Chipotle Mexican Grill, Inc. Q3 FY2025 earnings call

• Macro pressures: Third quarter performance fell short due to persistent macroeconomic pressures; consumer sentiment decline led to broad-based pullback in frequency across income cohorts, especially low to middle-income and 25-35-year-olds. • Operational initiatives: Reemphasizing standards with system-wide retraining, resetting quarterly bonus incentives, upgrading restaurants with high-efficiency equipment package (HEAP) to improve team experience and throughput; HEAP rollout expected to take ~3 years. • Marketing and menu innovation: Accelerated marketing spend to communicate value via menu innovation, rewards platform, and promotions; menu innovation like Adobo Ranch and Red Chimichurri drove transactions; planning new creative campaign to spotlight value. • Digital: Opportunities to create engaging experiences to drive rewards funnel; College Rewards program off to good start; planning additions to rewards program. • Expansion: Strong new restaurant openings in North America; Europe expansion to begin next year; Middle East opened 2 partner-operated restaurants and first Chipotlane outside NA; Asia joint venture partnership announced with SPC, with restaurants anticipated in 2026; aim to reach 7,000 restaurants long term.

Sales grew 7.5% to reach $3 billion including a 0.3% increase in comp. Digital sales were 36.7% of total sales. Restaurant-level margin was 24.5%, a decline of 100 basis points year-over-year. Adjusted diluted EPS was $0.29, an increase of 7% over last year. 84 new restaurants were opened, including 64 Chipotlane.

• Full year comps expected to decline in the low single-digit range. • Anticipate inflation to remain in mid-single-digit range in 2026 and not fully offset in near term. • Board authorized additional $500 million to share repurchase authorization, with $652 million remaining at end of quarter. • Expect G&A in Q4 to be around $161 million on a non-GAAP basis.

• Persistent macroeconomic pressures impacting consumer spending. • Consumer sentiment decline leading to pullback in dining frequency. • Inflation accelerating into mid-single-digit range, potentially pressuring margins if not offset. • Potential challenges in effectively communicating value proposition to consumers to drive transactions.

Q: Attribution of recent comp softness to Chipotle specific vs broader macro?

A: Majority due to pullback from core audience (household under $100k), but also some self-inflicted opportunity; confident to get consumers back through better marketing, digital, and innovation.