Chipotle Mexican Grill Inc. (NYSE: CMG) stock rose in premarket trading Thursday after the restaurant chain reported second-quarter results that topped Wall Street estimates, driven by higher comparable sales and increased customer traffic. Earnings Beat Estimates
Adjusted earnings were 33 cents per share, topping the analyst consensus estimate of 32 cents, according to Benzinga Pro.
Revenue increased 9.3% year over year to $3.35 billion, ahead of the consensus estimate of $3.33 billion.
Comparable restaurant sales rose 2.2%, supported by a 1.0% increase in customer transactions, signaling improved guest traffic.
Digital sales accounted for 38.3% of total revenue, up from 35.5% a year earlier.
The company said sales in the Middle East have begun to recover following recent geopolitical disruptions, although the pace of further expansion will depend on regional conditions.
Chipotle repurchased $631 million of its shares during the quarter. Its board also authorized an additional $1.3 billion share repurchase program, bringing the remaining buyback capacity to $1.7 billion as of June 30.
Chipotle Mexican Grill reported cash and cash equivalents of $228.2 million at the end of the second quarter of 2026, down from $350.5 million at the end of 2025.
Margins Face Cost Pressure
Restaurant-level operating margin declined 220 basis points from a year earlier as higher operating costs more than offset revenue growth.
Cost of sales rose to 29.7% of revenue as inflation and higher usage of chicken, steak and produce outweighed menu price increases and lower avocado and dairy costs.
Labor costs increased 30 basis points year over year to 25.0% of revenue, reflecting wage inflation and continued investments in the guest experience.
Management said business trends remained positive into early July but softened in recent weeks because of broader consumer and industry headwinds.
International Expansion Continues
Chipotle opened its first restaurant in Mexico through partner Alsea during the quarter. The company plans additional restaurants in the Monterrey metropolitan area later in 2026 and in Mexico City in 2027.
The company also plans to enter South Korea later in 2026, followed by Singapore in early 2027, while continuing preparations for an expansion into Saudi Arabia.
Chipotle opened 101 restaurants during the quarter, including 100 company-owned locations and one operated by an international partner.
Outlook
Chipotle reaffirmed its plan to open about 350 to 370 new restaurants in 2026, with about 80% expected to include a Chipotlane.
The company expects cost inflation to remain in the low-single-digit range during the third quarter. Labor costs are projected to remain in the mid-25% range, while wage inflation is expected to continue at a low-single-digit rate.
Menu price increases are expected to reach the mid-2% range in the third quarter, ending the year near the upper end of the previously guided 1% to 2% range.
Chipotle continues to expect full-year 2026 comparable sales growth in the low-single-digit range. Management also warned that third-quarter comparisons will become more challenging as the company laps stronger promotional activity from a year ago.
CMG Price Action: Chipotle Mexican Grill shares were up 5.23% at $36.03 during premarket trading on Thursday, according to Benzinga Pro data.