Chipotle Mexican Grill Inc.

07/31/2026 | Press release | Distributed by Public on 07/31/2026 10:24

Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Cautionary Note Regarding Forward-Looking Statements
Certain statements in this report are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995, including statements about the number of new restaurants we expect to open in 2026, and the number with Chipotlanes, the number of new international partner-operated restaurants we expect to open, our anticipated comparable restaurant sales for 2026, the expected impact of tariffs on our food, beverage and packaging costs during the 2026 third quarter and on an ongoing basis, our expectation to generate positive cash flow for the foreseeable future, our expectations for utilization of cash flow from operations, our ability to manage prices, risks and volatility in our supply chain, our plans for continuing stock buybacks and the volume of buybacks, and the period of time during which our cash and short-term investment will fund our operations. We use words such as "anticipate," "believe," "could," "should," "may," "approximately," "estimate," "expect," "intend," "project," "target," "goal," and similar terms and phrases, including references to assumptions, to identify forward-looking statements. The forward-looking statements in this report are based on currently available operating, financial, and competitive information available to us as of the date of this filing and speak only as of the date they are made. We assume no obligation to update these forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required by applicable law. These statements are subject to risks and uncertainties that could cause actual results to differ materially from those described in the statements, including but not limited to: wage inflation and state or local regulations mandating higher minimum wages; the competitive labor market, which impacts our ability to attract and retain qualified employees; the impact of any union organizing efforts and our responses to such efforts; increases in ingredient and other operating costs due to inflation, global conflicts, severe weather, our Food with Integrity philosophy, tariffs, or trade restrictions; intermittent supply shortages relating to our Food with Integrity philosophy, rapid expansion, limited time offerings, and supply chain disruptions; risks and impacts of food safety incidents and food-borne illnesses; our reliance on certain information technology systems and potential material failures, interruptions, or outages; risks that our investments in new technology and technological innovations may not generate returns; privacy and cybersecurity risks, including breaches, unauthorized access, theft, modification, destruction, or ransom of guest or employee personal or confidential information stored on our network or the network of third party providers; the impact of competition, including from sources outside the restaurant industry; the impact of government laws and regulations relating to our employees, employment practices, restaurant design and construction, and the sale of food or alcoholic beverages; our ability to achieve our planned growth, such as the costs and availability of suitable new restaurant sites, construction materials, and contractors and restaurant equipment; the expected costs and risks related to our international expansion, including through partner-operated restaurants in the Middle East, Asia, and Mexico; our ability to achieve expected levels of comparable restaurant sales due to factors such as changes in guests' perceptions of our brand, including as a result of negative publicity or social media posts and decreased consumer spending or restaurant visits, or the inability to increase menu prices or realize the benefits of menu price increases; failure to meet market expectations for our financial performance or any announced guidance and the impact thereof; the potential impact of activist shareholder actions or tactics; failure to attract or retain key executive talent; the impact of our brand, marketing, promotional, advertising, and pricing strategies, digital platform and menu innovations; our reliance on third party delivery services and the information technology infrastructure; and enforcement and litigation risks, including possible governmental actions and potential litigation related to food safety incidents, cybersecurity incidents, employment or privacy laws, advertising claims, contract disputes, or other matters. In addition, many of the foregoing risks and uncertainties are, or could be, exacerbated by any worsening of the global business and macroeconomic environment. These statements also are subject to other risk factors described from time to time in our SEC reports, including our annual report on Form 10-K and quarterly reports on Form 10-Q, all of which are available on the investor relations page of our website at ir.Chipotle.com.
As of June 30, 2026, we owned 4,074 Chipotle restaurants throughout the United States and 112 international Chipotle restaurants. Additionally, we had 15 international partner-operated restaurants. We manage our U.S. operations based on 12 regions and aggregate our operations to one reportable segment.
Throughout "Management's Discussion and Analysis of Financial Condition and Results of Operations" we discuss the following key operating metrics which we believe will drive our financial results and long-term growth model. We believe these metrics are useful to investors because management uses these metrics to assess the growth of our business and the effectiveness of our marketing and operational strategies:
•Comparable restaurant sales
•Food, beverage, and packaging as a percentage of total revenue
•Labor as a percentage of total revenue
•Occupancy as a percentage of total revenue
•Other operating costs as a percentage of total revenue
•New restaurant openings
Second Quarter 2026 Financial Highlights, year-over-year:
•Total revenue increased 9.3% to $3.3 billion
•Comparable restaurant sales increased 2.2%
•Diluted earnings per share remained flat at $0.32
Sales Trends. Comparable restaurant sales increased 2.2% for the three months ended June 30, 2026. The increase is attributable to a 1.2% increase in average check and a 1.0% increase in transactions. Comparable restaurant sales represent the change in period-over-period total revenue for company-owned restaurants in operation for at least 13 full calendar months. Digital sales represented 38.3% of total food and beverage revenue for the three months ended June 30, 2026, an increase from 35.5% for the three months ended June 30, 2025.
We believe these results reflect the success of our Recipe for Growth strategy (as discussed in our Annual Report on Form 10-K for the fiscal year ending December 31, 2025) and related initiatives against the dynamic consumer environment that has persisted in 2026. We have recently experienced low-single-digit headwinds to our comparable restaurant sales trends that we believe are tied to that environment as customers respond to, among other things, recent U.S. food safety concerns and geopolitical developments. While our outlook remains positive, our financial results could be materially adversely impacted if these disruptions or trends worsen throughout the third quarter of 2026 or beyond.
Restaurant Development. During the three months ended June 30, 2026, we opened 100 company-owned restaurants, which included 80 restaurants with a Chipotlane. We also opened one international partner-operated restaurant.
Restaurant Activity
The following table details company-owned restaurant unit data for the periods indicated.
Three months ended
June 30, 		Six months ended
June 30,
2026 2025 2026 2025
Beginning of period 4,090 3,781 4,042 3,726
Openings 100 61 149 118
Permanent closures (3) (2) (4) (4)
Relocations (1) (1) (1) (1)
Total at end of period 4,186 3,839 4,186 3,839
The following table details partner-operated restaurant unit data for the periods indicated.
Three months ended
June 30, 		Six months ended
June 30,
2026 2025 2026 2025
Beginning of period 14 5 14 3
Openings 1 - 1 2
Total at end of period 15 5 15 5
Results of Operations
Our results of operations as a percentage of total revenue and period-over-period changes are discussed in the following section.
Revenue
Three months ended
June 30, 		Percentage Six months ended
June 30, 		Percentage
2026 2025 change 2026 2025 change
(dollars in millions) (dollars in millions)
Food and beverage revenue $ 3,332.8 $ 3,047.8 9.4 % $ 6,405.5 $ 5,907.6 8.4 %
Delivery service revenue 15.8 15.6 0.8 % 31.3 31.1 0.7 %
Total revenue $ 3,348.6 $ 3,063.4 9.3 % $ 6,436.8 $ 5,938.6 8.4 %
Average restaurant sales (1)
$ 3.102 $ 3.142 (1.3 %) $ 3.102 $ 3.142 (1.3 %)
Comparable restaurant sales increase/(decrease) 2.2% (4.0%) 1.4 % (2.3 %)
Transactions 1.0% (4.9%) 0.8% (3.7%)
Average check 1.2% 0.9% 0.6% 1.4%
Menu price increase 1.6% 1.9% 1.3% 2.4%
Check mix (0.4 %) (1.0 %) (0.7 %) (1.0 %)
(1)Average restaurant sales refers to the average trailing 12-month food and beverage revenue for company-owned restaurants in operation for at least 12 full calendar months.
The following is a summary of the change in restaurant sales for the period indicated:
Three months ended Six months ended
(dollars in millions)
For the period ended June 30, 2025 $ 3,063.4 $ 5,938.6
Change from:
Comparable restaurant sales 65.9 79.9
Restaurants not yet in comparable base opened in 2026 66.0 80.1
Restaurants not yet in comparable base opened in 2025 161.9 353.9
Closures (9.8) (18.9)
Other 1.2 3.2
For the period ended June 30, 2026 $ 3,348.6 $ 6,436.8
Food, Beverage and Packaging Costs
Three months ended
June 30, 		Percentage Six months ended
June 30, 		Percentage
2026 2025 change 2026 2025 change
(dollars in millions) (dollars in millions)
Food, beverage and packaging $ 993.6 $ 886.0 12.1 % $ 1,906.9 $ 1,724.4 10.6 %
As a percentage of total revenue 29.7 % 28.9 % 0.8 % 29.6 % 29.0 % 0.6 %
Food, beverage and packaging costs increased 0.8% as a percentage of total revenue for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was driven by 1.4% of inflation, primarily from beef and freight, and 0.5% of higher protein and produce usage. These increases were partially offset by a 0.5% benefit from menu price increases and 0.5% of lower avocado and dairy costs.
Food, beverage and packaging costs increased 0.6% as a percentage of total revenue for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was primarily driven by 1.1% of inflation, primarily from beef and freight, and 0.5% of higher protein and produce usage. These increases were partially offset by 0.6% of lower avocado and dairy costs and a 0.4% benefit from menu price increases.
Labor Costs
Three months ended
June 30, 		Percentage Six months ended
June 30, 		Percentage
2026 2025 change 2026 2025 change
(dollars in millions) (dollars in millions)
Labor costs $ 836.5 $ 756.3 10.6 % $ 1,641.9 $ 1,474.5 11.4 %
As a percentage of total revenue 25.0 % 24.7 % 0.3 % 25.5 % 24.8 % 0.7 %
Labor costs increased 0.3% as a percentage of total revenue for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was primarily driven by 0.3% from wage inflation and performance-based bonuses and 0.2% from restaurant labor execution. These increases were partially offset by a 0.4% benefit from menu price increases.
Labor costs increased 0.7% as a percentage of total revenue for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was primarily driven by 0.4% from wage inflation and performance-based bonuses, 0.2% from costs related to certain legal proceedings, and 0.2% from lower average restaurant sales volumes. These increases were partially offset by a 0.3% benefit from menu price increases.
Occupancy Costs
Three months ended
June 30, 		Percentage Six months ended
June 30, 		Percentage
2026 2025 change 2026 2025 change
(dollars in millions) (dollars in millions)
Occupancy costs $ 174.2 $ 154.3 12.9 % $ 344.1 $ 304.1 13.2 %
As a percentage of total revenue 5.2 % 5.0 % 0.2 % 5.3 % 5.1 % 0.2 %
Occupancy costs increased 0.2% as a percentage of total revenue for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025. The increase was primarily due to 0.2% of expense associated with new restaurants.
Other Operating Costs
Three months ended
June 30, 		Percentage Six months ended
June 30, 		Percentage
2026 2025 change 2026 2025 change
(dollars in millions) (dollars in millions)
Other operating costs $ 499.8 $ 428.7 16.6 % $ 980.4 $ 843.8 16.2 %
As a percentage of total revenue 14.9 % 14.0 % 0.9 % 15.2 % 14.2 % 1.0 %
Other operating costs increased 0.9% as a percentage of total revenue for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The increase was primarily driven by a 0.3% increase in marketing and promotional activities and inflation across several items, most notably insurance claims, maintenance, and utility costs.
Other operating costs increased 1.0% as a percentage of total revenue for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was due to the impact from several items, primarily a 0.4% increase in marketing and promotional activities and a 0.2% increase in utilities.
General and Administrative Expenses
Three months ended
June 30, 		Percentage Six months ended
June 30, 		Percentage
2026 2025 change 2026 2025 change
(dollars in millions) (dollars in millions)
General and administrative expenses $ 190.5 $ 172.2 10.6 % $ 394.2 $ 344.9 14.3 %
As a percentage of total revenue 5.7 % 5.6 % 0.1 % 6.1 % 5.8 % 0.3 %
The following is a summary of the change in general and administrative expenses for the period indicated:
Three months ended Six months ended
(dollars in millions)
For the period ended June 30, 2025 $ 172.2 $ 344.9
Change from:
Conferences, primarily biennial All Managers' Conference (2.9) 20.4
Performance bonuses 10.8 16.7
Legal contingencies 11.1 12.3
Wages 6.2 11.2
Restructuring 4.1 7.0
Legal services (2.3) (2.0)
Stock-based compensation, August 2024 retention awards (11.3) (20.2)
Other 2.6 3.9
For the period ended June 30, 2026 $ 190.5 $ 394.2
Depreciation and Amortization
Three months ended
June 30, 		Percentage Six months ended
June 30, 		Percentage
2026 2025 change 2026 2025 change
(dollars in millions) (dollars in millions)
Depreciation and amortization $ 98.3 $ 90.9 8.1 % $ 195.0 $ 178.2 9.5 %
As a percentage of total revenue 2.9 % 3.0 % (0.1 %) 3.0 % 3.0 % 0.0 %
Depreciation and amortization decreased 0.1% as a percentage of total revenue for the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to sales leverage, partially offset by increased depreciation expense associated with new restaurants.
Depreciation and amortization remained flat as a percentage of total revenue for the six months ended June 30, 2026 compared to the six months ended June 30, 2025, primarily due to sales leverage offsetting the increased depreciation expense associated with new restaurants.
Impairment, Closure Costs, and Asset Disposals
Three months ended
June 30, 		Percentage Six months ended
June 30, 		Percentage
2026 2025 change 2026 2025 change
(dollars in millions) (dollars in millions)
Impairment, closure costs, and asset disposals $ 13.8 $ 5.5 152.6 % $ 23.6 $ 11.6 103.1 %
As a percentage of total revenue 0.4 % 0.2 % 0.2 % 0.4 % 0.2 % 0.2 %
Impairment, closure costs, and asset disposals increased in dollar terms for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025, primarily due to charges associated with the replacement of restaurant assets and, to a lesser extent, increased impairment of operating lease assets and leasehold improvements in the current period.
Interest and Other Income, Net
Three months ended
June 30, 		Percentage Six months ended
June 30, 		Percentage
2026 2025 change 2026 2025 change
(dollars in millions) (dollars in millions)
Interest and other income, net $ 7.7 $ 18.4 (58.2 %) $ 16.4 $ 40.6 (59.6 %)
As a percentage of total revenue 0.2 % 0.6 % (0.4 %) 0.3 % 0.7 % (0.4 %)
Interest and other income, net decreased in dollar terms for the three and six months ended June 30, 2026 compared to the three and six months ended June 30, 2025, primarily due to a decrease in interest income resulting from lower balances of interest bearing securities associated with increased repurchases of our common stock.
Provision for Income Taxes
Three months ended
June 30, 		Percentage Six months ended
June 30, 		Percentage
2026 2025 change 2026 2025 change
(dollars in millions) (dollars in millions)
Provision for income taxes $ 129.7 $ 141.3 (8.2 %) $ 232.7 $ 256.2 (9.2 %)
Effective income tax rate 24.3 % 24.5 % (0.2 %) 24.8 % 23.7 % 1.1 %
The effective income tax rate decreased 0.2% for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. The decrease was primarily driven by a 0.6% increase in U.S. federal income tax credits, partially offset by a 0.3% reduction in tax benefits related to option exercises and equity vesting, and a 0.1% increase in other discrete income tax items.
The effective income tax rate increased 1.1% for the six months ended June 30, 2026 compared to the six months ended June 30, 2025. The increase was primarily driven by a 1.0% reduction in tax benefits related to option exercises and equity vesting and a 0.3% increase in other discrete income tax items, partially offset with a 0.2% increase in U.S. federal income tax credits.
Seasonality
Seasonal factors cause our profitability to fluctuate from quarter to quarter. Historically, our average daily restaurant sales and net income are lower in the first and fourth quarters due, in part, to the holiday season and because fewer people eat out during periods of inclement weather (the winter months) than during periods of mild or warm weather (the spring, summer and fall months). Other factors also have a seasonal effect on our results. For example, restaurants located near colleges and universities generally do more business during the academic year. Seasonal factors, however, might be moderated or outweighed by other factors that may influence our quarterly results, such as unexpected publicity impacting our business in a positive or negative way, disease outbreak, epidemic or endemic, the impact of inflation and consumer sentiment on consumer spending, fluctuations in food or packaging costs, the timing of holidays, or the timing of menu price increases or promotional activities and other marketing initiatives. The number of trading days in a quarter can also affect our results, although, on an overall annual basis, changes in trading days do not have a significant impact.
Our quarterly results are also affected by other factors such as the amount and timing of non-cash stock-based compensation expense and related tax rate impacts, litigation, settlement costs and related legal expenses, impairment charges and non-operating costs, timing of marketing or promotional expenses, the number and timing of new restaurants opened in a quarter, and closure of restaurants. New restaurants typically have higher operating costs following opening because of the expenses associated with their opening and operating inefficiencies in the months immediately following opening. Accordingly, results for a particular quarter are not necessarily indicative of results to be expected for any other quarter or for any year.
Liquidity and Capital Resources
Cash and Investments
As of June 30, 2026, we had a cash and marketable investments balance of $667.1 million, non-marketable investments of $107.9 million, and restricted cash of $35.6 million. After funding the current operations in our restaurants and support centers, the first planned use of our cash flow from operations is to provide capital for the continued investment in new restaurant construction. In addition to continuing to invest in our restaurant expansion, we expect to utilize cash flow from operations to: invest in, maintain, and refurbish our existing restaurants; repurchase additional shares of our common stock subject to market conditions; and for general corporate purposes. As of June 30, 2026, $1.7 billion remained available for repurchases of shares of our common stock. Under the remaining repurchase authorizations, shares may be purchased from time to time in open market transactions, subject to market conditions.
Borrowing Capacity
As of June 30, 2026, we had $500.0 million of undrawn borrowing capacity under a revolving credit facility.
Use of Cash
We believe that cash from operations, together with our cash and investment balances, will be sufficient to meet ongoing capital expenditures, working capital requirements and other cash needs for the foreseeable future. Assuming no significant declines in comparable restaurant sales, we expect we will generate positive cash flow for the foreseeable future.
We have not required significant working capital because guests generally pay using cash or credit and debit cards and because our operations do not require significant receivables or significant inventories, partly due to our use of various fresh ingredients. In addition, we generally have the right to pay for the purchase of food, beverages and supplies sometime after the receipt of those items, generally within ten days, thereby reducing the need for incremental working capital to support our growth.
Cash Flows
Cash provided by operating activities was $1.3 billion for the six months ended June 30, 2026, compared to $1.1 billion for the six months ended June 30, 2025. The increase was primarily due to timing of tax-related payments, and to a lesser extent other changes in non-tax operating assets and liabilities.
Cash used in investing activities was $53.4 million for the six months ended June 30, 2026, compared to cash provided by investing activities of $8.1 million for the six months ended June 30, 2025. The change was primarily due to increased capital expenditures of $92.2 million, mainly related to costs associated with new restaurant development and the purchase of new equipment for existing restaurants. We expect continued elevated costs associated with purchases of new equipment for existing restaurants through 2027. This was partially offset by a $29.8 million increase in maturities of investments.
Cash used in financing activities was $1.4 billion for the six months ended June 30, 2026, compared to $1.0 billion for the six months ended June 30, 2025. The change was primarily due to increased repurchases of common stock of $357.9 million.
Critical Accounting Estimates
Critical accounting estimates are those that we believe are both significant and that require us to make difficult, subjective or complex judgments, often because we need to estimate the effect of inherently uncertain matters. We base our estimates and judgments on historical experiences and various other factors that we believe to be appropriate under the circumstances. Actual results may differ from these estimates, and we might obtain different estimates if we used different assumptions or factors. We had no significant changes to our critical accounting estimates as described in our Annual Report on Form 10-K for the year ended December 31, 2025.
Chipotle Mexican Grill Inc. published this content on July 31, 2026, and is solely responsible for the information contained herein. Distributed via EDGAR on July 31, 2026 at 16:24 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]