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Call sheet · Q2'26

Chipotle Mexican Grill (CMG)

Q2'26 earnings call · held July 29, 2026 · compared with the Q1'26 call · management-credibility review
4/12
Disclosure score
1 high, 5 medium, 3 low flags
Financial quality
Bottom line
The market will tout the 9.3% revenue jump, but the **real engine is the HEAP equipment rollout** - it is delivering measurable throughput gains that are hidden behind vague percentage metrics. The **binding constraint** is the speed of that rollout; at 30‑45 installs per week, traffic lift is capped, and the $100‑$300k per‑store remodel spend will further squeeze cash. Management’s favorite line, “early days on AI,” is still just a name‑drop without a dollar impact. **If HEAP install pace stalls or remodel ROI falls short, free cash flow will plunge and the FY‑26 guidance for low‑single‑digit comps could be at risk.** My view changes if the company can prove a per‑store incremental margin of >150 bps from HEAP or if cash balance stays above $1 B after Q3.

The 30-second version

  • Sleeper story: HEAP rollout is now the true traffic driver, not the buzz‑worthy LTOs
  • Obvious headline - 9.3% revenue growth beats expectations, but the binding constraint is equipment rollout speed
  • Red flag: key quality metric - restaurant‑level margin now presented as a raw percentage after stripping legal settlements, hiding the underlying cost pressure

What changed this quarter

MetricQ1'26Q2'26Change
Revenue (YoY)$3.03 B (+7.4%)$3.30 B (+9.3%)+9 % YoY acceleration
Adjusted Diluted EPS (YoY)$0.24 (‑17% YoY)$0.33 (flat YoY)+$0.09 (+38 %) YoY
Restaurant‑level margin23.7% (adjusted, Q1)25.2% (down 220 bps YoY)+150 bps vs prior quarter, but -220 bps YoY
Digital sales share35.5% of $3.02 B38.3% of $3.30 B+2.8 %pts YoY
Digital sales ($)$1.20 B$1.30 B+$0.10 B (+8 %)
Comp comparable sales0.5% (Q1)2.2% (incl. 1% transaction comp)+1.7 pp
New restaurant openings101 (80 company‑owned, 1 partner)101 (same as Q1)Flat
Cash & cash equivalents$2.10 B (approx, 1.3 B higher YoY)$0.80 B‑$1.30 B YoY drain
Stock repurchases (Q2)$0$631 MNew outflow
Labor cost % of sales25.7% (Q1)25.0% (up 30 bps YoY)+30 bps YoY, -70 bps QoQ

Accountability tracked

6 new promises made5 narrative shifts flagged6 prior promises scored
Inside the full report
The complete write-up covers the full promise ledger with kept/missed calls, disclosure-quality scoring, the metrics-vanished check, verification items, and the questions to ask next quarter.
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Scores, kept-promise rates, and flags on this site reflect the author's opinion, applying a stated methodology to statements management made on public earnings calls. Informational and educational purposes only - not investment advice, a recommendation, or an offer to buy or sell any security. Sources believed reliable but not guaranteed; the author may hold positions in the securities discussed.

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