If you've been craving a burrito bowl lately, you're not alone. Chipotle Mexican Grill (Chipotle (CMG)) reported second-quarter results that beat Wall Street's expectations, and the stock is up more than 5% in premarket trading Thursday. The secret sauce? More customers walking through the door.
Adjusted earnings came in at $0.33 per share, a penny ahead of the $0.32 analysts were looking for. Revenue jumped 9.3% to $3.35 billion, also topping the consensus estimate of $3.33 billion. Comparable restaurant sales rose 2.2%, with a 1.0% increase in customer transactions — a sign that people are returning to the chain after a period of softer traffic.
Digital sales continued to grow, accounting for 38.3% of total revenue, up from 35.5% a year ago. That's a reminder that even as diners come back in person, the online ordering habit isn't going away.
One interesting tidbit: Chipotle said sales in the Middle East are starting to recover after recent geopolitical disruptions. But the company is taking a cautious approach, noting that further expansion in the region will depend on conditions on the ground.
The company also flexed its financial muscles, repurchasing $631 million of its own shares during the quarter. The board authorized an additional $1.3 billion buyback program, leaving $1.7 billion in capacity as of June 30. That's a lot of confidence in the future — or at least a lot of cash to put to work.
Cash and equivalents stood at $228.2 million at quarter-end, down from $350.5 million at the end of 2025. That drop is partly due to the buybacks and investments in new restaurants.
Margins Under Pressure
It wasn't all guacamole and roses. Restaurant-level operating margin fell 220 basis points from a year ago, as higher costs ate into revenue growth. Cost of sales rose to 29.7% of revenue, driven by inflation and higher usage of chicken, steak, and produce. Those increases more than offset the benefits of menu price hikes and lower avocado and dairy costs.
Labor costs also ticked up 30 basis points to 25.0% of revenue, reflecting wage inflation and continued investments in the guest experience. In other words, Chipotle is spending more to keep employees happy and customers served.
Management noted that business trends were positive into early July but have softened in recent weeks due to broader consumer and industry headwinds. It's a cautious note, but not a surprising one given the economic uncertainty out there.
Going Global
Chipotle is thinking big — and international. During the quarter, the company opened its first restaurant in Mexico through a partnership with Alsea. More locations are planned in the Monterrey area later this year, with Mexico City slated for 2027.
But that's not all. Chipotle plans to enter South Korea later in 2026, followed by Singapore in early 2027. And it's continuing preparations for an expansion into Saudi Arabia. The company opened 101 restaurants in the quarter — 100 company-owned and one run by an international partner.
What's Next
Chipotle reaffirmed its plan to open 350 to 370 new restaurants in 2026, with about 80% expected to include a Chipotlane (because who doesn't want a drive-thru burrito?).
On costs, the company expects low-single-digit inflation in the third quarter. Labor costs should stay in the mid-25% range, with wage inflation continuing at a low-single-digit rate. Menu price increases are expected to hit the mid-2% range in Q3, ending the year near the upper end of the previously guided 1% to 2% range.
For the full year, Chipotle still expects low-single-digit comparable sales growth. But management warned that third-quarter comparisons will get tougher as the company laps stronger promotional activity from a year ago.
Shares of Chipotle were up 5.23% at $36.03 in premarket trading Thursday.
