Chipotle Mexican Grill, Inc.
CMG · NYSE
Next quarter
Reports Oct 28, 2026, after the close.
Consensus is $0.29 EPS for Sep 2026 across 13 estimates, ranging $0.28 to $0.31.
CMG Jun 2026
- 3.13%
- +12.50%
- $0.32
- $0.33
- —
- $3.35B
Reported results
- $3.35B
- $525.60M
- 15.70%
- $403.55M
- $0.32
Highlights
- Sales momentum: Comparable restaurant sales increased 2.2%, improving from 0.5% in Q1 FY2026 and a 4.0% decline in Q2 FY2025; transactions rose 1.0% and average check increased 1.2%.
- Revenue growth: Revenue rose 9.3% year over year to $3.35 billion, driven primarily by new restaurants and, to a lesser extent, comparable sales.
- Earnings: Adjusted diluted EPS was $0.33 versus consensus of $0.32, a 3.13% beat; GAAP diluted EPS was $0.32, flat year over year and up from $0.23 in Q1.
- Margin pressure: Operating margin fell to 15.7% from 18.2% year over year, while restaurant-level operating margin declined to 25.2% from 27.4%.
- Cost inflation: Food, beverage and packaging costs increased to 29.7% of revenue from 28.9%, while labor rose to 25.0% from 24.7%, reflecting beef and freight inflation, wage inflation, bonuses and additional restaurant labor.
- Restaurant development: Chipotle opened 100 company-owned restaurants, including 80 with a Chipotlane, and one international partner-operated location; the company ended the quarter with 4,186 company-owned restaurants and 15 partner-operated restaurants.
- Digital channel: Digital sales reached 38.3% of food and beverage revenue, up from 35.5% a year earlier.
- Outlook and capital returns: Management raised full-year comparable sales guidance to the low-single-digit range, maintained its target of 350 to 370 new restaurants, and repurchased $630.7 million of stock in Q2, with $1.7 billion remaining under authorization.
Analysis
Chipotle’s second quarter was a sales-recovery and unit-growth print, with adjusted EPS of $0.33 modestly above the $0.32 consensus estimate. Revenue increased 9.3% year over year to $3.35 billion, while GAAP net income declined 7.5% to $403.5 million and GAAP diluted EPS remained at $0.32. The comparison with Q2 FY2025 was pressured by lower margins, but the sequential picture improved materially: revenue rose from $3.09 billion in Q1, operating income increased from $397.1 million to $525.6 million, net income rose from $302.8 million to $403.5 million, and diluted EPS increased from $0.23 to $0.32.
The defining feature was the second consecutive quarter of improving comparable transactions. Comparable sales rose 2.2%, versus 0.5% in Q1 and a 4.0% decline a year ago, supported by a 1.0% transaction increase and a 1.2% increase in average check. That momentum, alongside 100 openings, led management to raise full-year comparable sales guidance to the low-single-digit range. Profitability, however, remained below last year: restaurant-level margin contracted 220 basis points to 25.2% as food, labor and other operating costs rose, while G&A also reflected $10.0 million of legal reserves and $3.3 million of restructuring costs. Chipotle continued to return capital aggressively, repurchasing $630.7 million of stock during the quarter.
Comparable sales recovery
Comparable sales accelerated for a second consecutive quarter, making demand trends the central positive in the print. Management attributed the improvement to its Recipe for Growth initiatives, including menu innovation, Rewards engagement, hospitality and group occasions, while the filing also noted continuing low-single-digit pressure from the consumer environment, recent food-safety concerns and geopolitical developments.
- Transactions: Comparable transactions increased 1.0%, versus a 0.8% increase in Q1 and a 4.9% decline in Q2 FY2025.
- Average check: Average check increased 1.2%, including a 1.6% menu price increase, partly offset by a 0.4% unfavorable check mix.
- Digital: Digital sales represented 38.3% of food and beverage revenue, up from 35.5% in the year-ago quarter.
- Guidance: Full-year comparable restaurant sales guidance was raised to the low-single-digit range.
Margin and cost pressure
The sales recovery did not yet translate into year-over-year profit growth. Operating income fell 6.0% to $525.6 million from $559.1 million, and operating margin contracted to 15.7% from 18.2%. Restaurant-level margin declined to 25.2% from 27.4%, as cost inflation and investment in execution outpaced pricing benefits.
- Food costs: Food, beverage and packaging costs rose 80 basis points to 29.7% of revenue. Beef and freight inflation contributed 1.4 percentage points and higher protein and produce usage added 0.5 point, partly offset by menu pricing and lower avocado and dairy costs.
- Labor: Labor costs increased 30 basis points to 25.0% of revenue, driven by wage inflation, performance bonuses and additional labor supporting hospitality and operational execution.
- Other costs: Other operating costs increased 90 basis points to 14.9% of revenue, reflecting higher marketing, insurance claims, maintenance and utilities.
- Corporate costs: G&A increased 10.6% to $190.5 million, including a $10.0 million legal reserve and $3.3 million of Recipe for Growth restructuring costs; adjusted G&A rose to $176.2 million from $159.9 million.
Restaurant expansion
Unit growth remained a major contributor to revenue, with 100 company-owned openings in the quarter compared with 61 in Q2 FY2025. Chipotlanes were included in 80 of the new locations, consistent with management’s view that the format improves access, new-store sales, margins and returns.
- Company-owned base: The company ended the quarter with 4,186 company-owned restaurants, up from 3,839 a year earlier and 4,090 at the end of Q1.
- International: One international partner-operated restaurant opened during the quarter, bringing the partner-operated total to 15.
- Full-year plan: Management continues to expect 350 to 370 new restaurants in 2026, including 10 to 15 international partner-operated locations, with approximately 80% of company-owned openings featuring a Chipotlane.
Earnings and capital allocation
The adjusted EPS beat was helped by the lower share count following substantial repurchases, although underlying earnings were lower than last year. Adjusted net income was $418.9 million versus $450.4 million, while diluted weighted-average shares declined to 1.279 billion from 1.350 billion.
- Quarterly earnings: GAAP net income declined to $403.5 million from $436.1 million, while adjusted net income declined to $418.9 million from $450.4 million.
- Tax rate: The effective tax rate was 24.3%, down from 24.5% a year earlier; management expects an underlying full-year rate of 24% to 26% before discrete items.
- Repurchases: Chipotle repurchased $630.7 million of stock at an average price of $32.55 during Q2 and had $1.7 billion remaining under its authorization at June 30.
- Liquidity: Six-month operating cash flow was $1.33 billion, versus $1.12 billion a year earlier, while capital expenditures were $397.6 million and six-month share repurchases totaled $1.35 billion.
Legal and operating risks
The quarter included elevated legal and restructuring costs, and the company’s filings continue to identify consumer sentiment, food safety, labor inflation, tariffs and geopolitical conditions as material risks to the sales recovery. Chipotle recorded an accrued legal liability of $29.6 million at June 30, compared with $11.4 million at December 31, 2025, while the shareholder litigation related to portion-size disclosures remained unresolved.
