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SEC Filings

CHIPOTLE MEXICAN GRILL INC filed this Form S-1/A on 12/23/2005
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Relationship with McDonald's

        Our equity is currently owned by McDonald's, our management and a small number of outside investors. McDonald's interest is about 91% and, after the offering, we expect McDonald's will own about 88% of the combined voting power of our outstanding stock and 69% of the economic interest in our outstanding common stock (or 87% and 65%, respectively, if the underwriters' over-allotment option is exercised in full).

        In connection with this offering, we've entered into agreements with McDonald's to clarify our relationship with McDonald's while it is our controlling shareholder. These agreements address services that McDonald's or its suppliers provide to us at preferred rates and for the allocation of employee benefit, tax and other liabilities and obligations attributable to or related to periods or events prior to and in connection with this offering. The agreements summarized below have been incorporated by reference as exhibits to the registration statement of which this prospectus is a part. As our controlling shareholder after this offering, McDonald's will continue to exercise significant influence over our business policies and affairs, including the composition of our board of directors and any action requiring the approval of our shareholders. Currently, one of the members of our board of directors, Mats Lederhausen, is also an employee of McDonald's. See "Risk Factors—Risks Relating to Our Affiliation with McDonald's."

        Historically, we've also entered into short-term agreements with McDonald's to provide us with temporary capital. In addition, we invest our excess cash under short-term agreements with McDonald's. See "Management's Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources."

        We currently reimburse McDonald's for payroll and related expenses relating to certain McDonald's employees that perform services for us, insurance coverage, software maintenance agreements and non-income based taxes, and we lease office and restaurant space from McDonald's and its affiliates. In aggregate, we paid McDonald's $3.6 million, $5.6 million and $8.8 million in 2002, 2003 and 2004, respectively, and $8.3 million in the first nine months of 2005 for those matters.

Services Agreement

        As a majority-owned subsidiary of McDonald's, we've historically received various services from McDonald's. These services include, among others, accounting services, insurance policy coverage (including primarily property and umbrella / excess liability) and certain welfare plans for our employees. Under the terms of a services agreement we'll enter into with McDonald's when we complete this offering, McDonald's will continue to provide services to us.

        The services agreement will become operative on the closing date of this offering and will have terms ranging from approximately one or two years depending on the service. Services will renew automatically unless we or McDonald's terminate the services agreement prior to renewal. If McDonald's ceases to own more than 80% of the combined voting power of our stock, we or McDonald's may terminate the services agreement or any of the services on providing advance notice, which ranges from two to 15 months, depending on the service; however, we or McDonald's may terminate the accounting services that McDonald's provides to us at any time, upon providing 15 months' notice, regardless of the level of McDonald's ownership.

        We will pay McDonald's mutually agreed-upon fees for the services. We estimate that the aggregate annual fees we'll pay initially will be about $                  per year. However, this amount may increase or decrease depending on a number of factors, including an increase or decrease over time in the number of services provided by McDonald's, the number of our stores or the number of our employees, agreed-upon annual price negotiations between us and McDonald's or an increase or decrease over time in the cost to McDonald's of procuring applicable insurance coverages and employee benefit arrangements. In addition,


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