:max_bytes(150000):strip_icc()/GettyImages-2196367652-55e39406d423410ea6c96b43103ee256.jpg "Chipotle Is Seeing a ‘Significant Pullback’ in Younger Customers. Its Stock Is Getting Hammered.")
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Key Takeaways
- Chipotle cut its full-year comparable-restaurant sales forecast as the fast casual chain experiences “a significant pullback” by customers between the ages of 25 and 34.
- In its earnings announcement, the company warned of “persistent macroeconomic pressures.”
The return of carne asada may not be enough to lure a crucial group of customers to Chipotle.
Shares of Chipotle Mexican Grill (CMG) were down 17% in early trading Thursday, a day after the fast-casual chain reported weaker-than-expected third-quarter revenue and trimmed its comparable-restaurant sales forecast for the full year.
“We continue to see persistent macroeconomic pressures,” CEO Scott Boatwright said in the company’s earnings release, adding that Chipotle is “accelerating menu innovation and creating more engaging digital experiences” in its effort to return to growth.
On a call with analysts, Boatwright said that Chipotle is seeing a “significant pullback” from 25- to 34-year-old customers who make less than $100,000 a year. “We’re losing them to grocery and food at home,” he said. “It is one of our core consumer cohorts. And so, they feel the pinch and we feel the pullback from them as well.”
Why This News Matters
Chipotle’s weaker outlook shows how inflation and changing consumer habits are squeezing even high-profile restaurant chains. The burrito giant’s struggles with younger, middle-income diners reflect a broader trend in the fast-casual industry, as rising prices and tighter budgets are pushing more people to cook at home instead of eating out.
Chipotle now expects comparable sales to be down slightly for the full year, compared with a July forecast that sales in 2025 would be “about flat.” Early this year, the company had projected that sales would grow low- to mid-single digits.
The Newport Beach, Calif.-based company reported third-quarter revenue of $3.00 billion, up 7.5% year-over-year but below the $3.06 billion consensus estimate of analysts polled by Visible Alpha. Adjusted earnings of $0.29 per share matched expectations.
Chipotle shares entered Thursday having lost about a third of their value this year. With today’s sharp decline, the stock is trading at its lowest levels since early 2023.
