CMG Q2 2025: Guides mid-single-digit comp growth, 29–30% margins
- Digital Engagement Boost: The Summer of Extras campaign drove impressive results with ~5,000,000 participants and a 14% increase in loyalty sign-ups, significantly engaging low-frequency users and driving transaction growth.
- Operational Efficiency & Margin Expansion: Investments in high efficiency equipment (including the produce slicer and related deployments) are already yielding labor efficiency gains (saving an estimated 2–3 hours per day per restaurant) and improved throughput, which support margin expansion and same-store sales recovery.
- International Growth Prospects: Robust progress in international markets—especially in Canada and Western Europe, where the brand is scaling rapidly with potential to unlock hundreds to thousands of restaurants—underscores a significant long‑term growth lever.
- Persistent macro headwinds and consumer sentiment issues: During Q2, Chipotle experienced a notable comp softness in May due to declining consumer sentiment, with comps only rebounding modestly in June and July. Continued macro uncertainty could hinder a sustained recovery in same-store sales.
- Rising cost pressures and margin risks: The company acknowledged a mix headwind, higher labor and operating costs, and anticipated tariff impacts in the upcoming quarters. These factors could erode margins, especially if consumer growth remains tepid.
- Reliance on digital and promotional initiatives amid execution risk: While digital campaigns such as Summer of Extras and the planned win-back journey have driven incremental engagement, there remains uncertainty as to whether these initiatives can consistently overcome headwinds and sustain mid single-digit comps over time.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +3% ( , ) | The modest 3% increase—from $2,973.1 million in Q2 2024 to $3,063.393 million in Q2 2025—suggests that core revenue drivers have stabilized, likely building on previous period improvements such as strong comparable restaurant sales and strategic pricing enhancements, even as overall market growth has moderated ( , ). |
Food and Beverage Revenue | +3% ( , ) | The consistent 3% growth (from $2,954.9 million in Q2 2024 to $3,047.754 million in Q2 2025) indicates that primary revenue streams have maintained steady performance thanks to sustained consumer demand and the residual benefits of earlier initiatives like new restaurant openings and menu price increases ( , ). |
Delivery Service Revenue | -14% ( , ) | The significant 14% decline—from $18.2 million in Q2 2024 to $15.639 million in Q2 2025—points to challenges in the digital delivery segment, possibly due to shifting consumer behavior, increased competition, or operational issues, a stark contrast to the moderate increases seen in other revenue areas that benefited from previous period success ( , ). |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Cost of Sales | Q3 2025 | high 29% range | high 29% range | no change |
Labor Costs | Q3 2025 | mid-24% range | high 24% range | raised |
Marketing Costs | Q3 2025 | mid-2% range | mid-2% range | no change |
Underlying G&A | Q3 2025 | $135 million | $139 million | raised |
Total G&A | Q3 2025 | $168 million | $163 million | lowered |
Comparable Sales | FY 2025 | Expected low single‐digit full‐year comp | about flat | lowered |
Depreciation | FY 2025 | around 3% of sales | around 3% of sales | no change |
Effective Tax Rate | FY 2025 | 25% to 27% | 25% to 27% | no change |
Marketing Costs | FY 2025 | high 2% range | high 2% range | no change |
Cost of Sales | FY 2025 | no prior guidance | Underlying cost of sales inflation expected to remain in the low single‐digit range | no prior guidance |
Labor Costs | FY 2025 | no prior guidance | Wage inflation anticipated to remain in the low single‐digit range | no prior guidance |
Tariffs | FY 2025 | no prior guidance | 50 basis point ongoing impact | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Comparable Sales | Q2 2025 | Expected low single-digit full-year comp with a trend line of about 0% to 1% | Grew from 2,973.1 millionIn Q2 2024 to 3,063.4 millionIn Q2 2025 (≈3% year-over-year) | Beat |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
International Expansion | Discussed in Q1 2025, Q4 2024, and Q3 2024 emphasizing growth in Canada, Western Europe, the Middle East, Latin America, and a global strategy framework. | Highlighted in Q2 2025 with success in Canada, menu alignment in Western Europe, expanding restaurant counts, and accelerated growth in the Middle East through the Alshaya partnership. | Consistent focus on geographic diversification with an enhanced strategic framework and deeper market‐specific leadership initiatives. |
Digital Engagement and AI-Driven Innovation | Q1 2025 noted innovations like the Autocado and augmented digital makeline along with early experiments on AI-driven customer journeys ; Q3 2024 discussed an AI hiring platform and early AI experiments for personalized loyalty experiences ; Q4 2024 mentioned technology improvements without a clear AI focus. | Q2 2025 showed strong initiatives such as the Summer of Extras program, the Win Back Journey, enhanced app personalization, loyalty growth, and a refined AI-driven welcome journey boosting engagement. | Increasing emphasis on leveraging AI for personalized digital engagement and loyalty enhancement, with a more gamified and data-driven approach boosting consumer interaction. |
Operational Efficiency and Throughput Improvements | Q1 2025 focused on operational fixes (cleanliness, throughput, and people deployment) ; Q3 2024 detailed progress with dual-sided planchas, produce slicers, expo enhancements, and the rollout of an AI hiring platform ; Q4 2024 emphasized GM stability and back-of-house modernization. | Q2 2025 provided detailed updates on equipment rollouts (produce slicers, high-efficiency equipment packages), throughput improvements (higher expo adoption), and labor efficiency gains driving faster service and prep time. | Ongoing commitment to modernizing restaurant operations with advanced equipment and technology, leading to measurable improvements in throughput and labor efficiency. |
Cost Pressures, Tariff Impacts, and Margin Risks | Q1 2025 reported rising cost pressures from inflation and specific tariff impacts (aluminum, broad-based tariffs) affecting cost of sales and margins ; Q3 2024 highlighted food cost inflation, margin declines, and noted no tariff discussion ; Q4 2024 discussed higher cost of sales and explicit tariff impacts on imports. | Q2 2025 noted improvements in cost of sales from menu price increases, steady tariff impacts, slightly higher labor costs, and acknowledged margin pressures with an optimistic outlook for recovery in H2. | Persistent cost pressures and tariff challenges remain a concern, though menu pricing and efficiency initiatives are beginning to offset these issues, with cautious optimism for margin recovery. |
Macro Economic Headwinds and Consumer Sentiment Challenges | Q1 2025 described a slowdown in consumer spending, digital softness, and weather/seasonal disruptions affecting transactions ; Q3 2024 mentioned competitive pressures and mixed consumer sentiment in a challenging macro landscape ; Q4 2024 only provided indirect references (weather, holiday shifts, tariffs). | Q2 2025 acknowledged a drop in consumer sentiment in May with a subsequent rebound in June driven by summer marketing; noted overall volatile sales trends and ongoing macroeconomic uncertainty. | Continued vulnerability to macroeconomic headwinds with recent targeted marketing efforts yielding a partial sentiment recovery, though overall consumer behavior remains mixed. |
Leadership Transitions and Management Uncertainty | Q3 2024 described an unexpected CEO departure leading to interim leadership, with transitional uncertainty noted ; Q4 2024 detailed a smooth transition from previous leadership with Scott Boatwright’s permanent appointment ; Q1 2025 did not mention leadership changes. | Q2 2025 introduced the appointment of Jason Kidd as COO with strong endorsements and clear leadership continuity, showing no management uncertainty. | Improved leadership stability with clear succession now in place, resolving earlier transitional uncertainties and reinforcing operational confidence. |
Product Innovation and Menu Enhancements | Q1 2025 highlighted the strong performance of Chipotle Honey Chicken LTO and plans for additional menu innovations and a potential three-LTO cadence ; Q3 2024 showcased successful launches like smoked brisket and promotional initiatives (Boorito) ; Q4 2024 focused on past LTO successes and upcoming product launches. | Q2 2025 emphasized continuing successes with Chipotle Honey Chicken, introduced Adobo Ranch as a new dip, and showcased innovative marketing programs like Summer of Extras and a trial catering platform to expand the offering. | Consistent drive for menu innovation, integrating popular LTOs with new product introductions and enhanced digital marketing, maintaining strong consumer response and reinforcing brand relevance. |
Physical Channel Enhancements (Chipotlanes) | Q1 2025 and Q3 2024 reported high percentages of new restaurant openings featuring Chipotlanes along with robust performance metrics; Q4 2024 detailed record openings and strong operational performance via Chipotlanes. | Q2 2025 reported 61 new restaurants with 47 featuring Chipotlanes and reiterated that 80% of planned new restaurants in 2025 will include a Chipotlane for improved customer convenience. | Strong and consistent emphasis on Chipotlanes as a key physical channel, driving operational efficiency and customer convenience, with continued growth and expansion firmly integrated into the company’s strategy. |
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Comp Growth
Q: Will comps hit mid single digits?
A: Management believes current macro headwinds are temporary; with initiatives like increased LTO cadence and enhanced value messaging, they expect comps to rebound to mid single digits and drive restaurant margins to around 29–30% as throughput improves. -
Digital Engagement
Q: Is digital marketing effective?
A: The Summer of Extras program engaged 5M participants and boosted enrollments by 14%, especially activating low frequency users, showing promising digital momentum for future loyalty growth. -
Operating Efficiency
Q: How will equipment upgrades help?
A: Early results from high-efficiency equipment indicate a labor time reduction of about 2–3 hours per day per restaurant, which is expected to improve throughput and support potential catering opportunities. -
Product Innovation
Q: New versus existing LTO mix?
A: Repeated LTO launches continue to outperform initial efforts, and a robust pipeline of proven products reinforces the brand’s value; management remains confident in this balanced approach. -
Consumer Dynamics
Q: Are macro factors affecting consumer behavior?
A: Although there was a brief pullback among lower-income consumers earlier in the quarter, a rebound in June and July suggests that macro factors are key drivers, prompting a refreshed focus on communicating value. -
Regional Performance
Q: Any notable regional differences?
A: Sales trends are consistent across regions with urban restaurants slightly outperforming suburban ones, and the Northeast remains strong despite increased competition. -
New Store Productivity
Q: How are new stores performing?
A: New store productivity remains strong at just over 80%, reflecting robust performance relative to the existing store base. -
COO & Strategy
Q: What will the new COO focus on?
A: Jason Kidd’s extensive retail background is expected to drive operational improvements and efficiency, reinforcing the current long-term strategy without major shifts. -
International Expansion
Q: How is international growth evolving?
A: Efforts in Western Europe and the Middle East are showing promising signs, with plans to deploy hundreds of restaurants as the brand scales toward self-sustaining growth. -
Food Cost Efficiencies
Q: What’s behind food cost improvements?
A: Improved flow-of-food practices and supplier diversification have yielded roughly 30–40 basis points in cost gains, more than offsetting past investments and supporting overall margin expansion.