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SEC Filings

S-1/A
CHIPOTLE MEXICAN GRILL INC filed this Form S-1/A on 12/05/2005
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include wages for our store managers, assistant store managers and crew, bonuses (which we pay quarterly), taxes and benefits. As we've added stores, our average number of hourly employees increased from about 3,000 in 2002 to 5,100 in 2003, 8,100 in 2004, and to about 9,900 in the first nine months of 2005. We generally have two shifts at most of our stores, which helps us better predict our store payroll expenses and in return provides our employees with more stable and predictable work hours. Some of the benefits we offer to our hourly employees are a bit unusual, such as English and Spanish lessons, free food and the opportunity to participate in our 401(k) plan. Although these and other benefits may increase our labor costs, we believe they help us to attract and keep good store managers and crew, which is important to our future success. We expect that some of these costs, such as workers compensation, will increase as McDonald's ownership interest decreases. See "Risk Factors—Risks Related to Our Business and Industry—As we increase our independence from McDonald's, we may face difficulties replacing services it currently provides to us and entering into new or modified arrangements with existing or new suppliers or service providers."

    Occupancy Costs

        Occupancy costs represented 9.1% of total revenue in 2002, 8.1% in 2003, 7.7% in 2004 and 7.6% in the first nine months of 2005. These costs include rent, real estate taxes, property taxes and common area maintenance charges. Occupancy costs generally increase as the number of stores increases, but have tended to decline as a percentage of sales due to our increasing average store sales.

    Other Operating Costs

        Other operating costs represented 14.6% of total revenue in 2002, 13.8% in 2003, 13.7% in 2004 and 13.1% in the first nine months of 2005. These costs include utilities, marketing and promotional costs (including free samples), bank fees, credit and debit card processing fees, store supplies, repair, maintenance and similar costs. One of the unique employee benefits included in other operating costs is our company car program, which is available to store managers who have been with us for more than four years. Although this and other similarly unusual benefits may increase our other operating costs, we believe it helps us to attract and keep good store managers, which is important to our future success. Other operating costs generally increase as sales increase and as the number of stores increases, but have tended to decline as a percentage of sales due to our increasing average store sales.

    General and Administrative Expenses

        General and administrative expenses include the corporate and administrative functions that support our stores, including employee wages and benefits, travel, information systems, recruiting and training costs, corporate rent, the $4.0 million credit and debit card liability reserve, professional fees, supplies and insurance and also include costs for store accounting services we received from McDonald's. General and administrative expenses represented about 12.6% of total revenue in 2002, 10.8% in 2003, 9.5% in 2004 and 8.2% in the first nine months of 2005.

        As a public company, we'll incur legal, accounting and other expenses that we did not incur as a majority-owned subsidiary of McDonald's. We expect that these additional expenses will be a few million dollars in each of 2006 and future years.

    Depreciation and Amortization

        Depreciation and amortization are periodic non-cash charges that represent the reduction in usefulness and value of a tangible or intangible asset. Depreciation and amortization represented about 5.5% of total revenue in 2002, 4.8% in 2003, 4.6% in 2004 and 4.5% in the first nine months of 2005. Our principal depreciation and amortization charge relates to capital expenditures for store construction.

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