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Chipotle Mexican Grill (CMG -13%) is under heavy pressure today after reporting its Q2 results last night. The burrito chain continues to operate in a challenging environment. The company has missed on revenue in 3 of the last 4 quarters. Perhaps just as discouraging to investors is that CMG also lowered its FY25 comp sales guidance to flat from low single digits.

• Comp sales declined -4% in Q2, with management noting Q2 "was probably the worst aggregate storm", due to lapping an extraordinary quarter last year. The decrease in comp sales guidance reflects ongoing volatility in the consumer environment, with management expecting a return to normal trends going into FY26.
• CMG did have some bright spots this quarter. It completed the rollout of produce slicers across all restaurants which should make them more efficient. Furthermore, it is seeing success in its new international markets. Its location in Kuwait completed its first year of operations, with revenue surpassing the average unit volume in the U.S.
• Despite the tough comps from a year ago, CMG's Q2 results were relatively lackluster. The slowing revenue growth and decrease in comp sales guidance are weighing more heavily on sentiment than the positives.

We think a big problem with CMG is that it doesn't really have a value menu like other fast-food restaurants. For example, Wendy's (WEN) has its Biggie Bag, and McDonald's (MCD) has its McValue menu. Where consumers feel stretched, these value items may be a more encouraging option. Also, CMG's higher price point relative to other fast-food restaurants may be exacerbating consumer hesitation.

On a final note, CMG recently went through some leadership changes, including a new CEO in November and a new COO in May. Investors are hoping they can spark a turnaround. CEO Scott Boatwright noted that COO Jason Kidd has already identified opportunities to improve the experience for both employees and guests that may have been "overlooked" by the prior COO.