SELL

Target Price: $131

Mihai Mazilu

CHIPOTLE MEXICAN GRILL , Inc. (NYSE: CMG) Coverage Initiation Report

Recent Price: $279.00 Market Data Market Cap. (bln) $8.50 Enterprise Value (bln) $8.10 Fully Diluted Shares Trailing P/E (ttm) 48.58 Forward P/E 33.13 PEG Ratio (5 yr exp) 2.00 Enterprise Value/EBITDA 22.32 Balance Sheet Total Cash (mil) Total Cash Per Share Total Debt (mil) Total Debt/Equity Current Ratio Book Value Per Share $349.6 $11.26 $3.78 0.47 3.30 26.09

The Valuations Our research focused on applying a diverse range of methodologies to gauge whether the current market valuation is realistic and sustainable. The graph below shows the various valuation ranges from the various methodologies used. The resulting range of share prices is very wide from $84.30 (in the case of a conservative hybrid DCF approach) to $310.87 (in the case of the market approach using earnings multiples). Most valuations though are below the current market value. We decided that the most realistic valuation is the hybrid DCF approach because that shows the intrinsic value of the company. The target price per share of $130.89 was chosen and it is based on a more relaxed hybrid DCF approach.

$700.00

$600.00

*Data above as of Apr 3, 2011

$500.00

Price per Share

$400.00 $310.87 $236.15

$184.38

$300.00

$278.00 Current, $274.00

$200.00 $130.89

$171.53 $171.53
$95.54

$236.15

Beta: 0.86 52-Week Chg. 129.67% 52-Week High $278.00 52-Week Low $114.87 50-Day Moving Avg. $255.35

$100.00
$84.30 $76.25

$114.87

$0.00

Company Overview
Chipotle Mexican Grill, Inc. operates restaurants in 35 states throughout the United States, Ontario, Canada and London, UK. The restaurants serve a focused menu of tacos, burritos, salads and burrito bowls, made using fresh ingredients. The chain is focused on trying to find the highest quality ingredients to make great tasting food; on recruiting and retaining top performing people to ensure that the restaurant experience provided is exceptional. The companys motto is Food With Integrity, and of the food served inside restaurants 100% of the pork, 100% of the chicken, and about 60% of the beef is naturally raised .

Opinion About the Current Market Valuation As shown in the analysis, Chipotle Mexican Grill is, by most methodologies used, overvalued. Chipotle Mexican Grill is a top performer and an innovator in the field of fast food. It managed to take a very simple culinary conceptthe burritoand build an assembly line around it and thus create a easy to customize and easy to deliver product. It also managed to create a very dynamic and scalable staffing structure, which allows it to serve record numbers of customers in each location and to easily expand. Despite this, there are however some serious headwinds to be considered, which may seriously challenge the current market valuation: The expected high growth (13% yearly increase in the number of restaurants in the next five years), will put serious pressure on the margins. Inflation in the price of the food commodities will also put additional pressures on the margins. Chipotle plans to expand its business by creating an Asian concept, based on a very similar business model. This creates the risk of spreading resources too thin. New marketing and fixed capital money are needed for the new concept, and would most probably distract the company from its focus on the already successful burrito concept. The management at Chipotle is very skeptical about international expansion. In the medium to long run, it may be missing very important growth opportunities that may put it at a disadvantage to the competition. It may also, over the same horizon, limit the gains related to foreign currency conversions (considering the ongoing devaluation is the US Dollar) Reducing the proportion of undocumented laborers used in the restaurant locations, may in the short to medium term, put additional pressure on the margins.

Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE:CMG) Coverage Initiation Report

Company overview
Chipotle Mexican Grill, Inc. operates fast-casual, fresh Mexican food restaurants in the United States, Toronto, Canada and in London, United Kingdom. As of December 31, 2010, it operated 1,084 restaurants. Chipotle Mexican Grill, Inc. was founded in 1993 and is based in Denver, Colorado. Chipotle experienced the greatest share increase among fast casual players in 2009 appealing to consumers growing demand for fresh fast food. Chipotles philosophy is food with integrity, meaning it sources the highest-quality ingredients that are grown or raised with respect for the environment, animals or the people who grow them. Chipotle also believes that food served fast does not have to be what is known as traditional fast food in America greasy, unhealthy or low quality. Chipotle has succeeded by emphasizing freshness and customization. All items are made to order and are cooked from raw ingredients, rather than arriving frozen at each outlet.

Market and Competitors

Chipotle operates in the space defined as fast casual, part of the fast food industry. This segment is essentially composed by restaurants where patrons pay before eating. In the US alone, fast food brought in $184.00 billion in 2010 and is expected to grow at a stable, albeit slow, growth rate of 2.5% for next 5 years. This growth is spurred by ethnic and specialty markets. Over 300,000 business report activity in this space. Key drivers of this industry are: reduced consumer spending increased health consciousness, increased competition from full service restaurants and consolidation. Competitive pressure and declining demand are forcing companies to consolidate their operations and streamline employment. Industry margins have fallen or, at best remaining flat, because of lower sale volumes, customers opting for value menu items (thin margin), high levels of price competition as the industry is reaching saturation and steadily increasing raw material prices.

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Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE:CMG) Coverage Initiation Report In building our valuation model, we considered Chipotle in the context of their industry. We selected a group containing a variety of fast growing smaller competitors, positioned to serve a trendier, healthier consumer, scaling down from full service restaurants. We were also compelled to include industry giants like McDonalds and Yum! Brands, because they account for such a large portion of their shared competitive landscape. Buffalo Wild Wings, the number two fast casual chain, also experienced strong growth, with 90 new units in 2009 and a strong focus on chicken wings, beer, and sports. The company also has a strong financial position, with no debt. The chain implements strategies tailored to the specifics of the community each restaurant is located in. Areas with a higher concentration of families will offer a childrens night, while others will focus on emphasizing drawing consumers in to watch sporting events on television. Panera Bread: The third player in fast casual dining also saw moderate success during a year that was very difficult for many of its competitors. Rather than discounting, as many fast food operators chose to do, Panera focused on innovation and quality and therefore achieved better sales results. Among improvements, for example, it used better product management to reduce the amount of lettuce it was using. The company has been able to succeed in a declining economy through gaining traffic from consumers trading down from full-service restaurants and new menu items target more heath conscious patrons. McDonalds: The leading fast food company has increased its share by appealing to young people, while remaining a destination for families. The Big Mac and fries remain the core of the companys growth strategy, but that is supplemented by continuous innovation that includes affordable snack options, the dollar value menu and premium coffee. As a response to the negative publicity associated with the perceived role of its hamburgers and fries in ruining the American diet, McDonalds Corp launched a line of salads and other healthy items in order to address consumers desire to eat better. In 2009, the company remained committed to innovation and value. To appeal to the growing number of full-service customers who were trading down to fast food, McDonalds introduced the Angus burger in July 2009, a premium burger experience at an affordable price. California Pizza Kitchen: This company's cookeries are putting a West Coast twist on an old favorite. California Pizza Kitchen (CPK) operates a chain of about 265 casual-dining restaurants that specialize in gourmet pizzas featuring unique topping combinations. The restaurants are found in more than 30 states and about a dozen other countries; more than 200 of the locations are company-owned. Like many other dining operators, the company has struggled with declining sales during recent years due largely to the recession, high unemployment, and the effect of the mortgage crisis in its core markets in California and Florida. CPK responded by pulling back sharply on expansion efforts to focus on reducing costs and new menu items designed to attract additional traffic to its restaurants.

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Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE:CMG) Coverage Initiation Report Yum! Brands Incs growth strategy has historically focused on expanding the multi-branding concept. However after two years of less than satisfactory performance, the company is deemphasizing its multibranding strategy as its core growth plan, focusing instead on increasing the appeal of its individual brands. The company has focused on boosting its bottom line through cost-cutting measures, prompted by rising food and fuel costs. Part of that effort has involved reducing the number of corporate-run locations through refranchising (700 restaurants in the US were sold to franchise operators in 2008 alone). Yum! Brands is focused on menu differentiation, including healthier fare and improving the quality of the companys facilities. BJ's Restaurants, Inc: owns and operates 93 restaurants located in 13 states. The companys restaurants operate either as a BJs Restaurant & Brewery which includes a brewery within the restaurant, a BJs Restaurant & Brewhouse which receives the beer it sells from one of its breweries or an approved third-party craft brewer of proprietary recipe beers, or a BJs Pizza & Grill which is a smaller format, full service restaurant with a more limited menu. BJs reported steadily increasing same store sales since Q1 2009 and managed to maintain growth to date. The more upscale atmosphere, superior service and interesting menu is the backbone of their position strategy, which so far proved successful as restaurant traffic has surpassed industry averages. P.F. Changs China Bistro, Inc: operates restaurants under the P.F. Changs China Bistro (Bistro) and Pei Wei Asian Diner (Pei Wei) names. As of January 2011, the company owned and operated 201 full service Bistro restaurants that feature a Chinese-inspired cuisine and attentive service. The menu features traditional Chinese offerings and dishes that illustrate the emerging influence of Southeast Asia on modern Chinese cuisine. It also owned and operated 168 quick casual Pei Wei restaurants that offer a menu of Asian cuisine. The company enjoys a strong cash position, essentially no debt and anticipates completing a $60 million share repurchase effort this year.

Benchmarking
Exhibit 8 Benchmarking Against Select Competitors shows how the financial metrics of Chipotle Mexican Grill match against the one of the comparable companies divided in the following categories: Quick service restaurants McDonalds, and YUM Brands Fast casual restaurants Panera Bread and Buffalo Wild Wings Casual dining restaurants California Pizza Kitchen, PG Changs and BJs Restaurants In terms of profitability, Chipotle has one of the highest gross margins(higher even than McDonalds). The only company with a higher 5 year CAGR is BJs Restaurants. Chipotle also has the highest 5 year CAGR in net income. The benchmarking shows that Chipotle Mexican Grill Inc. is one of the top performers in the industry.

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Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE:CMG) Coverage Initiation Report

Part B Valuation
The following valuation methodologies have been applied: Discounted Cash Flow Comparable Companies Market Multiples valuation (both based on EBITDA and earnings multiples) Precedent Transactions Multiples valuation (both based on EBITDA and earnings multiples) The results of our analysis are described in more detail in the exhibits included. The table below summarizes the results of the valuation approaches used.
($ USD in thousands) Equity Valuation Reconciliation Income Approach - DCF Analysis Market Approach - Guideline Public Companies - EBITDA Multiples Market Approach - Guideline Public Companies - Earnings Multiples Market Approach - Precedent Transactions - EBITDA Multiples Market Approach - Precedent Transactions - Earnings Multiples Current Market Cap Min 2,675,362 2,419,909 3,031,938 5,443,417 7,494,199 Max $4,153,889 5,851,408 $9,865,433 5,443,417 7,494,199 $8,500,000

$ $ $ $ $

$ $ $

Number of outstanding Shares (End of year 2010) Implied Price per Share Income Approach - DCF Analysis Market Approach - Guideline Public Companies - EBITDA Multiples Market Approach - Guideline Public Companies - Earnings Multiples Market Approach - Precedent Transactions - EBITDA Multiples Market Approach - Precedent Transactions - Earnings Multiples 52 Week range Current Price per Share (As of 04/03/2011) Min $ $ $ $ $ $ 84.30 76.25 95.54 171.53 236.15 114.87 $ $ $ $ $ $ $

31,735,000 Max 130.89 184.38 310.87 171.53 236.15 278.00 274.00

Exhibit 7 Football Field Valuation Graph presents the football field valuation in a more visual manner. The following conclusions can be drawn from the valuations above: It seems that the market grossly overvalues Chipotle Mexican Grill, Inc. The very high current market capitalization of the company is mostly due to institutional buyers who see the company as a perfect candidate for their high growth funds. But even in a high growth scenario, where the company would need to a lot of cash to expand, the intrinsic value will be substantially lower (less than half) of what the market price is. The markets seem to be overvaluing the top high growth performers in the restaurant industry (Chipotle Mexican Grill and BJs Restaurants). Due to the bubble like valuations for the top performers, valuations for the top performers are very high compared to the rest of the players in the industry. The market favors the use of earnings multiples, which are prone to substantially increase the valuations for the companies in the industry.

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Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE:CMG) Coverage Initiation Report

Discounted Cash Flow

The DCF Model is presented below:
Free Cash Flow s Calculation Est 2011 EBIT EBIT(1-t) Depreciation Change in Working Capital CAPEX FFCF $267,662 $165,147 $80,829 $122,981 $112,095 $10,900 Est 2012 $277,593 $171,275 $94,625 $69,322 $131,461 $65,116 Est 2013 $280,751 $173,223 $110,699 $80,767 $154,777 $48,378 Est 2014 $274,432 $169,325 $129,421 $94,076 $181,536 $23,134 Est 2015 $254,780 $157,199 $151,238 $109,626 $213,909 ($15,097) Est 2016 $193,567 $119,431 $156,969 $28,800 $77,379 $170,220

Based on: Terminal Values DCF WACC NPV $10,217 6.69%

QSR Avg $3,629,799 $57,208

Fact Casual $4,115,292 $39,838

Casual Dining $3,459,789 $17,856

Com parables $3,695,650 ($10,923)

BJ's $5,640,123

$2,575,636

$2,904,858

$2,460,349

$2,620,290

$3,938,876

Value of operations Cash Intrinsic Enterprise Value (EV) (-) Interest Bearing Debt Equity Value

$2,575,636 $224,838 $2,800,474 ($9,825) $2,790,649

$2,904,858 $224,838 $3,129,696 ($9,825) $3,119,871

$2,460,349 $224,838 $2,685,187 ($9,825) $2,675,362

$2,620,290 $224,838 $2,845,128 ($9,825) $2,835,303

$3,938,876 $224,838 $4,163,714 ($9,825) $4,153,889

As will be later discussed in more detail, the main driver for the equity valuation using the DCF method is the terminal value. The value per share using this method varies greatly from $84.40 to $130.89. Exhibit 1 Net Working Capital Calculation details the calculation used to calculate the estimate working capital balances. The assumptions related to the DCF model are as follows: Food, beverage and packaging costs growth rate is expected to be 4%, due to inflationary expectations over the next 5 years. These inflationary trends can already be experienced in the commodities markets and can increase over time, especially in the food related commodities. Labor cost growth rate is expected to be tame at 2% per year, due mainly to very high unemployment rates in the US making restaurant labor available at a discounted price. However, there are risks associated with the possibility of increases due to the company having to increase its use of legal labor, which can lead to more labor increases. The average occupancy cost per location is expected to be at $119,000 per year, which is exactly the average 2009-2010. Based on the 2006-2010 averages: o Other operating costs are expected to be 11% of revenue o Loss on disposal of assets is expected to be 0.4% of revenue o G&A is expected to be 6.5% of revenue o Depreciation and amortization is expected to be 4% of revenue o Other Net Income is expected to be 0.07% of revenue Exhibit 2 Revenue and CAPEX Projection details the how the revenue and CAPEX projection was based. Page 5 of 7

Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE:CMG) Coverage Initiation Report Average revenue per same store unit at the end of 2010 was $1,840,000 (as reported by the management) and it is assumed to be growing by 3% per year from 2012 through 2015 (the management expected it to grow in the low single digits). Once a new location is opened, it will reach the mature location average revenue ($1,840,000 in 2010 and adjusted by 3% for subsequent years) in approximately 2 years. In the first year of operation, the location will reach half of that target. The number of locations is expected to continue to grow by 13% each year. The number is reasonable one because it represents a more stable number (it went down from 23% per year in 2006 to 13.4%). Beginning with 2016, the company is expected to enter the stable growth mode, expanding its number of locations by just 4% per year. The cost for per opening a new location was $795,000 in 2010 and is expected to grow with inflation (2% in 2011 and 4% after that, due to the loose monetary policy).

Exhibit 3 Projected Income Statement shows the projected income statement through 2016. Discount Rate WACC will be equal to the cost of equity (which is calculated below and equal to 6.688%), as the only outstanding debt was paid off at the beginning of the 2011 year (as mentioned in the financial reports). It is assumed that the company will not be taking any or will be taking an immaterial amount of debt in the next six years. The management is very averse to borrowing as shown by the last five years lending activity. Beta 0.86 Rf 3.248% Rm 4%
Re 6.688% WACC = 6.688%

Terminal Value The value of the business operations (based on the assumptions previously discussed) over the 5 year forecasting horizon is only $114,196,000, mostly due to the fact that during the forecasting horizon a lot of money is being reinvested in expansion. This is why, the terminal value is the main driver for the intrinsic value of the Chipotle Mexican Grill, Inc equity. Exhibit 4 Terminal Value Calculation shows the details for the terminal value calculation. The comparables used were divided into three categories, considered most similar to the business model and industry of Chipotle Mexican Grill: Quick Service Restaurants McDonalds and YUM Brands are the most representative players in the category. Chipotle belongs to this category because one of its focuses is to provide healthy food quickly. Fast Casual Restaurants is also a category representative for the business model of Chipotle Mexican Grill because while there is a fast food component to the way food is delivered, there are other more upscale features such as better quality ingredients and a

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Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE:CMG) Coverage Initiation Report quirkier ambiance. The most representative public players and competitors are Buffalo Wild Wings and Panera Bread Co. Casual Dining Restaurants despite the fact that it does not provide table service, Chipotle also meets the definition of this category. Representative companies in this segment are: California Pizza Kitchen, P.F. Changs China Bistro and BJs Restaurants.

Based on the comparables selected the range for the terminal value can vary from $3,459,789,000 to $5,640,123,000. The lowest terminal value will be generated when using the comparables for the underperforming players in the casual dining restaurants segment (P.F. Changs China Bistro, Inc. and California Pizza Kitchen, Inc.); but, this category also hold the player whose comparables would create the highest terminal value BJs Restaurants, Inc. The latter resembles Chipotle Mexican Grill most in all the relevant aspects: profitability, margins, growth rate and customer base.

Precedent Transaction Approach

The most relevant past transaction was the purchase of Applebees International, Inc. by DineEquitys IHOP for a price of $1.9 billion. The details for this transaction are shown in Exhibit 5 Sale of Applebees International to IHOP Transaction Details. The multiples for this transaction are: EBITDA Multiple: 14.97x Earnings Multiple: 25.96x The implied valuations for Chipotle Mexican Grill based on the above ratios are shown below: CMG Metrics Implied Equity Valuation Interest Bearing Debt $ 9,825 EBITDA (EOY 2010) $ 364,278 EBITDA Multiple $ 5,443,417 Earnings (EOY 2010) $ 289,061 Earnings Multiple $ 7,494,199 The Applebees sale is the only relevant transaction (similar segment casual dining, similar customer base) that has occurred recently. Other transactions have occurred to but they were too small to be a relevant term for comparison.

Comparable Companies Analysis

The same comparable categories and companies will be used like in the case of the terminal value calculation. Exhibit 6 Market Comparables shows the implied valuations based in the comparables. The range is very wide, from $2,419,909,000 to $9,865,433,000. The lowest valuation is achieved was comparing with California Pizza Kitchen, Inc which is also the worst performer in the casual dining segment, but when comparing to the BJs Restaurants, Inc. (which, along with Chipotle is one of the best performers) the valuation is higher than the current market valuation.

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Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE: CMG) Coverage Initiation Report

Exhibit 1 Net Working Capital Calculation

Actual Est 2011 $246,528 $19,377 $12,733 $4,041 $18,186 $26,269 $137,409 $464,544 Est 2012 $288,606 $22,684 $14,907 $4,731 $21,291 $30,753 $160,862 $543,834 Est 2013 $337,631 $26,537 $17,439 $5,535 $24,907 $35,977 $188,188 $636,213 Est 2014 $394,734 $31,026 $20,388 $6,471 $29,120 $42,062 $220,015 $743,815 Est 2015 $461,275 $36,256 $23,825 $7,562 $34,028 $49,152 $257,104 $869,203 Est 2016 $478,757 $37,630 $24,728 $7,848 $35,318 $51,015 $266,848 $902,144 % to revenue Cash Days AR Days Inventory % to rev. Current deferred tax asset % to rev. Prepaid expenses and other current assets % to rev. Income tax receivable % to rev. Investments 12.2% 3.5 2.3 0.2% 0.9% 1.3% 6.8%

Net Working Capital Calc.

Cash and cash equivalents Accounts receivable Inventory Current deferred tax asset Prepaid expenses and other current assets Income tax receivable Investments Total current assets

2010 $224,838 $5,658 $7,098 $4,317 $16,016 $23,528 $124,766 $406,221

Accounts payable Accrued payroll and benefits Accrued liabilities Current portion of deemed landlord financing Income tax payable Total current liabilities

$33,705 $50,336 $38,892 $121 $123,054

$58,130 $149 $116 $$$58,396

$68,052 $175 $136 $$$68,363

$79,612 $205 $159 $$$79,976

$93,077 $239 $186 $$$93,502

$108,767 $280 $218 $$$109,264

$112,889 $290 $226 $$$113,405

Days AP % to rev. Accrued payroll and benefits % to rev. Accrued liabilities % to rev. Current portion of deemed landlord financing % to rev. Income tax payable

10.5 2.7% 2.1% 0.0% 0.0%

Working Capital

$283,167

$406,148

$475,470

$556,237

$650,313

$759,939

$788,739

The following assumptions have been used: Days AR is based on the Days AR amount at the end of 2010 which was 3.37 (rounded to 3.5) Days Inventory is based on the Days Inventory amount at the end of 2010 which was 2.29 (rounded to 2.3) Days AP is based on the Days AP average for 2006-2010 rounded to 10.5 days The % of revenue to Cash, Current deferred tax asset, prepaid expenses, income tax receivable, investments, accrued payroll, accrued liabilities, Current portion of deemed landlord financing, income tax payable are based on the % to revenue for the 2010 reporting year.

Exhibits - Page 1 of 8

Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE: CMG) Coverage Initiation Report

Exhibit 2 Revenue and CAPEX Projection

Actual 2010 Expected CPI Investment Cost per Restaurant ($ 000s) $ Expected # of net new locations Total # of locations 1,084 Growth Rate 13% Pre-opening costs per restaurant 60.21 Annual CAPEX Pre-opening costs Mature Location Average Revenue per Unit Revenue from newly Opened Locations $ $ Est. 2011 2% 795 $ 141 1,225 13% 60.21 112,095 8,490 1,840 129,720 $ Est. 2012 4% 827 $ 159 1,384 13% 60.21 131,461 9,573 1,895 417,892 $ Est. 2013 4% 860 $ 180 1,564 13% 60.21 154,777 10,838 1,952 761,302 $ Est. 2014 4% 894 $ 203 1,767 13% 60.21 181,536 12,222 2,011 $ 1,169,174 $ Est. 2015 4% 930 $ 230 1,997 13% 60.21 213,909 13,848 2,071 $ 1,652,607 $ Est. 2016 4% 967 80 2,077 4% 60.21 77,379 4,817 2,133 $ 1,732,048

Same Store Sales Growth Rate 3% 3% 3% 3% 3% 3% Revenue From Units Opened 2010 and Prior $ 1,891,000 $ 1,947,730 $ 2,006,162 $ 2,066,346 $ 2,128,337 $ 2,192,187 Total Revenue $ 2,020,720 $ 2,365,621 $ 2,767,463 $ 3,235,521 $ 3,780,944 $ 3,924,235

Pre-opening costs per restaurant are based on a historical average of the pre-opening costs per restaurant for 2006-2010. Annual CAPEX = Investment costs per restaurant (adjusted for inflation) x Expected net number of new locations Pre-opening costs = Pre-opening costs per restaurant x Expected net number of new locations

Exhibits - Page 2 of 8

Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE: CMG) Coverage Initiation Report

Exhibit 3 Projected Income Statement

Actual All amounts in 000s Total revenue $ 2010 1,835,922 $ Est 2011 2,020,720 $ Est 2012 2,365,621 $ Est 2013 2,767,463 $ Est 2014 3,235,521 $ Est 2015 3,780,944 $ Est 2016 3,924,235

Food, beverage and packaging costs Labor costs COGS

$ $ $

561,107 453,573 1,014,680

$ $ $

640,972 515,284 1,156,256

$ $ $

780,390 615,298 1,395,688

$ $ $

949,471 734,214 1,683,685

$ $ $

1,154,456 875,558 2,030,014

$ $ $

1,403,029 1,043,617 2,446,646

$ $ $

1,514,450 1,104,832 2,619,281

Occupancy costs Other operating costs

$ $

128,933 202,904

$ $

145,775 222,279

$ $

164,696 260,218

$ $

186,116 304,421

$ $

210,273 355,907

$ $

237,643 415,904

$ $

247,163 431,666

Pre-opening costs Loss on disposal of assets

$ $

7,767 6,296

$ $

8,490 8,083

$ $

9,573 9,462

$ $

10,838 11,070

$ $

12,222 12,942

$ $

13,848 15,124

$ $

4,817 15,697

General and administrative expenses

118,590

131,347

153,765

179,885

210,309

245,761

255,075

Depreciation and amortization Total operating expenses

$ $

68,921 1,548,091

$ $

80,829 1,753,058

$ $

94,625 2,088,028

$ $

110,699 2,486,713

$ $

129,421 2,961,088

$ $

151,238 3,526,164

$ $

156,969 3,730,669

EBIT - Income from operations

287,831

267,662

277,593

280,751

274,432

254,780

193,567

Interest and other income - Revenue - Costs Income before income taxes Provision for income taxes Net income $ $ $

1,230 289,061 $

1,415 269,076 $

1,656 279,249 $

1,937 282,688 $

2,265 276,697 $

2,647 257,426 $

2,747 196,313 (75,188) 121,125

(110,080) $ 178,981 $

(103,056) $ 166,020 $

(106,952) $ 172,296 $

(108,269) $ 174,418 $

(105,975) $ 170,722 $

(98,594) $ 158,832 $

EBITDA

348,491

372,218

391,449

403,853

406,018

350,536

Assum ptions Food, beverage and packaging costs Growth Rate 4% Food, beverage and packaging costs % to revenue 30.5% Labor costs Growth Rate Labor costs % to revenue Expected Number of Locations Average Occupancy ost per Location Other operating costs % Loss on disposal of assets G&A to Revenue % Depreciation and amortization % Other Net Income (% of revenue) $ 2% 25% 1,084 119 11% 0.4% 6.5% 4% 0.07% $

2011 4% 30.5% 2% 25% 1,225 119 11% 0.4% 6.5% 4% 0.07% $

2012 4% 30.5% 2% 25% 1,384 119 11% 0.4% 6.5% 4% 0.07% $

2013 4% 30.5% 2% 25% 1,564 119 11% 0.4% 6.5% 4% 0.07% $

2014 4% 30.5% 2% 25% 1,767 119 11% 0.4% 6.5% 4% 0.07% $

2015 4% 30.5% 2% 25% 1,997 119 11% 0.4% 6.5% 4% 0.07% $

2016 4% 30.5% 2% 25% 2,077 119 11% 0.4% 6.5% 4% 0.07%

Exhibits - Page 3 of 8

Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE: CMG) Coverage Initiation Report

Exhibit 4 Terminal Value Calculation

Gordon Growth Residual Cash Flow 2016 Terminal Growth Rate WACC Terminal Value $ 170,220 3.5% 6.688% EBITDA Multiples Approach QSR Avg. EBITDA 2016 $ 350,536 Residual CF 2016 $ 170,220 Multiplier 10.36x Terminal Value $ 3,629,799 Implied Growth 1.91% TEV/EBITDA LTM Quick Service Restaurants
McDonald's Corp. (NYSE:MCD) Yum ! Brands, Inc. (NYSE:YUM) Quick Service Restaurants Average 10.02x 10.69x 10.36x

$ 5,526,291

Fast Casual Avg. Casual Dining Avg. $ 350,536 $ 350,536 $ 170,220 $ 170,220 11.74x 9.87x $ 4,115,292 $ 3,459,789 2.45% 1.69%

Comparables Avg. $ 350,536 $ $ 170,220 $ 10.54x $ 3,695,650 $ 1.99%

BJ's 350,536 170,220 16.09x 5,640,123 3.56%

Fast Casual Restaurants

Buffalo Wild Wings Inc. (NasdaqGS:BWLD) Panera Bread Co. (NasdaqGS:PNRA) Fast Casual Restaurants Average 9.28x 14.20x 11.74x

Casual Dining Resutaurants

California Pizza Kitchen Inc. (NasdaqGS:CPKI) P.F. Chang's China Bistro, Inc. (NasdaqGS:PFCB) BJ's Restaurants, Inc. (NasdaqGS:BJRI) Casual Dining Restaurants Average 6.67x 6.85x 16.09x 9.87x

Average of all com parables

10.54x

Exhibits - Page 4 of 8

Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE: CMG) Coverage Initiation Report

Exhibit 5 Sale of Applebees International to IHOP Transaction Details

Company name BvDEP ID Number US431461763

APPLEBEE'S INTERNATIONAL INC.

Financial information on Applebee's International Inc. : Consolidated 12/31/2006 12 months USD Exchange Rate: USD/USD Turnover (operating revenue): EBITDA: EBIT: Profit before tax: Profit after tax: Total assets: Shareholders funds: Market capitalisation at month-end:
(1) P/E ratio (2) Price to book value

Country Code US

Activity Restaurant operator

Deal value Multiples 1.57 14.97 16.06 17.19 25.96 2.24 4.32 1.03

Deal Equity value Multiples 1.48 14.11 15.14 16.21 24.47 -1 2.12 4.07 -2 0.97

Deal Enterprise value Multiples 1.57 14.97 16.06 17.19 25.96 2.24 4.32 1.03

Deal Estimated Enterprise value Multiples 1.59 15.20 16.31 17.46 26.36 2.28 4.38 1.05

1.00 1,337,921,000.00 140,305,000.00 130,784,000.00 122,147,000.00 80,906,000.00 935,456,000.00 486,654,000.00 2,032,203,591.28

(3) Ebitda displayed for banks is the Pre-Impairment Operating Profit (line 10190 on Bankscope)

Exhibits - Page 5 of 8

Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE: CMG) Coverage Initiation Report

Exhibit 6 Market Comparables

Valuation 09 P/E Quick Service Restaurants
McDonald's Corp. (NYSE:MCD) Yum ! Brands, Inc. (NYSE:YUM) Average 16.15x 15.90x 16.03x 16.94x 21.60x 19.27x 10.02x 10.69x 10.36x

Growth EV/EBITDA LTM Unit 0.8% 2.1% Same Store 5.0% 2.0% EPS 10.4% 7.2% EBITDA 35.6% 21.5%

Margins EBIT 30.3% 16.3% Net 20.5% $ 10.2% $ $

10 P/E

Implied Equity Valuation EBITDA Earnings Multiple Multiple 3,640,241 3,884,307 3,762,274 $ $ $ 3,031,938 3,865,990 3,448,964

Fast Casual Restaurants

Buffalo Wild Wings Inc. (NasdaqGS:BWLD) Panera Bread Co. (NasdaqGS:PNRA) Average 24.14x 25.20x 24.67x 21.94x 29.96x 25.95x 9.28x 14.20x 11.74x

14.6% 5.3%

0.6% 7.9%

24.3% 30.2%

15.9% 16.5%

9.5% 12.0%

6.3% $ 7.3% $ $

3,370,675 5,162,923 4,266,799

$ $ $

3,926,843 5,362,271 4,644,557

Casual Dining Resutaurants

California Pizza Kitchen Inc. (NasdaqGS:CPKI) P.F. Chang's China Bistro, Inc. (NasdaqGS:PFCB) BJ's Restaurants, Inc. (NasdaqGS:BJRI) Average 35.24x 22.87x 36.89x 31.67x N/A 25.49x 55.12x 40.31x 6.67x 6.85x 16.09x 9.87x

0.0% 1.6% 9.8%

-2.4% N/A 2.3% 17.7% 5.6% 70.8%

9.0% 11.4% 11.7%

3.2% 5.2% 6.1%

-0.1% $ 3.8% $ 4.5% $ $ 20.5% $ 7.5% $ -0.1% $ 9.7%

2,419,909 2,485,479 5,851,408 3,585,599 5,851,408 3,830,706 2,419,909

N/A $ 4,562,226 $ 9,865,433 $ 7,213,829 $ $ $ 9,865,433 5,102,450 3,031,938

High Average Low

36.89x 25.20x 15.90x

25.39x

55.12x 28.51x 16.94x

41.15x

16.09x 10.54x 6.67x

21.00x

14.6% 4.9% 0.0% 13.49%

7.9% 3.0% -2.4% 9.40%

70.8% 26.8% 7.2% 42.80%

35.6% 17.4% 9.0% 19.8%

30.3% 11.8% 3.2% 16.0%

Chipotle Mexican Grill Inc. (NYSA:BWLD)

The Most Appropriate Com parable BJ's Restaurants, Inc. (NasdaqGS:BJRI)

CMG Metrics Interest Bearing Debt EBITDA (EOY 2010) Earnings (EOY 2010)

$ 9,825 $ 364,278 $ 178,981

Exhibits - Page 6 of 8

Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE: CMG) Coverage Initiation Report

Exhibit 7 Football Field Valuation Graph

Football Field
$700.00

$600.00

$500.00
Price per Share

$400.00 $310.87 $236.15 $184.38 $130.89 $100.00 $84.30 $0.00 $76.25 $95.54 $171.53 $171.53 $114.87 $236.15 $278.00 Current, $274.00

$300.00

$200.00

Exhibits - Page 7 of 8

Mihai Mazilu Chipotle Mexican Grill, Inc. (NYSE: CMG) Coverage Initiation Report

Exhibit 8 Benchmarking Against Select Competitors

QSR Worst YUM
Margin Analysis Gross Margin % EBITDA Margin % EBITA Margin % EBIT Margin %

Best MCD 36.7% 31.8% 26.5% 26.5% 3.4% 3.7% 0.0%

Avg

Fast Casual Worst Best PNRA BWLD 33.5% 15.2% 10.3% 10.2% 1.3% 5.5% 5.1% 25.6% 14.3% 8.7% 8.6% 3.3% 10.6% 5.7%

Avg

Casual Dining Worst Best CPKI BJRI 18.8% 10.3% 4.5% 4.5% 1.0% -12.9% 5.8% 19.2% 10.0% 5.0% 5.0% 0.8% 7.6% 5.0%

Avg

25.6% 19.0% 14.0% 13.8% 5.2% -5.3% 0.0%

31.1% 25.4% 20.3% 20.2% 4.3% -0.8% 0.0%

29.6% 14.8% 9.5% 9.4% 2.3% 8.1% 5.4%

18.7% 10.4% 4.9% 4.9% 0.8% -3.0% 5.5%

Marketing % Net Working Capital % Depreciation & Amort %

5 Years CAGR Total Revenue Earnings from Cont. Ops. Net Income

5.3% 9.3% 9.2%

6.1% 16.5% 18.2%

5.7% 12.9% 13.7%

26.9% 21.6% 21.6%

27.0% 40.5% 40.5%

27.0% 31.1% 31.1%

12.4% -1.5% -1.5%

28.6% 27.0% 27.0%

19.2% 11.1% 11.8%

CHIPOTLE Gross Margin % EBITDA Margin % EBITA Margin % EBIT Margin %

37.7% 19.8% 16.0% 16.0% 1.4% 10.6% 3.8%

Marketing % Net Working Capital % Depreciation & Amort %

5 Years CAGR Total Revenue Earnings from Cont. Ops. Net Income

23.9% 36.6% 36.6%

Exhibits - Page 8 of 8