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Chipotle Mexican Grill (CMG) is trading higher after reporting its Q1 results last night. The fast-casual burrito chain reported EPS in line with expectations, while revenue increased 7.4% yr/yr to $3.1 bln, above expectations. CMG reaffirmed its FY26 comp guidance of about flat, but investors appear encouraged by the return to positive comp and transaction growth, along with continued momentum into April.

• Q1 comparable sales increased a modest 0.5%, but importantly, returned to positive territory, driven by transaction growth of 0.6% and partially offset by a 0.1% decrease in average check.
• CMG saw particular strength from menu innovation, including the High Protein menu launch, the return of Chicken al Pastor, and the launch of Cilantro Lime Sauce. Double Protein and Single Tacos saw double-digit percentage increases that sustained through April, while Chicken al Pastor had its highest incidence across its three launches and Cilantro Lime Sauce outperformed Red Chimichurri.
• That momentum continued into April, and CMG is anticipating Q2 comps around the +1% range.
• As it relates to pricing, CMG ran just under 1% in Q1, expects about 1.5% in Q2, and continues to expect pricing of 1-2% for the year. It is still pricing below inflation to support its value proposition, with cost of sales inflation expected around 4% for FY26.
• Adjusted restaurant-level margin fell 250 bps yr/yr to 23.7%, reflecting its pricing actions and higher food/labor costs. CMG expects the price-cost gap to narrow in the back half as it laps elevated beef costs.
• While Q1 performance and current trends are tracking ahead of expectations and guidance, management is keeping a conservative outlook given the dynamic consumer environment.

Briefing.com Analyst Insight

This was an encouraging report from CMG, with comps returning to positive territory and transaction growth turning positive. The improvement was still modest, but management's commentary around April momentum and Q2 comps around +1% suggests CMG is building a stronger base, with trends tracking ahead of the full-year guide. That said, management is still taking a cautious stance given the dynamic consumer environment, reaffirming its full-year comp guidance of about flat. Restaurant-level margins also remain a watch item, though CMG expects the price-cost gap to narrow in the back half as it laps elevated beef costs. Overall, this was a step in the right direction for Chipotle. It will be important to see whether the renewed momentum from menu innovation, rewards, and better restaurant execution can sustain the improvement as it works through a still-dynamic consumer backdrop.