Chipotle (CMG) Q2 FY26 earnings call: guidance and Q&A

How do LTOs perform on repeat, and are there changes in value perception given past underpricing?

Chipotle Honey Chicken performed better the second time, and LTOs generally build lift. The brand tracker shows solid progress in value perception across all income groups and age cohorts, with affordability scores improving. Value is seen as a holistic concept including convenience, execution, and menu innovation, not just price.

“Chipotle Honey Chicken did perform better the second time around as do many of our LTOs. So we're excited about the pantry items that we have. I do think there's a point of diminishing returns. I don't know what -- if that's the fifth or sixth time around.”

asked by Sara Senatore · answered by Scott Boatwright

Given recent slowdowns and tough comparisons, what gives confidence in picking up momentum into 2027?

Transaction growth in Q2 was an early result of the Recipe for Growth strategy. Investments in restaurant execution (HEEP, throughput, hospitality), menu innovation, Rewards engagement, and brand communication are showing 'green shoots' of positive momentum that will build and scale into 2027. New digital leadership is expected to bring game-changing innovation.

“The transaction growth we saw in Q2 was really the early days of the Recipe for Growth strategy hard at work for us, specifically around menu innovation. And so if you think about what we're doing, is we're investing in our restaurant execution, and that investment is in the form of high-efficiency equipment package and really investing in better throughput and hospitality.”

asked by David Palmer · answered by Scott Boatwright

Provide more color on the low single-digit comp guide for 2026, including Q3 trajectory and impact of recent softening.

Q2 traffic improved throughout the quarter, and momentum continued into early July. However, late July saw a softening of about 200 basis points due to heightened consumer caution and industry-wide cyclospora concerns. Q3 comps are anticipated to be around +1%, assuming this 200 basis point impact continues. Chipotle's products are not involved in the cyclospora conversation, but sales are impacted.

“And then in the second half of July, we did see a softening, call it about 200 basis points or so right around the issue that's affecting the industry around cyclospora. And so we took that into account when we're looking at Q3, so you do have to keep in mind, like I said in my prepared comments, Q3 is the toughest lap that we have this year. But at this point, we anticipate our comps will be somewhere around a plus 1% in Q3, which does assume a continuation of that roughly 200 basis point impact because it's really tough at this point to predict how long it will persist.”

asked by Dennis Geiger · answered by Adam Rymer

What is the incremental CapEx and expected sales uplift for the store refresh program, and are partners being considered for other international markets?

The company is testing different investment levels ($100k-$300k per restaurant) for a remodel-refresh program across various geographies to assess consumer perceptions and ROI, with no results to report yet. For global expansion, Chipotle is strategically building partner-operated restaurants and JVs (e.g., Alsea in Latin America, SPC in Southeast Asia) to leverage local expertise and achieve healthy returns, while continuing to own and operate in Western Europe.

“We're in early days. We have selected several locations across several geographies to make different levels of investment in today. So think -- I want you to think between $100,000 and $300,000 per restaurant to see what the return -- what the consumer perceptions are and then what the overall return will be.”

asked by Danilo Gargiulo · answered by Scott Boatwright

With a new CMO, how will the brand messaging evolve, particularly around value and ingredient quality, contrasting with limited-service competitors?

The new CMO, Fernando Machado, will evolve the 'For Real' campaign, not pivot from it. The focus will be on how food is prepared fresh, ingredient usage, and cultivating a better world. The messaging will stretch creative ambition and highlight Chipotle's extraordinary value through high-quality ingredients, fresh preparation, abundance, speed, and an approachable price point, differentiating it from competitors.

“So if you think about what Fernando is going to do, it's not a 180 pivot. It's really the next evolution of what For Real looks like for us. And so you can -- you've already tied to it already, but I'll tell you, you're going to see more of how we prepare our food fresh in restaurant. You're going to see more of our ingredient usage and how we think about ingredients.”

asked by Jon Tower · answered by Scott Boatwright

What has been learned from the methodical pricing rollout, and what gave comfort to trend towards the higher end of the initial 1-2% guide?

The methodical pricing process is working well, allowing for precise measurement of resistance and dynamic adjustments. This strategy enables market-by-market and region-by-region rollout. The narrowing gap between pricing and inflation, with Q3 inflation expected around 3% and pricing in the mid-2% range, gave comfort. The company expects pricing and inflation to match from Q4 forward, eliminating the dislocation.

“And so in Q3, I would expect inflation to be closer to about 3%, while pricing, like we said in the prepared comments, will be closer to that mid-2% range. So that dislocation has narrowed meaningfully from the first half where pricing was more in that 1% range, while inflation was kind of in that low to mid-3%. And so on a go-forward basis, we're pretty much there in Q3, but from Q4 forward, we expect those 2 to match and that -- therefore, that dislocation will not be there on a go-forward basis.”

asked by Andrew North · answered by Adam Rymer