Chipotle Mexican Grill(CMG) - 2025 Q2 - Quarterly Results

Second Quarter 2025 Earnings Release Executive Summary & Highlights Second Quarter 2025 Highlights Chipotle reported Q2 2025 financial results with total revenue growth, but declines in comparable sales, operating margins, and diluted EPS, while opening 61 new restaurants Second Quarter 2025 Key Financial Highlights (YoY): | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :---------- | :---------- | :----------- | | Total Revenue | $3.1 billion | - | +3.0% | | Comparable Restaurant Sales | - | - | -4.0% | | Operating Margin | 18.2% | 19.7% | -1.5 pp | | Restaurant Level Operating Margin | 27.4% | 28.9% | -1.5 pp | | Diluted Earnings Per Share | $0.32 | $0.33 | -3.0% | | Adjusted Diluted Earnings Per Share | $0.33 | $0.34 | -2.9% | - 61 new company-owned restaurants opened, with 47 featuring Chipotlanes[5][8] CEO Commentary CEO Scott Boatwright noted building momentum from marketing and easing comparisons, expressing optimism for continued growth through employee support, menu innovation, and global expansion - Company momentum is building with the launch of summer marketing campaigns and easing comparisons[3] - Optimistic about continued positive momentum, planning to support employees with new tools, introduce menu innovations, expand the rewards program, and pursue global expansion[3] Financial Performance (Q2 2025) Revenue and Sales Performance Q2 2025 total revenue grew 3.0% to $3.1 billion due to new openings, while comparable sales declined 4.0% from lower transactions, with digital sales at 35.5% Second Quarter 2025 Revenue and Sales Performance (YoY): | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :---------- | :---------- | :----------- | | Total Revenue | $3.1 billion | - | +3.0% | | Comparable Restaurant Sales | - | - | -4.0% | | Transactions | - | - | -4.9% | | Average Check | - | - | +0.9% | | Digital Sales (as % of Food and Beverage Revenue) | 35.5% | - | - | Cost of Sales and Operating Expenses Q2 2025 saw food, beverage, and packaging costs decrease due to pricing and efficiency, while labor costs rose from lower sales volume, and G&A expenses declined due to reduced bonuses and equity compensation Second Quarter 2025 Cost of Sales and Operating Expenses (as % of Total Revenue): | Cost Category | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :--------------------- | :--------------------- | :----------- | | Food, Beverage, and Packaging | 28.9% | 29.4% | -0.5 pp | | Labor | 24.7% | 24.1% | +0.6 pp | | General and Administrative Expenses | $172.2 million | $175.0 million | -$2.8 million | - Food, beverage, and packaging costs decreased primarily due to 2024 menu price increases and sales cost efficiencies, partially offset by inflation in ingredients like steak and chicken[6] - Labor costs increased mainly due to lower sales volume, but menu price increases and efficient labor management offset wage inflation[7] - General and administrative expenses decreased primarily due to lower performance bonuses and equity compensation[9] Profitability and Earnings Per Share Q2 2025 saw declines in operating margin, restaurant-level operating margin, net income, and diluted EPS, while the effective income tax rate slightly decreased Second Quarter 2025 Profitability and Earnings Per Share (YoY): | Metric | Q2 2025 | Q2 2024 | Change (YoY) | | :-------------------------------- | :---------- | :---------- | :----------- | | Operating Margin | 18.2% | 19.7% | -1.5 pp | | Restaurant Level Operating Margin | 27.4% | 28.9% | -1.5 pp | | Net Income | $436.1 million | $455.7 million | -4.3% | | Diluted Earnings Per Share | $0.32 | $0.33 | -3.0% | | Adjusted Net Income | $450.4 million | $463.0 million | -2.7% | | Adjusted Diluted Earnings Per Share | $0.33 | $0.34 | -2.9% | | Effective Income Tax Rate | 24.5% | 25.0% | -0.5 pp | Share Repurchases The company repurchased $435.9 million in shares during Q2 2025, with $838.8 million remaining under the authorized repurchase program Share Repurchase Activity: | Metric | Q2 2025 | As of June 30, 2025 | | :-------------------------------- | :---------- | :-------------------- | | Share Repurchase Amount | $435.9 million | - | | Average Repurchase Price (per share) | $50.16 | - | | Remaining Repurchase Authorization | - | $838.8 million | Operational Highlights Restaurant Development Chipotle opened 61 new company-owned restaurants in Q2 2025, with 47 featuring Chipotlanes, which continue to enhance convenience and boost new restaurant performance - 61 new company-owned restaurants opened in Q2 2025, with 47 featuring Chipotlanes[5] - Chipotlanes continue to perform well, enhancing customer accessibility and convenience, and increasing sales, margins, and returns for new restaurants[5] Financial Outlook & Definitions 2025 Outlook Management projects flat comparable restaurant sales for full-year 2025, with 315-345 new company-owned restaurants planned and an effective tax rate of 25-27% - Full-year 2025 comparable restaurant sales are expected to be flat[14] - Plans include opening 315 to 345 new company-owned restaurants, with over 80% featuring Chipotlanes[14] - The full-year underlying effective tax rate is projected to be between 25% and 27% (excluding discrete items)[14] Key Financial Definitions This section defines key financial and operational terms like comparable restaurant sales, average restaurant sales, restaurant-level operating margin, and digital sales for clear understanding - Comparable restaurant sales (sales comps): Year-over-year change in total revenue for company-owned restaurants operating for at least 13 full calendar months[14] - Average restaurant sales: Average food and beverage revenue over the past 12 months for company-owned restaurants operating for at least 12 full calendar months[14] - Restaurant-level operating margin: Total revenue less direct restaurant operating costs (food, beverage, and packaging, labor, occupancy, and other operating costs), expressed as a percentage of total revenue[14] - Digital sales: Company-owned restaurant food and beverage revenue generated through Chipotle's website, app, or third-party delivery platforms, including revenue deferrals related to Chipotle Rewards[14] Company Information About Chipotle Chipotle Mexican Grill, Inc. is committed to "Cultivate a Better World" through responsibly sourced, real food, operating over 3,800 restaurants globally and leading in digital and sustainable practices - As of June 30, 2025, operates over 3,800 restaurants in the U.S., Canada, U.K., France, Germany, Kuwait, and UAE[15] - Committed to serving real food, responsibly sourced, classically prepared, and free of artificial colors, flavors, or preservatives[15] - A leader in digital, technology, and sustainable business practices, dedicated to making food more accessible[15] Forward-Looking Statements This section outlines forward-looking statements and associated risks, including wage and food cost inflation, food safety, cybersecurity, competition, and regulatory changes, with no obligation to update - Statements regarding full-year 2025 comparable restaurant sales growth, new restaurant openings, and projected effective tax rate are forward-looking[16] - Risks include wage inflation, rising food/beverage/packaging costs, food safety incidents, reliance on IT systems, privacy and cybersecurity risks, competition, government regulations, and challenges in achieving planned growth[16] - The company undertakes no obligation to update these forward-looking statements[16] Condensed Consolidated Financial Statements Condensed Consolidated Statements of Income (Three Months) The unaudited condensed consolidated income statement for Q2 2025 reports total revenue of $3,063,393 thousand, net income of $436,127 thousand, and diluted EPS of $0.32 Condensed Consolidated Statements of Income (Three Months, in thousands): | Metric | Q2 2025 | Q2 2024 | | :-------------------------------- | :---------- | :---------- | | Total Revenue | $3,063,393 | $2,973,117 | | Operating Income | $559,057 | $586,053 | | Net Income | $436,127 | $455,671 | | Diluted Earnings Per Share | $0.32 | $0.33 | | Food, Beverage, and Packaging (as % of Revenue) | 28.9% | 29.4% | | Labor (as % of Revenue) | 24.7% | 24.1% | | General and Administrative Expenses (as % of Revenue) | 5.6% | 5.9% | Condensed Consolidated Statements of Income (Six Months) The unaudited condensed consolidated income statement for H1 2025 reports total revenue of $5,938,646 thousand, net income of $822,726 thousand, and diluted EPS of $0.61 Condensed Consolidated Statements of Income (Six Months, in thousands): | Metric | H1 2025 | H1 2024 | | :-------------------------------- | :---------- | :---------- | | Total Revenue | $5,938,646 | $5,674,966 | | Operating Income | $1,038,307 | $1,027,345 | | Net Income | $822,726 | $814,958 | | Diluted Earnings Per Share | $0.61 | $0.59 | | Food, Beverage, and Packaging (as % of Revenue) | 29.0% | 29.1% | | Labor (as % of Revenue) | 24.8% | 24.2% | | General and Administrative Expenses (as % of Revenue) | 5.8% | 6.7% | Condensed Consolidated Balance Sheets The unaudited condensed consolidated balance sheet as of June 30, 2025, reports total assets of $9,268,794 thousand, total liabilities of $5,740,599 thousand, and total shareholders' equity of $3,528,195 thousand Condensed Consolidated Balance Sheets (in thousands): | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :-------------- | :---------------- | | Total Assets | $9,268,794 | $9,204,374 | | Total Current Assets | $1,869,125 | $1,780,587 | | Total Liabilities | $5,740,599 | $5,548,828 | | Total Current Liabilities | $1,132,271 | $1,168,768 | | Total Shareholders' Equity | $3,528,195 | $3,655,546 | Condensed Consolidated Statements of Cash Flows The unaudited condensed consolidated cash flow statement for H1 2025 reports net cash provided by operating activities of $1,118,402 thousand, net cash provided by investing activities of $8,067 thousand, and net cash used in financing activities of $1,028,834 thousand Condensed Consolidated Statements of Cash Flows (Six Months, in thousands): | Metric | H1 2025 | H1 2024 | | :-------------------------------- | :---------- | :---------- | | Net Cash Provided by Operating Activities | $1,118,402 | $1,131,812 | | Net Cash Provided by/(Used in) Investing Activities | $8,067 | $(637,254) | | Net Cash Used in Financing Activities | $(1,028,834) | $(245,408) | | Net Change in Cash, Cash Equivalents, and Restricted Cash | $96,849 | $248,029 | | Cash, Cash Equivalents, and Restricted Cash at End of Period | $875,228 | $834,192 | Supplemental Data & Non-GAAP Reconciliations Supplemental Financial and Other Data This section presents quarterly restaurant development, including 61 new openings and 2 closures in Q2 2025, with average restaurant sales of $3,142 thousand and a 4.0% decline in comparable sales Supplemental Financial and Other Data (Quarterly): | Metric | June 30, 2025 (Q2) | March 31, 2025 (Q1) | December 31, 2024 (Q4) | September 30, 2024 (Q3) | June 30, 2024 (Q2) | | :-------------------------------- | :----------------- | :----------------- | :----------------- | :----------------- | :----------------- | | Company-Owned Restaurant Openings | 61 | 57 | 119 | 86 | 52 | | Chipotle Permanent Closures | (2) | (2) | (2) | (1) | (1) | | Company-Owned Restaurants at End of Period | 3,839 | 3,781 | 3,726 | 3,615 | 3,530 | | Average Restaurant Sales (in thousands) | $3,142 | $3,186 | $3,213 | $3,184 | $3,146 | | Comparable Restaurant Sales Growth/(Decline) | (4.0%) | (0.4%) | 5.4% | 6.0% | 11.1% | | Franchised Restaurant Openings | - | 2 | 1 | 1 | 1 | | Franchised Restaurants at End of Period | 5 | 5 | 3 | 2 | 1 | Non-GAAP Financial Measures Reconciliation This section defines non-GAAP financial measures like adjusted net income and restaurant-level operating margin, providing a transparent view of underlying performance as a supplement to GAAP results - Non-GAAP metrics (adjusted net income, adjusted general and administrative expenses, adjusted effective income tax rate, restaurant-level operating margin) are used to facilitate effective evaluation of operating performance across periods[29] - These adjustments provide a more transparent view of underlying performance, allowing investors to evaluate the company's business on the same basis as management[29] - Non-GAAP metrics should be considered supplemental to, not a substitute for, GAAP results[29] Adjusted Net Income and Adjusted Diluted Earnings per Share Q2 2025 adjusted net income was $450,405 thousand and adjusted diluted EPS was $0.33, reflecting adjustments for impairments, legal fees, equity compensation, and unrealized losses Adjusted Net Income and Adjusted Diluted Earnings per Share (in thousands, except per share amounts): | Metric | Q2 2025 | Q2 2024 | | :-------------------------------- | :---------- | :---------- | | Net Income (GAAP) | $436,127 | $455,671 | | Total Non-GAAP Adjustments | $16,897 | $9,791 | | Tax Impact of Non-GAAP Adjustments | $(2,619) | $(2,471) | | Adjusted Net Income | $450,405 | $462,991 | | Diluted Earnings Per Share (GAAP) | $0.32 | $0.33 | | Adjusted Diluted Earnings Per Share | $0.33 | $0.34 | Adjusted General and Administrative Expenses Q2 2025 adjusted general and administrative expenses were $159,938 thousand, calculated after non-GAAP adjustments for equity compensation and legal proceedings Adjusted General and Administrative Expenses (in thousands): | Metric | Q2 2025 | Q2 2024 | | :-------------------------------- | :---------- | :---------- | | General and Administrative Expenses (GAAP) | $172,151 | $175,028 | | Total Non-GAAP Adjustments | $(12,213) | $(3,775) | | Adjusted General and Administrative Expenses | $159,938 | $171,253 | Adjusted Effective Income Tax Rate Q2 2025 adjusted effective income tax rate was 24.2%, a slight decrease from the GAAP rate of 24.5%, reflecting non-GAAP adjustments Adjusted Effective Income Tax Rate: | Metric | Q2 2025 | Q2 2024 | | :-------------------------------- | :------ | :------ | | Effective Income Tax Rate (GAAP) | 24.5% | 25.0% | | Tax Impact of Non-GAAP Adjustments | (0.3%) | - | | Adjusted Effective Income Tax Rate | 24.2% | 25.0% | Restaurant Level Operating Margin Q2 2025 restaurant-level operating margin was 27.4%, calculated by adjusting operating income to exclude non-GAAP items like G&A, depreciation, pre-opening, and impairment costs Restaurant Level Operating Margin (in thousands): | Metric | Q2 2025 | Q2 2024 | | :-------------------------------- | :---------- | :---------- | | Operating Income | $559,057 | $586,053 | | Total Non-GAAP Adjustments | $279,173 | $273,347 | | Restaurant Level Operating Margin | $838,230 | $859,400 | | Restaurant Level Operating Margin (as % of Revenue) | 27.4% | 28.9% |