Chipotle Mexican Grill, Inc. (CMG) Earnings & Analysis

Latest quarter

Chipotle reported Q2 FY2026 revenue of $3.3 billion, up 9.31% from Q2 FY2025. Revenue, as the consensus counts it, was $3.3 billion, 0.81% above the consensus of $3.3 billion. Adjusted EPS, as the consensus counts it, was $0.33, 3.13% above the consensus adjusted EPS of $0.32.

The filing said comparable restaurant sales increased 2.2%, reflecting a 1.0% increase in transactions and a 1.2% increase in average check. Diluted EPS was $0.32, unchanged from Q2 FY2025. Gross margin was 25.2%, down −2.1 percentage points from a year earlier, while operating margin was 15.7%, down −2.6 percentage points. The filing attributed higher food, labor, occupancy and other operating costs as percentages of revenue to inflation, restaurant investments and marketing activity. Free cash flow was $463.4 million, up 15.6% from Q2 FY2025.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

Chief Financial Officer Adam Rymer said traffic improved through Q2 and the first half of July, before sales trends softened by about 200 basis points in the second half of July amid consumer caution and an industry cyclospora issue. Rymer said the company was affected from a sales perspective, while Chief Executive Officer Scott Boatwright said Chipotle was not involved in the food-safety matter and did not use the products at issue.

Rymer said Q3 comparable sales are anticipated to be around 1.00%, assuming the roughly 200-basis-point impact continues through the quarter. He said the company’s Q3 comparisons are its toughest of the year because it is lapping increased promotional activity. Asked about the issue’s duration, Rymer said it was difficult to predict how long it could persist.

On pricing and costs, Rymer said inflation is expected to be closer to 3% in Q3 and pricing closer to the mid-2% range. He said the gap between pricing and inflation narrowed during Q3, and that the company expects them to match from Q4 onward. Rymer also said cost of sales is anticipated to be just under 30%, labor costs in the mid-25% range, other operating costs in the mid-15% range and marketing costs in the low 3% range for Q3.

Boatwright said the company is making restaurant-execution investments, including Linebacker deployment in more than 70% of restaurants and HEAP equipment installed in more than 1,000 restaurants. He said Chipotle still expects HEAP equipment to reach approximately 2,000 restaurants by year-end. Boatwright also said the company is rolling out its digital make-line interface across restaurants and preparing catering and Build Your Own Chipotle for a national launch in 2027.

Boatwright said the company opened 100 company-owned restaurants during the quarter and still expects to open approximately 350 restaurants in FY2026, with about 80.0% including a Chipotlane. He said the company sees international growth through company-owned and partner-operated markets, while maintaining that development pace in the U.S.

Guidance

Chipotle now expects FY2026 comparable restaurant sales growth in the low single-digit range. Rymer said the company anticipates Q3 FY2026 comparable sales growth of around 1.00%, which incorporates a continuation of the roughly 200-basis-point sales impact discussed on the call. The company also expects FY2026 menu pricing to finish near the high end of its 1% to 2% range.