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CHIPOTLE MEXICAN GRILL INC (CMG)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue rose 3.0% to $3.063B; comparable restaurant sales fell 4.0% on transactions -4.9% and average check +0.9%. GAAP diluted EPS was $0.32; adjusted diluted EPS was $0.33 .
  • Management said comps and transactions turned positive in June and continued into early July, driven by stepped-up summer marketing (Adobo Ranch, “Summer of Extras”) and rewards; full-year comps guidance was lowered to “about flat” (from “low single digit” in Q1) .
  • Restaurant-level margin was 27.4% (down ~150 bps YoY), aided by cost efficiencies and favorable avocados; CFO guided Q3 cost of sales to the high-29% range (mix headwind ~60 bps from rolling off Honey Chicken and ~40 bps tariffs) and labor in the high-24% range .
  • Capital return accelerated: CMG repurchased $435.9M at ~$50.16 per share in Q2 and added $400M authorization; $838.8M remained available at quarter-end .
  • Stock reaction catalysts: lowered comp guidance; evidence of near-term comp reacceleration in June/July; increased marketing spend; tariff/mix headwind clarity; margin efficiency offsets.

What Went Well and What Went Wrong

What Went Well

  • Positive comp and transaction trends exited June and continued into July, supported by the “Summer of Extras” program and marketing momentum: “we returned to a positive comp and transaction trends…continued into July” .
  • Honey Chicken and Adobo Ranch performed strongly; Honey Chicken had “the highest incidence rate of all limited-time offers…included in one out of every four orders,” and Adobo Ranch drove incremental transactions .
  • Back-of-house productivity and cost initiatives improved execution; produce slicer rollout completed, with CFO citing supply-chain and in-restaurant efficiencies more than offsetting prior portion investments and helping cost of sales decline 50 bps YoY to 28.9% .

What Went Wrong

  • Comps -4.0% on transactions -4.9%; restaurant-level margin fell ~150 bps YoY to 27.4% on lower volumes and higher marketing/other operating costs (+110 bps YoY to 14.0%) .
  • Guidance cut: full-year comps moved to “about flat” (from “low single digit” in Q1), reflecting consumer volatility and mix/tariff headwinds anticipated in H2 .
  • Mix headwinds persisted (~-1% in Q2) from smaller group size and trade-down from premium proteins (steak/barbacoa) to chicken; labor deleverage to 24.7% of sales (+60 bps YoY) with volumes weaker .

Financial Results

MetricQ2 2024Q1 2025Q2 2025
Revenue ($USD Billions)$2.973 $2.875 $3.063
GAAP Diluted EPS ($)$0.33 $0.28 $0.32
Adjusted Diluted EPS ($)$0.34 $0.29 $0.33
Operating Margin %19.7% 16.7% 18.2%
Restaurant-Level Operating Margin %28.9% 26.2% 27.4%
Net Income ($USD Millions)$455.7 $386.6 $436.1
KPIs (drivers and footprint)Q1 2025Q2 2025
Comparable Restaurant Sales Change (%)-0.4% -4.0%
Transactions Change (%)-2.3% -4.9%
Average Check Change (%)+1.9% +0.9%
Digital Sales (% of food & beverage)35.4% 35.5%
Company-Owned Restaurants Opened (quarter)57 61
With Chipotlane (#)48 47
Average Restaurant Sales (Trailing-12) ($)$3,186 $3,142
Q2 2025 Actual vs Consensus (S&P Global)Consensus*Actual
Revenue ($USD Billions)$3.117*$3.063
Primary/Adjusted EPS ($)$0.326*$0.33 (Adjusted)

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Comparable Restaurant Sales (FY)2025Low single digit About flat Lowered
New Company-Owned Openings2025315–345; >80% Chipotlane 315–345; >80% Chipotlane Maintained
Underlying Effective Tax Rate202525%–27% 25%–27% Maintained
Cost of Sales (%)Q3 2025—High 29% range; ~60 bps mix from Honey Chicken roll-off; ~40 bps tariffs New detail
Labor Costs (%)Q3 2025—High 24% range; wage inflation low single digits New detail
Marketing Costs (% of sales)Q3/FY 2025Full year high-2% Q3 mid-2%; full year high-2% Maintained
Tariff Impact (ongoing)2025~50 bps ongoing ~50 bps ongoing (Q3 ~40 bps) Maintained
Non-GAAP G&A ($)Q3 2025—~$163M New detail

Other capital allocation: repurchase $435.9M in Q2 at $50.16/share; additional $400M authorization approved (remaining $838.8M available) .

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
AI/Personalization & RewardsBuilding loyalty; brand strength; planning innovations AI-assisted welcome journeys; friction removal; loyalty focus 46–47% uplift on AI welcome journey; “win-back” program; 5M Summer of Extras participants; +14% enrollments; ~20M active members Accelerating personalization and engagement
Back-of-house technologyProduce slicer & high-efficiency equipment test; Autocado and augmented digital make line in stage gate Rollout across restaurants by summer; expanded equipment retrofits Produce slicer rollout complete; staged rollout of dual-sided plancha, rice cooker, fryer; hundreds of installs by year-end; 2–3 hours labor efficiency/day expected Scaling modernization to drive throughput/margins
Marketing/LTO cadenceStrong LTOs (Brisket); visibility/relevance/love Honey Chicken planned; increased summer spend; potential 3 LTOs/year Honey Chicken high incidence; Adobo Ranch dip incrementality; doubled social/streaming reach; BOGO activation More frequent, targeted LTOs; higher ROAS spend
Supply chain/tariffsHighlighted inflation & usage; avocado timing benefits Estimated ~50–60 bps tariff potential; supplier diversification (avocados) Q3 tariffs ~40 bps; ongoing ~50 bps; avocado favorability; efficiencies offset portion investment Headwinds quantified; offsets in place
Macro/consumer sentimentTransaction growth in 2024; cautious start 2025 Slower consumer; comps to turn positive exiting Q2 “Worst aggregate storm” in Q2; comps/transactions positive in June; choppy July; aiming mid-single-digit comps longer term Improving into H2; tone constructive
Regional trendsThroughput focus; Chipotlanes stronger —Urban slightly outperforming; vacation pockets soft Mixed; urban resilience

Management Commentary

  • “We returned to a positive comp and transaction trends, which have continued into July…we now anticipate comparable sales to be about flat for the full year” — Scott Boatwright, CEO .
  • “Cost of sales…28.9%, a decrease of about 50 bps from last year…the benefit of our menu price increase… and cost of sales efficiencies more than offset inflation” — Adam Rymer, CFO .
  • “Honey Chicken…included in one out of every four orders…Adobo Ranch…off to a great start driving incremental transactions” — Scott Boatwright .
  • “Produce slicers…enable our teams to complete prep on time and be properly deployed for their peak period” — Scott Boatwright .
  • “Marketing costs were 2.7% of sales in Q2…we expect marketing costs to step up to the mid-2% range in Q3” — Adam Rymer .

Q&A Highlights

  • Comps trajectory: Two-year comp recovered to ~8% exiting June; July was choppy at 7–8%; expecting ~8% two-year in Q3 with plan to lap Brisket .
  • Digital and rewards: 5M “Summer of Extras” participants with ~40% transactors; +14% enrollments YoY; win-back journey in test to re-engage lapsing users .
  • Equipment ROI: Early installs suggest 2–3 hours/day labor efficiency per restaurant; throughput benefits expected as deployment expands .
  • Mix/tariffs: Mix headwind ~-1% (smaller group size, shift to chicken); tariffs ~50 bps ongoing, ~40 bps in Q3 .
  • Regional: Urban slightly outperforming suburban; pockets of softness around high vacation times; Northeast remains strong .

Estimates Context

  • Q2 2025 vs consensus: Revenue $3.063B vs $3.117B consensus* (miss); Adjusted/Primary EPS $0.33 vs $0.326 consensus* (beat) . Values retrieved from S&P Global.*
  • Forward consensus (context): Q3 2025 EPS 0.2875*, revenue $3.0225B*; Q4 2025 EPS 0.2417*, revenue $2.9597B*; modeling implies modest sequential improvement with seasonality. Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Near-term: Evidence of comp/transaction inflection in late Q2/early Q3; watch sustainability as summer marketing fades and as fall campaigns (college rewards) launch .
  • Guidance reset: Full-year comps cut to “about flat” from “low single digit,” de-risking H2 expectations amid tariff and mix headwinds; openings/tax unchanged .
  • Margin path: Cost efficiencies and lower avocados offset price/mix/tariff pressures; CFO guided Q3 COGS high-29% and labor high-24%; expect transaction-driven flow-through if comps hold .
  • Marketing cadence: Higher spend (mid-2% of sales in Q3) with proven LTOs (Honey Chicken, Adobo Ranch) and gamified rewards driving frequency; consider ROAS durability .
  • Execution lever: Back-of-house modernization (produce slicer + equipment suite) should improve prep, throughput, and potentially unlock catering; scale-out over ~3 years .
  • Capital allocation: Aggressive buybacks ($435.9M in Q2; $838.8M remaining) provide EPS support through volatility .
  • Watch items: Mix normalization as premium LTOs roll off; tariff policy changes; consumer sentiment; urban/suburban divergence; continued positive two-year comp trend .

Sources

  • Q2 2025 8-K and Press Release: ; Press Release duplicate .
  • Q2 2025 Earnings Call Transcript: .
  • Q1 2025 8-K and Transcript: .
  • Q4 2024 8-K and Transcript: .
  • Estimates: S&P Global via GetEstimates (see tables; values marked with asterisk).*