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    CMG
    Earnings call· Jun 2026(Q2 FY26)

    CHIPOTLE MEXICAN GRILL Q2 FY26 earnings call CMG

    Jul 29, 2026 Source

    Executive summary

    Chipotle Q2 FY26 — Recipe for Growth Drives Transaction Growth Amidst Industry Headwinds

    Chipotle's Q2 FY26 results demonstrated the early traction of its 'Recipe for Growth' strategy, with strong revenue and transaction growth driven by menu innovation and digital engagement. Despite industry-wide consumer caution and inflationary pressures impacting margins, the company remains confident in its initiatives, including technology rollouts and global expansion, to drive sustainable long-term growth. Management is focused on enhancing guest experience and leveraging strategic partnerships for international market entry.

    Highlights

    5

    • Revenue grew 9.3% to $3.3 billion, driven by continued positive comparable sales and transactions.

    • Comparable restaurant sales increased 2.2%, including a transaction comp of 1%, with momentum building through the quarter.

    • Opened 101 new restaurants in Q2, including 80 Chipotlanes, maintaining strong new restaurant productivity and cash-on-cash returns.

    • Chipotle Honey Chicken LTO outperformed last year's launch with a cumulative attachment rate north of 25%.

    • Active members in the Rewards program reached 23 million, with in-store loyalty comps outpacing order-ahead loyalty comps since the relaunch.

    Concerns

    5

    • Restaurant-level margin decreased 220 basis points year-over-year to 25.2%.

    • Adjusted diluted EPS was $0.33, flat to last year.

    • Cost of sales increased 80 basis points to 29.7% due to inflation in beef and freight, and increased usage of certain ingredients.

    • Labor costs increased 30 basis points to 25% due to wage inflation and performance bonuses.

    • Softer trends in recent weeks, with a 200 basis point impact in late July attributed to heightened consumer caution and industry-wide cyclospora concerns.

    Guidance & targets

    21
    CategoryTargetConfidence
    Full-year comparable sales growth
    low single-digit range
    high materiality
    High
    Q3 comparable sales growth
    around +1%
    high materiality
    Medium
    Full-year new restaurant openings
    approximately 350
    medium materiality
    High
    Chipotlane percentage of new restaurant openings
    about 80%
    low materiality
    High
    HEEP rollout completion
    approximately 2,000 restaurants
    medium materiality
    High
    HEEP rollout completion for entire portfolio
    sometime in 2027
    medium materiality
    Medium
    Q3 cost of sales
    just under 30%
    medium materiality
    High
    Q3 cost of sales inflation
    low single-digit range
    low materiality
    High
    Q3 labor cost
    mid-25% range
    medium materiality
    High
    Q3 marketing costs
    low 3% range
    low materiality
    High
    Full-year marketing costs
    low 3% range
    low materiality
    High
    Q3 other operating costs
    mid-15% range
    medium materiality
    High
    Q3 non-GAAP G&A
    around $180 million
    medium materiality
    High
    Full-year effective tax rate
    24% to 26% range
    low materiality
    High
    Full-year pricing impact
    near the high end of 1% to 2% range
    medium materiality
    High
    Mexico expansion
    additional openings planned in Monterrey metropolitan area later this year and expansion into Mexico City in 2027
    low materiality
    High
    South Korea expansion
    first restaurants in Seoul, South Korea this year
    low materiality
    High
    Singapore expansion
    expected to follow shortly thereafter in early 2027
    low materiality
    High
    Saudi Arabian market entry
    in the near future
    low materiality
    Medium
    Middle East long-term potential
    support hundreds of Chipotle restaurants over time
    low materiality
    High
    Full-year depreciation
    around 3% of sales
    low materiality
    High

    Segment performance

    1
    SegmentRevenueYoYQoQMargin
    Europe
    Each country delivered high single-digit comp sales growth during the quarter, reflecting multiyear efforts to align with North American standards and improved unit economics.
    		—high single-digit——

    Operational metrics

    47
    Revenue growth
    9.3%YoY
    Q2 FY26

    Total revenue reached $3.3 billion.

    Transaction comp
    1%
    Q2 FY26

    Contributed to comparable restaurant sales increase.

    Digital sales
    $1.3 billion
    Q2 FY26

    Increased as a percentage of total sales compared to prior year.

    Restaurant-level margin
    25.2%down 220 bps YoY
    Q2 FY26

    Impacted by increased costs.

    Adjusted diluted EPS
    $0.33flat YoY
    Q2 FY26

    Flat compared to the prior year.

    New restaurants opened
    101
    Q2 FY26

    Includes 80 Chipotlanes and 1 international partner-operated restaurant.

    Pricing impact
    1.6%
    Q2 FY26

    Impact of menu price increases in Q2.

    Pricing impact
    mid-2% rangeincrease from Q2
    Q3 FY26

    Anticipated increase in pricing impact for Q3.

    New restaurant productivity
    80%stable
    Q2 FY26

    Remained stable, among the strongest in the industry.

    Year 2 cash-on-cash returns
    60%
    Q2 FY26

    Around 60%, among the strongest in the industry.

    Net impact from new openings on comp sales
    100 bpsin line with prior years
    Q2 FY26

    Consistent with historical trends, even in dense markets.

    Cost of sales
    29.7%increase of 80 bps YoY
    Q2 FY26

    Increased primarily due to inflation and ingredient usage.

    Labor costs
    25%increase of 30 bps YoY
    Q2 FY26

    Primarily driven by wage inflation and performance bonuses.

    Other operating costs
    14.9%increase of 90 bps YoY
    Q2 FY26

    Primarily driven by higher marketing and inflation across several items.

    Marketing costs
    3%increase of 30 bps YoY
    Q2 FY26

    Increased as a percentage of sales.

    GAAP G&A
    $190 million
    Q2 FY26

    Reported on a GAAP basis.

    Non-GAAP G&A
    $176 million
    Q2 FY26

    Excludes certain legal settlements, restructuring costs, and retention equity awards.

    Underlying G&A
    $148 million
    Q2 FY26

    Component of G&A.

    Noncash stock compensation
    $25 million
    Q2 FY26

    Component of G&A.

    Bonus accruals and payroll taxes
    $5 million
    Q2 FY26

    Component of G&A.

    Benefit related to All Manager Conference
    $2 million
    Q2 FY26

    Offsetting item in G&A.

    Depreciation
    $98 million
    Q2 FY26

    Depreciation expense for the quarter.

    GAAP effective tax rate
    24.3%
    Q2 FY26

    Reported on a GAAP basis.

    Non-GAAP effective tax rate
    24.0%
    Q2 FY26

    Reported on a non-GAAP basis.

    Cash, restricted cash and investments balance
    $800 milliondecrease of $1.3 billion YoY
    end of Q2 FY26

    Decrease compared to a year ago due to stock repurchases.

    Stock repurchases
    $631 million
    Q2 FY26

    Executed in the second quarter at an average price of $32.55.

    Stock repurchases
    over $1.3 billion
    YTD FY26

    Year-to-date total at an average price of $34.35.

    Repurchase authorization
    $1.3 billionadditional authorization
    Q2 FY26

    Board authorized an additional $1.3 billion.

    Repurchase authorization remaining
    $1.7 billion
    end of Q2 FY26

    Remaining authorization at the end of the quarter.

    General manager turnover
    multiyear low
    Q2 FY26

    Reflects strength of culture and people development.

    Crew turnover
    returned to historical norms
    Q2 FY26

    Reflects strength of culture and people development.

    Max 15 performance (HEEP vs enterprise)
    2 to 3 entreesoutperforming enterprise
    Q2 FY26

    HEEP restaurants outperform the enterprise in peak 15-minute periods.

    Guest satisfaction scores
    notable year-over-year increasesYoY
    Q2 FY26

    Result of investments in hospitality and training.

    Digital on-time percentage
    notable year-over-year increasesYoY
    Q2 FY26

    Result of investments in technology and operations.

    Refunds reduction
    meaningful reduction
    Q2 FY26

    Result of improved execution and guest satisfaction.

    Rewards participation in-restaurant
    20%compared to 90% for owned digital
    Q2 FY26

    Significant opportunity to increase participation in the in-restaurant business.

    Daily enrollments (in-restaurant)
    nearly 20%step-up
    since launch

    Driven by new in-restaurant enrollment tools.

    In-store loyalty comps
    outpaced order-ahead loyalty comps
    since relaunch

    Reinforces belief that simplifying in-restaurant Rewards increases engagement.

    Active members in Rewards program
    23 million
    Q2 FY26

    Significant opportunity to strengthen the digital ecosystem.

    Chipotle Honey Chicken attachment rate
    north of 25%outperforming last year's launch
    Q2 FY26

    Strong guest response to the LTO.

    Cilantro Lime Sauce attachment rate
    maintained above Red Chimichurri and Adobo Ranch
    Q2 FY26

    Continues to perform exceptionally well, reinforcing demand for flavor-forward innovation.

    Catering and Build-Your-Own Chipotle sales mix
    2% to 3%
    Q2 FY26

    Highly incremental and operationally efficient, with encouraging pilot results.

    Matchday BOGO sales record
    new single day sales record and most successful BOGO in history
    Q2 FY26

    Outdid the previous highest sales day (Tatted Like a Chipotle Bag promotion).

    Wallet share gains
    highest year-over-year gains since 2024YoY
    Q2 FY26

    Across all income cohorts and age groups.

    Market share gains
    taken share in each month of 2026
    YTD FY26

    Across all income cohorts and age groups.

    Inflation vs pricing gap
    narrowing
    H2 FY26

    Gap between pricing and inflation is easing in the second half of the year.

    Inflation vs pricing gap
    expected to match
    Q4 FY26 forward

    Dislocation between pricing and inflation is expected to be eliminated from Q4 forward.

    Industry KPIs

    2
    MetricValueDetails
    Comparable sales comps2.2%%
    Net unit growth development pipeline101units

    Product announcements

    10
    ProductTypeDetails
    Chipotle Honey Chickenlaunch
    Cilantro Lime Sauceupdate
    High-protein campaignupdate
    Cook to needs toollaunch
    Chipotle Kitchenlaunch
    Chipotle Rewards programlaunch
    Summer of Extras campaignlaunch
    Frictionless in-restaurant Rewards experiencelaunch
    Catering and Build-Your-Own Chipotle national launchroadmap
    New menu items (protein, sides, beverage)roadmap

    Deals & partnerships

    3
    AlseaPartner for expansion into Latin America, specifically Mexico.

    Partnered for expansion into Mexico, with the first restaurant opened in Monterrey. Additional openings planned in Monterrey and Mexico City in 2027.

    SPC GroupPartner for expansion into Southeast Asia, specifically South Korea and Singapore.

    Partnered for expansion into South Korea (first restaurants in Seoul this year) and Singapore (early 2027).

    AlshayaPartner for expansion into the Middle East.

    Partnered for expansion in the Middle East, with 15 restaurants across 3-4 countries. Opened new restaurants in Abu Dhabi and Qatar, with plans to enter Saudi Arabia.

    Risks & headwinds

    6
    Heightened consumer caution and industry-wide cyclospora concernslate July 2026, potentially continuing into Q3 FY26

    approximately 200 basis points impact on comp sales in late July

    Mitigation: Chipotle's robust food safety program, close work with government agencies, and sourcing practices (lettuces from California, not using products caught in the conversation).

    Tougher comparisons in Q3 FY26Q3 FY26

    Q3 is the toughest lap this year

    Mitigation: Continued execution of Recipe for Growth initiatives, menu innovation, and digital engagement.

    Inflation in cost of salesQ2 FY26, Q3 FY26

    80 bps increase in Q2 FY26 cost of sales; Q3 cost of sales inflation in low single-digit range

    Mitigation: Menu price increases, benefits from lower avocado and dairy prices.

    Wage inflation and performance bonusesQ2 FY26, Q3 FY26

    30 bps increase in Q2 FY26 labor costs; Q3 wage inflation in low single-digit range

    Mitigation: Impact from menu price increases, labor execution in restaurants, and investments in guest experience.

    Inflation across other operating costsQ2 FY26

    90 bps increase in Q2 FY26 other operating costs

    Mitigation: Disciplined approach to investments in technology and other areas to drive efficiencies.

    Geopolitical conditions impacting Middle East developmentnear-term

    near-term development remains dependent on geopolitical conditions

    Mitigation: Long-term outlook remains unchanged, belief in region's potential to support hundreds of restaurants.

    What to watch in Q3 FY26

    5

    Q3 Comparable Sales Growth

    Q3 FY26
    CurrentSofter trends in late July (approx. 200 bps impact)
    Targetaround +1%

    Why it matters

    This will indicate the extent of recovery from recent softness and the impact of industry-wide cyclospora concerns on sales.

    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.

    Q&A highlights

    6

    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

    2 min read5 chapters

    Detailed Narrative

    01

    Recipe for Growth Strategy Progress

    Chipotle's 'Recipe for Growth' strategy, launched at the start of the year, is gaining traction, driving positive transaction growth and strengthening restaurant execution. The strategy focuses on five pillars: protecting the core, modernizing the business model with technology, evolving brand messaging and menu innovation, cultivating talent, and expanding global reach. Early proof points reinforce confidence in these long-term investments, with initiatives like the return of Chipotle Honey Chicken and the revamped Rewards program contributing to incremental transactions and brand relevance.

    02

    Restaurant Execution and Throughput Improvements

    The company is making targeted investments to strengthen guest experience and hospitality, with a focus on throughput. Linebacker and expo deployment reached over 70% of restaurants for the first time this quarter, accelerating year-over-year max 15 performance. The High-Efficiency Equipment Package (HEEP) is now in over 1,000 restaurants, expected to reach 2,000 by year-end, showing improvements in food quality, guest satisfaction, and throughput gains of 2-3 entrees in peak 15-minute periods. Enhanced training, mystery shoppers, and optimized manager deployment are also contributing to increased guest satisfaction and reduced refunds.

    03

    Digital Innovation and Rewards Program Enhancements

    Chipotle is modernizing its business through technology, including the launch of a modernized 'cook to needs' tool in pilot and the rollout of 'Chipotle Kitchen' for digital order accuracy. The Rewards program was relaunched in mid-April with enhanced personalization and expanded redemption options, driving a nearly 20% step-up in daily enrollments. A new frictionless in-restaurant Rewards experience is set to pilot in August, aiming to increase engagement and speed of service by automatically earning points upon payment. The 'Summer of Extras' campaign also saw increased member engagement and overall frequency.

    04

    Brand Messaging and Menu Innovation Pipeline

    The company is evolving its brand messaging to highlight its differentiated value proposition of real food, high-quality ingredients, generous portions, and accessible price points. The return of Chipotle Honey Chicken and the continued strong performance of Cilantro Lime Sauce demonstrate successful menu innovation. A strong innovation pipeline is planned for the second half of the year, including two additional limited-time protein options and further menu innovation. Efforts are also underway to expand into group occasions through catering and 'Build-Your-Own Chipotle', with a national launch for catering targeted for 2027.

    05

    Global Expansion and People Development

    Chipotle opened 100 company-owned restaurants in Q2 and expects to open approximately 350 this year, with 80% including a Chipotlane. International expansion is progressing with high single-digit comp sales growth in Europe. The first restaurant in Monterrey, Mexico, opened with partner Alsea, with further expansion planned for Mexico City in 2027. New markets in Seoul, South Korea (this year) and Singapore (early 2027) are planned with SPC Group. Middle East sales are returning to pre-conflict levels, with new openings in Abu Dhabi and Qatar, and planned entry into Saudi Arabia, reinforcing the long-term potential for hundreds of restaurants in the region. General manager turnover remains at a multiyear low, and crew turnover has returned to historical norms.

    AI-generated summary of the company’s earnings call. Not investment advice.