Chipotle Mexican Grill, Inc. Q1 FY2026 earnings call

• Recognized extraordinary people in restaurants. - First quarter performance exceeded expectations with revenue growth, positive comparable sales and transaction growth. - Recipe for growth strategy includes protecting core, modernizing with tech, evolving brand, cultivating talent, scaling markets. - Rolled out high-efficiency equipment in over 600 restaurants, on track to reach 2000 by year end. - Tested new mystery shopper program and hospitality competition. - Launched digital make line display in over 100 restaurants, expanding AI assistant capabilities. - New rewards look and feel with loyalty comps outpacing non-loyalty. - Increased menu innovation cadence with limited time offerings. - Expanded group occasion programs. - Restructured leadership with new Chief Brand Officer and Chief Digital Officer. - Partner-operated restaurants in Middle East face delays, but long-term outlook remains. Europe has strong opening day sales and positive comps.

For the first quarter, revenue grew 7.4%. Comparable sales increased 0.5%. Digital sales were $1.2 billion. Cost of sales was 29.6%, labor costs 25.7%, marketing costs 15.6%, G&A $204 million. Revenue contribution by segments: Core restaurant business with revenue growth driven by various initiatives including menu innovation and rewards. Digital sales contribute a significant portion. Cost of sales was affected by inflation in certain items but partially offset by better crop in Mexico. Labor costs were impacted by lower sales volumes and higher benefits expense. Marketing costs increased to support menu innovation.

• Full year comp guidance remains about flat. - Q2 pricing expected to be about 1.5%, full year 1 - 2%. - Cost of sales expected to step up to about 30% in Q2, full-year cost-of-sales inflation around 4%. - Labor costs expected in low 25% range with wage inflation in low single-digit range. - Marketing costs expected below 3% of sales in Q2 and full year. - G&A in Q2 around certain amount including underlying G&A and non-cash stock compensation. - Tax rate expected in 24 - 26% range.

• Ongoing geopolitical conditions in Middle East causing delays in partner-operated restaurant openings. - Dynamic consumer environment could impact comp performance. - Cost of sales inflation with mid-single-digit range in Q2 and step down in second half. - Labor costs affected by lower sales volumes and higher benefits expense. - Competition could impact market share. - Third-party delivery channel may have lower value perception affecting value scores.

Q: Clarification on April performance and question on Fernando Machado's impact.

A: April saw step up due to Easter shift, cilantro lime sauce outperforming, and rewards relaunch. Fernando brings deep global marketing experience, love for Chipotle brand, and will drive brand growth.

Q: Comp side color and guide embeds.

A: January had double digit increase in double protein and single tacos, sustained through April, weather impact in March, April saw step up, Q2 comp estimate in plus 1% range.

Q: Membership growth and rewards.

A: 25% uplift in new members, redesigned rewards program with new benefits.

Q: MIX components and outlook.

A: Transactions up, check slight decline, mix drag from lower group size, cannibalization, but protein campaign providing mix lift.

Q: Pricing perception and marketing message.

A: Charge fair price, underprice industry, testing pricing ideas like happy hour.

Q: Competition and store productivity.

A: Competition impact low, store productivity at 80% of recent trend.

Q: Delivery channel value perception.

A: Testing delivery platforms, surpassing 20% of orders picked up in-store, looking to improve delivery strategy.

Q: Labor levels and heat package.

A: Labor levels challenged, heat package shows improvement in about two months, rollout at 30 installs per week, moving to 45 per week.

Q: Marketing spend and conversion.

A: Marketing spend grew, getting returns on incremental spend, with brand building component.

Q: Turnover and throughput.

A: 2025 turnover anomaly due to sales deceleration, Q1 back to historical low, heat package helps with faster experience.