Chipotle Mexican Grill shares soared nearly 14% on Thursday after the company posted second-quarter revenue and earnings Wednesday that edged past Wall Street estimates, and it raised its full-year sales outlook.

The results gave investors confidence that the burrito chain's recovery is gaining traction, although rising beef, freight, and labor costs continued to squeeze profitability.

For the quarter ended in June, Chipotle revenue increased 9.3% from a year earlier to $3.35 billion, slightly above analysts' consensus estimate of about $3.33 billion. Adjusted earnings were 33 cents a share, one cent ahead of expectations and unchanged from the year-ago period.

Comparable-restaurant sales rose 2.2%, accelerating from 0.5% in the first quarter -- driven by an 1% rise in transactions and a 1.2% gain in the average check. That means Chipotle generated growth from both customer visits and spending rather than relying entirely on menu-price increases.

Management now expects comparable sales to increase in the low-single-digit range for 2026, up from its previous forecast for roughly flat results. CEO Scott Boatwright credited the company's "Recipe for Growth" strategy, which includes menu innovation, stronger engagement through Chipotle Rewards, improved hospitality, and an effort to capture more group orders.

New restaurants remain another major growth engine. Chipotle opened 100 company-operated locations during the quarter, including 80 with its drive-through Chipotlanes, plus one partner-operated international restaurant. The company maintained its plan to open 350 to 370 restaurants this year, including 10 to 15 international partner-operated locations.

Still, margins came under more pressure. Restaurant-level operating margin fell to 25.2% from 27.4% a year earlier, driven by beef and freight inflation and greater use of protein and produce. Labor costs also rose as Chipotle increased wages, bonuses, and staffing tied to its hospitality initiatives.

"The year-over-year margin dislocation is really because of inflation running around 3% to 3.5%, and we're not able to offset with pricing as we have done historically," said CEO Scott Boatwright in an interview with Barron's. "It's something we have decided to invest in this consumer environment, to not pass those costs to consumers when they're having a tough time."

For the second half of the year, Boatwright said Chipotle will have a "slow and measured approach" to pricing.

Chipotle recently opened its first restaurant in Mexico, and is preparing to enter South Korea and Singapore.

"The pent up demand for Chipotle in those markets is absolutely extraordinary," said Boatwright, noting that Chipotle's ingredient sourcing and food preparation "resonates in all geographies around the globe."

The company's "Build Your Own Chipotle" catering service could be another potential growth driver. The CEO said the catering menu -- built for families of four to six -- is "highly incremental."

The company has launched a test for catering in three markets, and is looking for a full-scale launch in 2027.

Still, Wall Street analysts have a few things to watch. The comparable sales number is "encouraging," wrote BNP Paribas' senior analyst Steve McManus in a Thursday note, but questions remain around whether Chipotle's traffic gain is a result of "buying share" with lower prices or a genuine demand inflection.

Chipotle management also noted that the recent Cyclospora outbreak has dented sales by about 200 basis points in the second half of July, even though the company doesn't use any lettuce in question from Mexico in its menu. All its lettuce is sourced from California, said Chipotle.

In its outlook, management assumes this drag would continue for the rest of the third quarter, but William Blair analyst Sharon Zackfia believes that's unlikely and the actual comparable sales in the current quarter could come better than the 1% guidance.

PTIG analyst Peter Saleh said Chipotle needs genuinely new menu items to produce stronger, lasting sales growth. Management said on the earnings call that more menu innovation was being tested and is expected to launch in late 2026 or early 2027.

Chipotle's upcoming rewards-payment upgrade could also help make checkout faster, allowing restaurants to serve more customers, said Saleh.

The second quarter suggests Chipotle's top-line recovery is becoming more credible. The next test is whether the company can convert that momentum into stronger profits.