A customer carries a Chipotle bag on Friday, January 31, 2025 in San Francisco, California.
David Paul Morris | Bloomberg | Getty Images
Chipotle Mexican Grill announced Wednesday that its quarterly sales were lower than expected, and same-store sales forecasts were revised downward for the third straight quarter.
The company’s stock price plunged 13% in extended trading.
Chipotle expects full-year same-store sales to decline by a low-single-digit percentage in fiscal 2025. That’s a big change from February, when the burrito chain Chipotle expected same-store sales to grow at a low to mid-single digit rate.
Chief Executive Officer Scott Boatwright said the company was facing “consistent macroeconomic pressures.” Traffic decreased by 0.8%, the third consecutive quarter of decline.
The chain outperformed the overall restaurant industry in 2024, but the downturn in the consumer environment finally hit restaurants this year. Because Chipotle’s customer base skews higher-income, it was immune to the backlash in spending from lower-income customers that fast-food chains reported last year.
But now, Chipotle is seeing customers of all income levels visiting its stores less frequently. Boatwright said consumers making less than $100,000 a year, who make up about 40% of the company’s customer base, are spending even less. He added that groups are eating out less frequently due to concerns about the economy and inflation.
Customers between the ages of 25 and 35 are having a particularly difficult time, he said during the company’s earnings call.
“Relative to the restaurant industry as a whole, we tend to skew toward this group, which is young and indexed a little too high,” Boatwright said.
He cited headwinds such as unemployment, higher student loan repayments and slower real wage growth adjusted for inflation, which are hurting certain consumer groups.
“We’re not losing those customers, they’re just coming in less often,” Boatright said.
Here’s how the company reported compared to Wall Street expectations, based on a survey of analysts by LSEG.
Earnings per share: Adjusted 29 cents, in line with expectations Earnings: $3.0 billion vs. $3.03 billion expected
The restaurant chain’s stock price fell about 5% in after-hours trading.
Chipotle reported third-quarter net income of $382.1 million, or 29 cents per share, down from $387.4 million, or 28 cents per share, in the year-ago period.
Excluding small adjustments for stock-based compensation grants and other items, the burrito chain still earned 29 cents per share.
Net sales increased 7.5% to $3.0 billion due to strong new restaurant performance. The company has opened 84 company-operated stores and two licensed international stores.
Chipotle’s same-store sales increased 0.3%, reversing the previous quarter’s decline. However, the sales growth for restaurants open at least a year was driven by a 1.1% rise in average checks due to lower foot traffic.
“While we have seen encouraging results from accelerating marketing spend and rolling out carne asada and red chimichurri, our underlying trends remain challenged throughout the quarter and into October,” CFO Adam Reimer said in a statement.
Boatwright said he supports the chain’s overall value proposition and won’t turn to discounting to lure customers back. But he acknowledged that consumers are lumping the chain in with other fast-casual competitors, with average prices closer to $15 per appetizer than Chipotle’s roughly $10.
Boatwright said Chipotle is focused on innovating its in-restaurant operations, marketing, digital experiences and menus to restore traffic growth.
Chipotle expects to open 350 to 370 new locations by 2026. The company aims to expand globally, and its goals include 10 to 15 international restaurants operated by partners.
Last month, Chipotle announced a joint venture with South Korea-based restaurant operator SPC Group. We also have development agreements with carriers in the Middle East and Latin America.
