Chipotle Mexican Grill Inc. (NYSE:CMG)

Over the five-year period, significant growth is observed in the company’s investment in property, plant, and equipment. This growth is primarily driven by increases in leasehold improvements and buildings, equipment, and furniture and fixtures. Land holdings have remained constant throughout the period.

Land

The value of land held by the company remained consistent at US$12,943 thousand from 2021 through 2025, indicating no significant land acquisitions or disposals during this timeframe.

Leasehold Improvements and Buildings

Leasehold improvements and buildings demonstrate a substantial and consistent upward trend, increasing from US$2,094,227 thousand in 2021 to US$3,260,533 thousand in 2025. This represents a cumulative increase of approximately 56.1% over the five-year period, suggesting a considerable expansion of the company’s leased and owned facilities.

Furniture and Fixtures

Furniture and fixtures also exhibit growth, rising from US$222,774 thousand in 2021 to US$321,426 thousand in 2025. While the absolute increase is smaller than that of leasehold improvements and buildings, the percentage increase of approximately 44.3% indicates a consistent investment in equipping these facilities.

Equipment

The value of equipment increased steadily from US$868,435 thousand in 2021 to US$1,447,193 thousand in 2025, representing a 66.7% increase. This suggests ongoing investment in operational capabilities and potentially technological upgrades.

Construction in Progress

Construction in progress shows an initial increase from US$107,222 thousand in 2021 to US$192,945 thousand in 2024, indicating increased building activity. However, a decrease to US$168,583 thousand is observed in 2025, potentially suggesting the completion of projects initiated in prior years.

Gross Property, Plant, and Equipment

The gross value of property, plant, and equipment increased consistently from US$3,305,601 thousand in 2021 to US$5,210,678 thousand in 2025, mirroring the growth in its component parts. This represents a cumulative increase of approximately 57.6%.

Accumulated Depreciation

Accumulated depreciation increased steadily from US$-1,536,323 thousand in 2021 to US$-2,531,317 thousand in 2025. This is consistent with the increase in the gross value of property, plant, and equipment and reflects the ongoing consumption of the economic benefits of these assets.

Net Property, Plant, and Equipment

Net property, plant, and equipment increased from US$1,769,278 thousand in 2021 to US$2,679,361 thousand in 2025, demonstrating a 51.3% increase. The growth in net property, plant, and equipment is slightly lower than the growth in gross property, plant, and equipment, due to the increasing impact of accumulated depreciation.

Overall, the company demonstrates a pattern of consistent investment in its property, plant, and equipment base, with a particular focus on leasehold improvements and buildings, and equipment. The increasing accumulated depreciation is a natural consequence of this investment and the passage of time.

The average age ratio exhibits a consistent upward trend over the five-year period. This indicates a gradual aging of the company’s property, plant, and equipment (PP&E) asset base.

Average Age Ratio Trend

The average age ratio increased from 46.66% in 2021 to 48.70% in 2025. The increase was relatively steady between 2021 and 2024, with increments of approximately 0.57% to 0.73% annually. The rate of increase slowed considerably between 2024 and 2025, rising only 0.08%.

The consistent increase in the average age ratio suggests that the company may be extending the useful life of its existing assets, potentially deferring capital expenditures. Alternatively, it could indicate a slower pace of asset replacement relative to depreciation. The deceleration in the increase during the most recent year may suggest a shift in investment strategy or an anticipated increase in asset replacement in the near future. Further investigation into capital expenditure plans and depreciation policies would be necessary to confirm these possibilities.

Implications of an Aging Asset Base

A continually aging asset base can potentially lead to increased maintenance costs, reduced operational efficiency, and a higher risk of unexpected equipment failures. While extending asset life can provide short-term cost savings, it may ultimately necessitate larger capital outlays when assets reach the end of their useful lives. Monitoring this ratio in conjunction with maintenance expense and capital expenditure levels is crucial for assessing the long-term sustainability of the company’s operations.

The values associated with property, plant, and equipment demonstrate consistent growth over the five-year period. Accumulated depreciation, leasehold improvements, and gross property, plant, and equipment all increased annually. Concurrently, the average age ratio exhibits a gradual upward trend.

Accumulated Depreciation

Accumulated depreciation increased steadily from US$1,536,323 thousand in 2021 to US$2,531,317 thousand in 2025. This indicates a consistent recognition of the cost of assets over their useful lives. The rate of increase appears relatively stable year-over-year.

Leasehold Improvements, Property and Equipment, Gross

Gross property, plant, and equipment, including leasehold improvements, experienced consistent growth, rising from US$3,305,601 thousand in 2021 to US$5,210,678 thousand in 2025. This suggests ongoing investment in assets, potentially supporting expansion or upgrades to existing facilities.

Land

The value of land remained constant at US$12,943 thousand throughout the observed period. This indicates no acquisitions or disposals of land during these years.

Average Age Ratio

The average age ratio increased from 46.66% in 2021 to 48.70% in 2025. This suggests that, on average, the company’s property, plant, and equipment are becoming older. While the increase is gradual, it warrants monitoring to assess potential implications for future capital expenditure requirements and asset performance. The rate of increase slowed between 2024 and 2025.

The combination of increasing gross property, plant, and equipment and a rising average age ratio suggests a pattern of continued investment in assets alongside the natural aging of the existing asset base. Further investigation into the specific assets being added and retired would provide a more nuanced understanding of the company’s asset management strategy.