Chipotle’s stock took a hit, dropping 15% on Thursday after the chain noted a decrease in customer visits and adjusted its sales outlook downward.
For the third quarter, net sales climbed 7.5% to $3 billion, which fell short of Wall Street’s expectation of $3.03 billion.
CEO Scott Boatright emphasized that the company is having difficulty keeping customers amid “sustained macroeconomic pressures.”
He pointed out factors like slowing wage growth in comparison to job losses, the resumption of student loan payments, and ongoing inflation affecting its main demographic—customers aged 25 to 35.
“We tend to skew toward this group, which is young and indexed a little bit too high relative to the restaurant industry as a whole,” Boatright expressed during a recent earnings call.
Store visits saw a decline of 0.8%, marking the third quarter in a row of such downturns.
The company has revised its full-year same-store sales forecast to reflect a low-single-digit decrease, contrasting sharply with earlier predictions of low to mid-single-digit growth.
“We’re not losing those customers; they’re just coming in less often,” Boatright remarked.
Chipotle’s net income stood at $382.1 million, or 29 cents per share, down from $387.4 million a year prior. After accounting for stock-based grants and other adjustments, earnings remained at 29 cents per share.
The fast-food sector has generally faced challenges in attracting customers post-pandemic, as rising prices have led to reduced dining out.
While Chipotle has generally catered to a wealthier demographic that has managed to keep spending, Boatright noted that around 40% of its customers earning less than $100,000 annually are cutting back on meals at restaurants due to tightening budgets.
Same-store sales rose by 0.3% in the third quarter, reversing the earlier decline. However, this growth was mainly driven by a 1.1% rise in average check prices, not an increase in foot traffic.
Boatwright argued, albeit Chipotle’s prices being about $10 lower, customers are still seeing the brand as comparable to other fast-casual options, so there’s no immediate need for discounts.
Looking ahead, the company aims to enhance experiences both in-store and online, alongside introducing new marketing strategies and menu items, according to Boatwright.
Chipotle has plans for significant expansion, targeting 350 to 370 new restaurant openings in 2026, which includes 15 international locations operated by partners. The company is also entering partnerships for expansion in South Korea, the Middle East, and Latin America.
