Mexican food restaurants chain Chipotle Mexican Grill Inc. (CMG), Thursday reported a rise in profit for the second quarter, helped mainly by an 8.7% increase in comparable store sales on improved traffic. Both earnings and revenue for the quarter came in ahead of analysts' estimates. Following the news, CMG shares gained more than 4% in after hours trading.
The Denver, Colorado-based company's second-quarter net income was $46.46 million or $1.46 per share, compared to $35.39 million or $1.10 per share in the second quarter of 2009. For the sequential first quarter, the company reported net income of $37.84 million or $1.19 per share.
On average, 20 analysts polled by Thomson Reuters expected the company to report earnings of $1.39 per share for the quarter. Analysts' estimates typically exclude special items.
Revenue for the quarter was $466.84 million, up 20.1% from $388.84 million in the prior-year period. Analysts expected revenues of $452.84 million for the quarter. First-quarter revenues were $409.7 million.
The growth in revenue was the result of new restaurants not in the comparable base and an 8.7% increase in comparable restaurant sales. Comparable restaurant sales growth was primarily driven by increased traffic in the quarter.
Restaurant level operating margin, which represents total revenue less restaurant operating costs, expressed as a percent of total revenue, was 26.9% for the second quarter, an increase of 90 basis points from last year.
G&A costs were 6.5% of revenue, down 10 basis points from the prior-year period. The improvement as a percent of revenue was attributed to the impact of comparable restaurant sales growth partially offset by increased stock based compensation expense.
Interest and other income for the quarter increased to $0.43 million from $0.29 million in the previous year.
During the quarter, Chipotle opened 25 new restaurants, compared to 24 in the previous year. Number of restaurants at the end of the quarter was 1,001, up from 886 last year.
Average restaurant sales, defined as the average trailing 12-month sales for restaurants in operation for at least 12 full calendar months, increased to $1,763 from $1,734 in the previous year.
Founder, Chairman, and Co-CEO Steve Ells, said, "We are excited about the progress we have made toward our vision to change the way the world thinks about and eats fast food and look forward to many more milestones as we begin our journey to the next 1,000 restaurants," Ells added.
For the six-month period, Chipotle Mexican's net income increased to $84.31 million or $2.65 per share from $60.78 million or $1.88 per share in the same period of the previous year. Revenue for the period increased to $265.83 million from $230.09 million last year.
For fiscal year 2010, the company expects mid to high single digit comparable restaurant sales growth, and anticipates opening 120-130 new restaurants and an effective tax rate of approximately 38.4%.
CMG closed Thursday's regular trading at $133.16, up $3.56 or 2.75%, on a volume of 1.20 million shares on the NYSE. In after hours, the stock further gained $5.59 or 4.20%, trading at $138.95. In the past 52-week period, the stock trended in a range of $79.02 to $155.42, with a 3-month average volume of 0.76 million shares.
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