Chipotle Revenue Grows 9.3% to $3.3 Billion as Restaurant Margin Falls
Key Facts
Chipotle is set to report third-quarter results on October 28, after posting second-quarter revenue of $3.3 billion, up 9.3% year over year, while restaurant-level operating margin fell to 25.2% from 27.4% a year earlier. The company reported those figures in July, and the question ahead of its new results is whether sales growth can continue to support the business as margins decline. Comparable restaurant sales rose 2.2% in the second quarter, alongside expansion of the store network. Costs and net profitability, meanwhile, showed pressure on performance compared with the year-earlier period. Markets are watching the company's statement and management's update to its annual outlook for signs of any change in demand and cost trends.
Second-quarter comparable sales growth came from a 1.2% increase in average check and a 1.0% rise in transactions, according to Chipotle's filing. Growth was split between higher check size and more transactions, though the contribution from transactions remained limited at 1.0%. The company said new restaurant openings were the primary driver of revenue growth, while sales at existing locations contributed less. Chipotle opened 100 company-operated restaurants during the quarter, including 80 with a Chipotlane, as well as one restaurant operated by an international partner. Digital sales rose to 38.3% of food and beverage revenue, compared with 35.5% in the second quarter of 2025.
Input costs weighed on margins: food, beverage and packaging costs were 29.7% of revenue in the second quarter, compared with 28.9% a year earlier. The company attributed the increase to inflation, particularly in beef and freight, as well as greater use of proteins and agricultural products. Labor costs also rose to 25.0% of revenue from 24.7% in the year-earlier period. Chipotle linked this to employee compensation, wage inflation and performance bonuses, along with increased staffing to support operational execution. Net income fell to $403.5 million from $436.1 million, while diluted earnings per share remained at $0.32 in both periods.
The comparison with the third quarter of 2025 highlights earlier weakness in same-store sales growth: revenue then rose 7.5% to $3.0 billion, but comparable sales increased only 0.3%. That increase came from 1.1% growth in average check, which partly offset a 0.8% decline in transactions. Digital sales accounted for 36.7% of food and beverage revenue that quarter, below the second-quarter 2026 share. Chief Executive Scott Boatwright said at the time that the company continued to face "ongoing economic pressures," while standing by the strength of its value proposition and brand. Management said it was focused on execution, marketing, menu innovation and the digital experience to restore transaction growth.
In July, management forecast full-year comparable restaurant sales growth in the low single digits, with 350 to 370 restaurant openings during the fiscal year, including 10 to 15 operated by international partners. It also forecast roughly 1% comparable sales growth in the third quarter during its second-quarter earnings call. These projections put expansion and existing-store performance at the center of attention for the October results, particularly after new openings and transaction growth contributed at different rates in previous periods. The third-quarter results statement is scheduled for about 4:10 p.m. Eastern Time on October 28, with the investor call starting at 4:30 p.m. The call is expected to provide management's view of sales, costs and the annual outlook.
Before the announcement, TD Cowen on October 21 downgraded the stock to "Hold" from "Buy" and cut its price target to $32 from $44, citing a weak start to the fourth quarter according to alternative data. The bank estimated comparable sales growth of 1% in the fourth quarter of 2026, then 2.1% in 2027, versus consensus of 3.2% for 2027. Bank analyst Andrew Charles wrote: "We fear October sales are on track to miss the fourth-quarter inflection point we had previously expected, despite an easier monthly comparison." Those concerns put growth expectations to the test as results and updated guidance are released, but remain the bank's estimates rather than results announced by the company. Chipotle shares had risen 5.87% in extended trading after the second-quarter results announcement in July, to $36.25, after closing the regular session at $34.25.