024

Food safety is our top priority, and we dedicate significant resources to ensuring that our guests enjoy safe, high-quality food products.
However, even with strong preventative controls and interventions from farm to restaurant, food safety risks cannot be completely eliminated.
Incidents of food-borne illnesses continue to occur in the restaurant and retail food industries and incidents may result from the failure of restaurant employees to properly cook or maintain our ingredients, employees or guests entering our restaurant while infected with communicable diseases, or contaminated ingredients resulting from the failure of one of our suppliers to execute food safety preventive controls.
Any report, legitimate or rumored, of food-borne illness caused by pathogens such as E. coli, hepatitis A, norovirus, listeria, Campylobacter, Clostridium perfringens or salmonella, or other food safety issues, such as food tampering or contamination, at one of our restaurants could adversely affect our reputation and have a negative impact on our sales.
In addition, instances of food-borne illness or food safety issues that occur solely at competitors’ restaurants, suppliers or distributors (even if we do not work with them) could result in negative publicity about the restaurant industry and adversely impact our sales.
We may be at a higher risk for food safety incidents than some competitors due to our greater use of fresh, unprocessed produce, handling of raw chicken in our restaurants, our reliance on employees cooking with traditional methods and the lack of artificial preservatives and frozen ingredients in our menu items.
The risk of illnesses associated with our food also may increase due to our delivery or catering businesses, in which our food is transported, stored and/or served in conditions that are not under our control.
In addition, real or perceived concerns about emerging food safety issues, such as phthalates, per- and polyfluoroalkyl substances ("PFAS"), microplastics or heavy metals in the U.S. food supply chain, could impact consumers’ confidence in the restaurant industry and reduce restaurant sales.
Failure to maintain the reputation and relevance of the Chipotle brand could negatively impact our financial results .
Incidents that could erode trust in our brand include actual or perceived food safety or food-borne illnesses; allegations of unethical, racially-biased, inequitable, or socially irresponsible behavior by employees and/or guests; privacy breaches or violations of privacy laws; safety-related incidents occurring in or around our restaurants; guest perceptions regarding smaller entrée portion sizes; or other events or incidents described in this risk factors section.
Social media, video-sharing, networking, and gaming and messaging platforms dramatically increase the speed with which negative publicity is disseminated, often before we have a meaningful opportunity to investigate, respond to and address an issue.
Additionally, consumer demand for our products and our brand value could diminish significantly if we, our employees or business partners fail to comply with applicable laws and regulations, take controversial positions or actions, fail to deliver a consistently positive guest experience or fail to foster an inclusive and welcoming environment.
The restaurant industry is highly competitive with respect to taste preferences, price, food quality and selection, customer service, brand reputation, digital engagement, advertising and promotional initiatives, and the location, attractiveness and maintenance of restaurants.
We also compete with non-traditional market participants, such as “convenience meals” in the form of entrées, side dishes or meal preparation kits from grocery stores, meal kit delivery services, and “ghost” or “dark” kitchens, where meals are prepared at separate takeaway premises rather than a restaurant, and with delivery aggregators and food delivery services, which provide consumers with convenient access to a broad range of competing restaurant chains and food retailers, particularly in urbanized areas, and may form a closer relationship with our guests.
If guest tastes or dietary preferences change, if our marketing efforts are unsuccessful, or if our restaurants are unable to compete successfully with other restaurant outlets, our business could be adversely affected.
The increasing use of these claims by competitors, regardless of the accuracy of such claims, may lessen our differentiation and make it more difficult for us to compete.
Our investments in technology and automation to transform and enhance the experience of our employees and guests may not generate the expected results.
We have launched several initiatives to make our food preparation and cooking processes more efficient and drive a better experience for our employees and consumers, most of which are still moving through our “stage gate” development and evaluation process.
These initiatives include a dual sided plancha, which is our cooking grill; an automated produce slicer; an automated make line by Hyphen, which would automatically assemble guest ordered bowls and salads; and Autocado, an automated avocado processing device that cuts, cores and scoops avocados.
We have invested significant time and resources into developing and testing these technologies, but there can be no guarantee that all or any of them will be widely deployed throughout our restaurant network or, if deployed, will materially improve employee or guest experience or our financial performance.
We also continue to build upon our investments in digital ordering and guest engagement to enhance guest experience and strengthen our ties with our guests.
If these initiatives are not ultimately deployed or if we do not fully realize the intended benefits of these significant investments, our business results may suffer.
Over 15% of our 2024 food and beverage revenue consisted of delivery orders for which we are reliant on third-party delivery companies.
Depending on which ordering platform a guest uses – our platform or the third-party delivery service platform – the delivery fee we collect from the guest may be less than the actual delivery cost.
As the delivery industry consolidates, delivery companies gain greater leverage in negotiating the terms of contracts and increasing pricing, which in turn could negatively impact our profits from this channel.
If the third-party delivery companies we utilize increase the fees they charge users or give greater priority or promotions on their platforms to other restaurants, our delivery business and our sales may be negatively impacted.
Risks Related to Human Capital If we are not able to hire, develop and retain qualified restaurant employees and/or appropriately plan our workforce, our growth plan and profitability could be adversely affected.
We have experienced and may continue to experience challenges in hiring and retaining restaurant employees and in maintaining full restaurant staffing in various locations, which has resulted in longer wait times for guest orders, temporary closures of the digital make line and decreased employee and guest satisfaction.
Anticipated changes in immigration laws and regulations could decrease the pool of candidates with legal work authorization, cause disruption in the workforce for all companies that rely on hourly workers and increase the costs, time and requirements to hire new employees.
In addition, failure to adequately monitor and proactively respond to employee dissatisfaction could lead to poor guest satisfaction, higher turnover, litigation and unionization efforts, which could negatively impact our financial results.
All of these regulations impose additional obligations on us, which could increase our operating costs, and our failure to comply with any of these regulations could subject us to penalties and other legal liabilities, which could adversely affect our ability to attract and retain employees and our results of operations, and potentially cause us to close or reduce operating hours of some restaurants in these jurisdictions.
For example, in 2022 we settled a complaint alleging that we violated New York City’s Fair Workweek law and Earned Safe and Sick Time Act, and we have undergone several audits of our compliance with employment law requirements, which could result in additional liabilities.
Our liability exposure for these employment laws and regulations may be higher than our restaurant peers because we have more employees, since we are one of the largest restaurant companies that owns and operates all our restaurants, while most of our restaurant peers franchise some or a significant portion of their operations.
Our profitability has been and could continue to be adversely impacted by increases in labor costs, including wages and health benefits, which are some of our most significant costs, including increases triggered by federal, state and local laws governing matters such as minimum wages, meal and rest breaks and changes to eligibility for overtime pay; regulations regarding scheduling and benefits; increased health care and workers’ compensation insurance costs; and higher wages and benefit costs necessary to attract, hire and retain high-quality employees with the right skill sets in a highly competitive job market.
In addition, state and local laws may require wage increases and standards on working hours and other factors that would restrict our flexibility to respond to market conditions and increase our costs without corresponding benefits.
For example, in 2024 California required national restaurant chains, including Chipotle, to pay a minimum $20 per hour wage to California restaurant workers, which minimum wage may be increased annually by a state-appointed council.
Other states, counties and cities are considering similar regulations.
A failure to maintain appropriate organizational capability to support our strategic initiatives, a failure to implement appropriate development programs and build adequate bench strength with key skillsets, or a failure to effectively manage our leadership succession, could jeopardize our ability to meet our business performance expectations and growth targets.
Risks Related to Cybersecurity, Data Privacy and IT Systems Breaches or other unauthorized access, theft, modification or destruction of guest and/or employee personal, confidential or other material information that is stored in our systems or by third parties on our behalf could damage our reputation and expose us to potential liabilities.
As our reliance on technology has grown, the scope and severity of potential risks from cyber threats has increased.

and 77 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

Watch CMG. Know when insiders buy.

One email the day a filing lands. Free.