In a bowl, combine the chicken with all the marinade ingredients. Toss to coat. Marinate for 15 minutes or up to overnight in the fridge.
Set your grill to medium-high heat. Take skewers and thread the chicken pieces on.
Grill the skewers until chicken is lightly charred and cooked through. About 10 to 12 minutes. During the same time, thread the shallots and peppers on to a skewer, if using, and grill for 2-3 minutes per side.
To make the sauce, blend together the yogurt, serrano, garlic and lemon juice. If the sauce is too thick, add a few tablespoons of water until desired consistency is achieved. Season with salt. Taste, adding more of the lemon as desired.
Serve the chicken shawarma drizzled with the sauce over a pita bread or with rice on the side.