Chipotle Mexican Grill on Wednesday softened its annual sales growth forecast as sticky inflation and economic uncertainty reduced consumers and brought Burrito Chain stock down 3% after opening hours.
The company is currently expecting annual sales growth rates in a single digit lower range compared to its pre-estimation of low single digit rise.
President Trump’s sweeping tariffs on trading partners, including Mexico and Canada, and the escalation of the trade war with China, sparked fears about the US recession, forcing businesses to rebound annual expectations as consumers deal with higher costs of living.
Chipotle has previously benefited from menu innovation and optimising kitchen operations, but analysts point out that the company could face some impact from import duties on products such as avocado and beef.
“In February, we began to see an increase in the level of uncertainty that consumers feel. Consumers saved money due to economic concerns and reduced restaurant visits. These trends continued into April.”
Sales at Chipotle’s comparable restaurants fell 0.4% in the first quarter, which ended March 31, but rose 5.4% in the previous three months.
According to data compiled by LSEG, the company reported total revenue of $2.85 billion, not reaching an analyst average estimate of $2.95 billion.
The restaurant-level operating profit margin fell to 26.2% in the first quarter, compared to 27.5% in the previous year.
In January, Chipotle said Trump’s tariffs on Mexico would have an impact of about 60 basis points on annual raw material costs.
To protect margins from higher input costs, the company is also investing in the introduction of technologies such as slicers and three-tier rice cookers that help optimize labor and time in the kitchen.
