Part 1: Company Analysis and Competitive

Environment
Business Analysis
Company Overview
Chipotle Mexican Grill Inc. also known as Chipotle is one of the leaders in its industry, the fast
and casual dining segment. It was established around 30 years ago. Where it specializes in
Mexican dishes that are made to suit the segment of the industry it is targeting. The company
has also focused on giving clients what they want by offering them various
customized options. In recent years, and accommodation to the world trend, the company has
focused its process on both sustainability and ethical sources to maintain the brand loyalty it
has worked hard to develop. In 30 years of business, Chipotle now runs 3200 branches globally
with the main concentration being in the United States. This averages out to more than 100
new restaurants per year. Unlike other fast-casual chains, Chipotle runs its operations across all
branches to ensure consistent standards of quality are applied, and to maintain the Chipotle
experience anywhere in the world (Chipotle Mexican Grill, 2023).
As part of being in line with the global trend, Chipotle has ensured its online market presence
as the world shifts to a more digital approach to consumerism. Focusing and enhancing their
dynamic digital system which generates increasing sales year over year over the past few years.
As of 2023, this revenue share of digital sales accounted for almost 45% of their overall revenue
of the year. Furthermore, their company app includes around 30 million unique clients which
was a determining part of their growth in recent years (Chipotle Mexican Grill, 2023). On top of
their online sales, Chipotle has customized its drive-thru experience and refers to it as
"Chipotlane" which enhances the experience of their consumers and serves them in the outlet
that conveniences them best.

Primary Revenue Streams

Chipotle utilizes three main revenue streams that enable it to run its operations smoothly. The
first one is their initial business model of in-restaurant dining, the second was briefly discussed
earlier which is digital sales, and lastly their catering service. In-restaurant dining is the current
biggest contributor to sales and revenue, as its branches extend to strategic locations that allow
easy access to clients and generate the most customer engagement.
While the in-restaurant experience is the main revenue driver, it is not their main growth
driver. As the company's investment in technology has increased over the years, their main
driver of growth is their digital sales. It is currently vital for their business and its operations.
Their digital presence includes delivery and pickup applications that are facilitated by another
company just as Uber Eats. These third parties have allowed and boosted the growth of
Chipotle beyond its physical business. Lastly, their catering service, while small in size compared
to the other components remains a strong push during seasonal times that is also diversifying
their revenue (Statista 2023).
Another driver of business and growth is the marketing attempts of Chipotle where they
innovate in their menus and offer seasonal limited-time offerings that enhance their sales on a
transactional basis. With the proper marketing and operational efforts, Chipotle has been able
to maintain the steady growth that made it into one of the industry leaders.

Trends and Risks

Just like any other company in the market, Chipotle is exposed to macroeconomic shifts and
trends. The industry they operate in is considered an industry that is sensitive to
macroeconomic changes. These changes include both inflation and labor costs. Inflation directly
affects the operational revenue of Chipotle as their use of raw materials has to maintain
freshness and could easily shift quickly. The same can be said of labor costs but on the specific
aspects of wage inflation and other competitive hiring that will shift the wages up (IBISWorld,
2023). Nonetheless, many mitigation tools can aid companies specifically Chipotle to avoid
unexpected changes.
In terms of trends, we have briefly discussed some of them earlier, these include technology
advancements and digital ecosystems that are on the rise. These technological advancements
include supply chains that work on AI technology and apps developed for processing orders.
While they do enhance customer experience and increase the operational efficiency of Chipotle
they do come with their own cost. The other trend is health and sustainability, which is
becoming a main driver of consumer choices. This includes choices of ingredients and their
sourcing. While both these trends are supporters of growth, they require higher costs in terms
of both sourcing and capital investment in research and development (Morningstar, 2023). In
valuation, these trends and risks can affect the choice of growth rate and the operational
margins of Chipotle.

Peer Comparision and Analysis

Peer List
To aid in the valuation process of Chipotle we need to be able to position it among its peers. For
the written analysis, we took into account five of its direct competitors and peer list. Shake
Shack Inc., Darden Restaurants Inc., BJ’s Restaurants Inc., Restaurant Brands International Inc.,
and Cheesecake Factory Inc. These competitors are all similar in size and reputation to Chipotle.
Moreover, they have a similar market they target and similar approaches to operations and
expansion. This allows them to be some of the best benchmarks to analyze and value Chipotle.

Company Name Reinvestment Rate - % (FY0) Debt to Equity

Shake Shack Inc 4.74% 58%
Darden Restaurants Inc 17.94% 126%
BJ's Restaurants Inc 5.53% 42%
Restaurant Brands International Inc 18.60% 463%
Cheesecake Factory Inc 15.13% 148%

Analysis
Compared to its peers, Chipotle has the highest reinvestment rate. It currently stands at 38%
which is actually significantly higher than any of these 5 peers and their average. This highlights
the focus that Chipotle has on developing its current operations and its presence. This can allow
us to use a higher growth rate in the valuation as it is a function of the reinvestment rate and
return on capital.
While in terms of its debt-to-equity ratio, we can quickly notice how heavily are the peer list
structured on debt. Where the average for the peers quickly indicates that these companies
have more debt than equity. Which is a risky tendency for the competitors. On the other side,
Chipotle has a market debt-to-equity ratio of 6.3%. In terms of book value, this drops to less
than 1%. Chipotle has no long-term debt or bonds issued in its books. Rather all its debt is
actually of operating leases, thus implying they are only for operation purposes and
commitments. This low debt-to-equity ratio will aid in lowering the cost of capital for Chipotle
compared to its peers.

Risk Assessment
Risks
There are 3 main risks to affect the valuation and operations of Chipotle. The first is inflation
and rising costs. The second is the intense competition. Lastly, regulatory challenges. To avoid
repetition, we will skip the first point as it was already discussed earlier in the analysis. In terms
of competition, their industry is fast-moving and ever-growing. Some client behavior is
susceptible to changes in taste and trying new things. Also, consumers are very sensitive to the
prices of their products and meals. This forces Chipotle and its peers to always adapt and
expand their offering and price range in order not to lose their edge and competitive advantage
against their peers.
Regulatory challenge is a broad topic that can include labor laws, health laws, and compliance
costs. For example, the rising minimum wage can seriously affect the costs of Chipotle and
could require them to quickly adjust their budgets to accommodate. Health laws are one of the
core controllers of the food industry and consumers' evolving needs. Therefore, Chipotle is
always exposed to risks arising from regulatory changes. Lack of cooperation from Chipotle's
side can cause serious reputational challenges that they cannot afford.

Mitigation Strategies
There are many strategies that can lessen the exposure to such risks. One of the main ones that
is currently trending is automation and the increasing dependency on AI technology and tools.
This allows them to lower the number of employees needed and at the same time enhance
efficiency in their delivery of services whether it is in their catering, in-restaurant, or digital
sales.
Part 2: Discount Rate Estimation
Regression Beta
Calculation and Analysis
For the calculation of the regression beta, we used Chipotle's monthly closing price and the
monthly closing price of the S&P 500 index over the past years from 2019 until 2023. We
calculated the returns of each, the stock, and the index. Then we employed two methods to
calculate the regression beta.
The first method is the slope method. This required more data points to be extracted. As for the
first slope calculation, we needed to include the last 60 data points which are the closing prices
of the stock and index from 2014 until 2019, and their returns. Each month moving forward, we
included the 60 most recent slopes until we reach the last data point of December 2023. Lastly,
we averaged the 60 computed slopes to get a regression beta of 1.15202.
The second method applied to determine the regression beta is the covariance beta. Which
includes calculating the covariance between the stock and the index returns and then dividing it
by the variance of the index returns. This gave us a regression beta of 1.33121.
The final regression beta that we decided to proceed with is the average of both these
methods. This gave a final regression beta of 1.24. The aim of these regression betas is to
reflect how sensitive is Chipotle to changes in the index based on historical exposure. The value
of the beta tells us that this exposure has a moderate exposure to the market.
Limitations of Regression Beta
One of the main limitations of using regression beta is the assumption that the company risk
profile maintains consistency over time. This is not true, especially for a company like Chipotle
which experienced high growth over time. During the period of valuation we are undertaking,
we can notice how rapid the growth of Chipotle has been. Their digital evolution and
operational investments are changing the way the company is to an extent that historical data
might not be the best reflector of reality.
Another argument to support the limitation of the model is by viewing the graph of the slopes
that aided in the computation of beta. Over the period, we can notice a jump in the beta
computed where the data starts close to 0.6 till it reaches above 1 and attempts to stabilize
itself. Further highlighting the change in the risk profile of the company.

Bottom-Up Beta Analysis

Process and Methodology
Another way to calculate beta is the bottom-up approach. This process includes utilizing the
data extracted from the chosen peer group that are similar in operations, market niche, and
relative size. For this analysis, we took into account a bigger peer group, more than 5 and they
are as follows: Shake Shack Inc., Darden Restaurants Inc., Wendy's Co., BJ's Restaurants Inc.,
Restaurant Brands International Inc, Brinker International Inc, Cheesecake Factory Inc, Hot Chili
Ltd, Noodles & Co.
Now using Refinitiv, we extracted the essential data that is required for our computation. This
includes the average monthly beta for each of the peers, their WACC tax rate, and their debt
and equity to calculate the Debt-to-equity ratio.
After collecting the data, we proceeded with our calculation which included unlevering each of
the peer betas using their own D/E ratio and their tax rate. To unlever the beta we simply
divided the beta by (1+(D/E)(1-t) which can be seen computed in the table below.
 WACC Tax Debt to
Identifier (RIC) Beta Rate Equity (1-t) 1+[(D/E)*(1-t)) Unlevered Beta
SHAK.K 1.86 0.22 58% 78.45% 1.46 1.27
DRI.N 1.30 0.14 126% 86.13% 2.09 0.62
WEN.OQ 0.77 0.23 1082% 77.12% 9.34 0.08
BJRI.OQ 2.07 0.22 42% 78.45% 1.33 1.56
QSR 0.95 0.20 463% 79.91% 4.70 0.20
EAT 2.50 0.22 2031% 78.45% 16.94 0.15
CAKE.O 1.47 0.22 148% 78.45% 2.16 0.68
HCH.AX 1.55 0.30 0% 70.23% 1.00 1.55
NDLS.OQ 1.63 0.22 309% 78.45% 3.43 0.48

This allows us to understate the risk of the business by removing the effects of each company's
financial leverage. After calculating all the unlevered betas, we average them using a simple
average and consider it the peer benchmark beta. We then accommodate this peer benchmark
beta to the specific risk of Chipotle by leveraging it using Chipotle's debt-to-equity ratio and its
own tax rate. This gives a final bottom-up beta for Chipotle of 0.77.
Market Value of Debt and Equity
Average Benchmark Unlevered Beta 0.73
Total Debt 3,976,437,637
62,722,164,96
Total Equity 0
WACC Tax Rate, (%) 21.6%
Debt to Equity 6.3%
(1-t) 78.4%
1+[(D/E)*(1-t)) 1.05
Beta 0.77

Advantages of Bottom-Up Beta

One of the key differences between this approach and the regression is the data included in the
calculation. Bottom-up beta incorporates the capital structure of the company into its
computation allowing us to have a cleaner version. Furthermore, it allows to use of peers that
will eliminate any company-specific value. It is important to consider the peer strategically to
offer a consistent result of performance and computation.
Beta Comparision
The regression beta revealed that Chipotle has a higher sensitivity to the market while the
bottom-up beta offered the opposite explanation that indicated a lower sensitivity to the
market. Each of these will have a different impact on the valuation as they directly impact the
cost of equity. A higher beta implies a lower more conservative valuation while a lower beta
implies the opposite.

Cost of Debt and WACC

Cost of Debt
Chipotle does not have any bonds issued or long-term debt. They also do not have any credit
scoring in the major credit agencies as indicated in Revinitiv. They do have operating leases that
we are treating as their debt given their characteristic and value. The extracted from the most
recent annual report of Chipotle are the book value of the operating, the weighted average
discount rate, and the estimated time to maturity computed in the annual report as well. Using
these data points we were able to compute an estimated interest expense and to compute the
market value of debt as follows.

Book Value of Operating Leases (in USD thousands) 4,051

Approx interest expense (in %) 5.1%
198.9
Approx interest expense (in USD thousands) 0
Approx maturity (in years) 13.7
Cost of debt (in %) 5.1%
MV of debt (in USD million) 3,976

WACC
There are two necessary rates for the computation of the WACC. The cost of debt and the cost
of equity. As shown earlier the cost of debt for Chipotle is 5.1%. For the cost of equity, we need
to retrieve the risk-free rate, Beta which was already computed, and the expected return of the
market. For the risk-free rate, we got the rate of a US 10-year treasury bond and retrieved a
rate of 4.3%. We also extracted the expected return of the S&P index from Refinitiv and got a
value of 7.4%.
Using the CAPM formula, we can compute the cost of equity. We calculated 3 costs of equity,
one by using the regression beta, the bottom-up beta, and finally the average of both. As can be
seen in the tables below.
Debt to Equity (Market Value) 6.3%
Marginal Tax 21.8%
Risk-free rate: 4.3%
Average Beta 1.01
E(Rm) 7.4%
Equity Premium 3.0%
Cost of Equity 7.41%
Cost of Debt 5.1%

WACC 7.2%

Debt to Equity (Market Value) 6.3%

Marginal Tax 21.8%
Risk-free rate: 4.3%
Regression Beta 1.24
E(Rm) 7.4%
Equity Premium 3.0%
Cost of Equity 8.13%
Cost of Debt 5.1%

WACC 7.9%

Debt to Equity (Market Value) 6.3%

Marginal Tax 21.8%
Risk-free rate: 4.3%
Bottom Up Beta 0.77
E(Rm) 7.4%
Equity Premium 3.0%
Cost of Equity 6.69%
Cost of Debt 5.1%

WACC 6.5%

There are two necessary rates for the computation of the WACC. The cost of debt and the cost
of equity. As shown earlier the cost of debt for Chipotle is 5.1%. For the cost of equity, we need
 to retrieve the risk-free rate, Beta which was already computed, and the expected return of the
market. For the risk-free rate, we got the rate of a US 10-year treasury bond and retrieved a
rate of 4.3%. We also extracted the expected return of the S&P index from Refinitiv and got a
value of 7.4%.

Part 3: Cash Flow Estimation

Historical Cash Flow Analysis
We can use the historical free cash flow of the firm as a trajectory of the company's financial
direction and health. Chipotle had a FCFF of 94.4 million USD in 2018 which jumped to 1.15
billion USD in 2022. A very strong significant growth in the first four years of the analysis. The
FCFF dropped to 800 million USD in 2023 showing signs that the growth spurt has stopped and
that it is starting to stabilize. This is a strong indicator that the company was able to improve its
revenues and operations over the past few years and it is now reaping its rewards.
When it comes to the adjustment of extraordinary items, there were none to report. This points
out that this growth in cash flow is pattern solely dependent on their organic instead of being
caused by a specific event occurring during the years.

31-12-2018 31-12-2019 31-12-2020 31-12-2021 31-12-2022 31-12-2023

Revenues 4,865.0 5,586.4 5,984.6 7,547.1 8,634.7 9,871.7

Operating Margin before

Non-Recurring 7.2% 8.6% 5.5% 11.0% 13.7% 16.2%
Income/Expenses
EBITDA 554.0 692.3 565.7 1,084.3 1,468.4 1,915.6
EBIT 290.1 464.1 298.3 812.6 1,160.8 1,559.2
Tax Rate 36.6% 23.6% -21.1% 19.7% 23.9% 24.2%
EBIT(1-t) 183.8 354.6 361.2 652.8 883.4 1,182.2
Depreciation &
264.0 228.2 267.4 271.7 307.6 356.4
Amortization
- Capital Expenditures 287.4 319.9 373.4 438.4 479.2 560.7
- Chg WC 66.0 228.3 127.4 210.4 -437.3 177.2
FCFF 94.4 34.5 127.9 275.7 1,149.0 800.6
When it comes to setting up the base year, we decided to go with the normalizing approach.
Where many of the metrics required for the base year were normalized such as revenue,
operating margins, effective tax rate, capital expenditure, changes in working capital,
depreciation, return on investment, and the reinvestment rate. The remainder of the data is
shown in the table below. This will allow us to estimate what the stable company looks like
avoiding all of the volatility that is encurred with the high growth spurt.
Normalized Revenues 7,081,556,667
Normalized Operating Margin 10.36%
Effective tax rate
(for use on operating income) 17.81%
Normalized Depreciation & Amort'n 282,546,667

Normalized CapEx 409,835,000

Normalized Change in Working
Capital 62,000,000

Closing Stock Price 45.74

Number of shares outstanding 1,371,300,000
Market Value of Equity 62,722,164,960
Market Value of Debt 3,976,437,637
66,698,602,597.3
Market Value 5
Debt to Equity Ratio 6.3%

Book Value of Debt 4,051,100,000

Book Value of Equity 3,062,210,000

Reinvestment Rate 26%

ROC 26%
Non-cash Working Capital/Sales 0.24%

Cash Flow Forecasting

For the forecasting methodology, it is important to note where we got our values for the
terminal year. For this we calculated we started extracting industry standards, to be specific the
US restaurants and dining sector from the Damodaran data set. This data included the debt-to-
equity ratio, return on invested capital, effective tax rate, and reinvestment rate. The
remainder of the data is shown in the table below. We then moved Chpitole’s base calculation
from the base year to the terminal year in equal steps.
 Industry Numbers
Operating Margin % 17.26%
Debt / Equity 25.73%
ROIC est. 19.56%
Tax 21.60%

Beta 1.19
Cost of Equity 9.38%
Cost of Debt 5.09%
Reinvestment Rate 34.51%
Non-cash Working Capital/Sales 3.57%

For the growth rate used in each year, we computed growth as a function of reinvestment rate
and ROIC in each. Providing us with a smooth transition of the growth of the company to where
it would grow perpetually at the US 10-year government bond rate.
Model Base Year 1 2 3 4 5 Terminal
Revenue Growth Rate 6.98% 7.00% 6.98% 6.94% 6.86% 4.35%

Revenues 7,081,556,667 7,575,982,932 8,106,119,465 8,672,105,866 9,273,580,474 9,909,578,952 10,340,348,349

Operating Margin 10.36% 11.51% 12.66% 13.81% 14.96% 16.11% 17.26%

EBIT 733,295,193 871,679,969 1,025,964,520 1,197,401,017 1,387,173,079 1,596,350,589 1,784,744,125

Tax Rate 17.81% 18.48% 19.15% 19.83% 20.50% 21.17% 21.84%

EBIT(1-t) 602,695,319 710,576,699 829,452,739 960,006,853 1,102,834,297 1,258,408,860 1,394,927,948

+ Depreciation 282,546,667 302,273,755 323,425,645 346,007,908 370,006,112 395,381,783 412,569,029

- Capital Expenditures 409,835,000 438,449,215 469,130,112 501,885,768 536,695,254 573,502,759 598,432,924

- Chg WC 62,000,000 60,492,728 109,658,304 165,384,704 228,259,178 298,842,781 369,150,436

FCFF 413,406,986 513,908,510 574,089,968 638,744,288 707,885,978 781,445,102 839,913,616

Terminal Value 6,719,308,931

Cost of Capital Calculations
Tax Rate 21.84% 18.48% 19.15% 19.83% 20.50% 21.17% 21.84%
Debt Ratio 6.34% 9.57% 12.80% 16.03% 19.27% 22.50% 25.73%
Beta 1.006 103.63% 106.71% 109.78% 112.85% 115.93% 1.190
Cost of Equity 7.41% 7.74% 8.07% 8.39% 8.72% 9.05% 9.38%
Cost of Debt 5.10% 5.10% 5.10% 5.10% 5.09% 5.09% 5.09%
The after-tax cost of debt 3.99% 4.16% 4.12% 4.08% 4.05% 4.01% 3.98%
Cost of Capital 7.19% 7.39% 7.56% 7.70% 7.82% 7.92% 7.99%
Computed Variables

Total Capital Invested 7,113,310,000 8,983,962,336 11,469,535,230 14,799,788,058 19,299,589,611 25,431,717,900 33,860,354,341
Reinvestment Rate 26.30% 27.67% 29.04% 30.40% 31.77% 33.14% 34.51%
Return on Invested Capital 26.37% 25.24% 24.10% 22.96% 21.83% 20.69% 19.56%
Non-cash Working
Capital/Sales 0.2% 0.80% 1.35% 1.91% 2.46% 3.02% 3.6%
Scenario-Based Cash Flow Forecasting
We considered the first model above as the base scenario and the basis of our other scenarios.
We want to explore the effects of different growth structures on the cash flows, reinvestment
rate, and return on invested capital. For this, we kept the computation as is but only changed
the growth rate. Then we calculated the ROIC by dividing EBIT(1-T) by the invested capital
calculation. We then used the growth function to estimate the reinvestment rate.
For the high growth scenario, we assumed that the high growth will keep on increasing till it
reaches the peak of 25% in two years. Thereafter, it decreases by five percent a year. Under this
growth structure, we noticed that the reinvestment rate for a period of time will exceed 200%
in a single year. For Chipotle to be able to sustain such growth it will have to reshape its capital
structure and become heavily invested in debt.
In the low growth scenario, we assumed that the company would only grow 3-4 in each of the
years. The reinvestment rate in this scenario was reasonable and realistic. This makes sense as
this is a function of growth itself. However, this approach undermines the capacity of Chipotle
to generate returns which is not true based on historical analysis.
When comparing these scenarios to whether they are a realistic approach to how the company
might behave in perpetuity, we find that the base scenario remains the most realistic approach.
The high growth scenario seems unsustainable, especially with the required reinvestment rate.
One of the key elements is that the reinvestment rate for the terminal year is above 100%
which implies that Chipotle must maintain that in perpetuity which is far from reality.

Part 4: DCF Valuation and Investment

Recommendation
DCF Valuation Analysis
Projected Cash Flows and Terminal Value
For the DCF analysis, we utilized the base scenario we developed earlier and computed its FCFF
for the next five years. As these computations were adjusted to tax effects, they reflect an
accurate and reliable measure of cash available to the company. For the discount rate, as
previously discussed, we started with 7.19% which was calculated using the average regression
and bottom-up betas. Then we steadily grew this WACC to align it with the industry averages
computed for the terminal year. As indicated in the brief, the terminal value was considered as
8 times the EBIT of the terminal year. This gave us a terminal value of around 11 billion USD.
Present Value and Valuation
We computed that the present value of the FCFF is around 3.27 billion and the present value of
the terminal value is 8.52 billion USD. This gave us a total firm value of 11.79 billion USD. After
adjusting for debt and computing the value per share, we end with an intrinsic value of
Chipotle's stock of 5.70 USD per share.

The Valuation
PV of FCFF = 3,271,762,741
PV of Terminal Value = 8,520,182,612
Value of Firm = 11,791,945,353
- Value of Outstanding Debt = 3,976,437,637
Value of Equity = 7,815,507,716
Outstanding Shares 1,371,300,000
Value of Equity per share = 5.70

The per-share value computed is much lower than the closing price of Chipotle during 2023.
This highlights that the stock is currently overvalued and the market sentiment on the future of
the company is pushing the price up. Market sentiment is in support of the growth the
company has done in the past few years and indicates their expectation of company
profitability. Given this big difference, our recommendation would be to Sell Chipotle's stock.
Even though the fundamental performance of the company is great, the a difference between
the intrinsic value and the market price.

Sensitivity Analysis
Methodology
For the sensitivity analysis of the financial model, we wanted to explore the variations of the
valuation based on changes in growth and discount rates. For the changes in discount rate, we
chose to test two scenarios, a high WACC and a low WACC. For the high WACC, we increased
the rate for each year by 2% while for the low WACC, we decreased the rate from the base year
by 2%. For changes in growth rate, we took both the high and low scenarios previously
discussed and used them in parallel with the changes in the discount rate.
 Results
When combining changes in both variables we can see how changes in these rates affect the
valuation. The best case scenario occurs when we have high growth and a low discount rate
where the company value shows the highest result of 22 billion USD equating to a value per
share of 13.24 USD. The Worst Case Scenario occurs when we combine a high discount rate
accompanied by low growth which totals a firm value of 9.15 billion USD and a value per share
of 3.78 USD.
Growth
Value of Firm
Low Base High

Low 12,198,722,440 14,069,179,724 22,134,813,641

WACC
Base 10,243,513,051 11,791,945,353 18,475,012,499

High 9,153,349,642 10,522,992,356 16,438,088,491

Growth
Value per Share
Low Base High

Low 6.00 7.36 13.24

WACC
Base 4.57 5.70 10.57

High 3.78 4.77 9.09

Cost of Capital
Base 7.19% 7.39% 7.56% 7.70% 7.82% 7.92% 7.99%
High 9.19% 9.39% 9.56% 9.70% 9.82% 9.92% 9.99%
Low 4.19% 4.39% 4.56% 4.70% 4.82% 4.92% 4.99%

Growth
Base 6.98% 7.00% 6.98% 6.94% 6.86% 4.35%
High 20.00% 25.00% 20.00% 15.00% 10.00% 4.35%
Low 4.00% 3.00% 4.00% 3.00% 4.00% 4.35%

Based on this analysis we can see that the valuation range for Chipotle's stock is between 3.78
USD and 13.24 USD depending on how the scenario plays out in reality. This big difference in
the price highlights the impact of both these rates on the valuation and their importance.
Therefore, for any valuation to be successful, the basis of it will be dependent on how these
two rates were calculated.
References
Chipotle Mexican Grill, Inc. 2023 Annual Report.
IBISWorld. Industry Report: Chain Restaurants in the U.S.
Morningstar. Chipotle Mexican Grill Analyst Report, 2023.
Statista. Digital Ordering Trends in Restaurants, 2023.