Chipotle Lowers Sales Forecast as Inflation-Hit Diners Reduce Spending
Chipotle Mexican Grill has recently revised its annual sales forecast for the third time this year. The company anticipates that consumer dining expenditures will continue to face considerable pressure through early 2026. This announcement had a significant impact on its stock, which dropped 15% after market hours.
Sales Pressure Amid Economic Challenges
According to CEO Scott Boatwright, U.S. households with incomes below $100,000—accounting for approximately 40% of Chipotle’s sales—have sharply reduced their visits. The financial strain on consumers, especially those aged 25-35, is influenced by several factors, including:
- Rising unemployment rates
- Resumed student loan repayments
- Stagnant wage growth
This demographic shift in consumer behavior is concerning for Chipotle, as economic pressures divert spending away from dining out.
Factors Impacting Chipotle’s Margins
Chipotle is also feeling the effects of ongoing inflation, with significant increases in beef prices, its largest commodity. Tariffs and heightened costs have further strained profit margins. The company plans to approach price increases cautiously in 2026, as CFO Adam Rymer highlighted during a post-earnings call. This strategy acknowledges the pressure on margins while aiming to maintain consumer trust.
Operational Challenges and Customer Experience
In addition to financial hurdles, Chipotle faced operational challenges pertaining to:
- Digital order accuracy
- Ingredient availability
- Cleanliness standards
The company is taking steps to address these issues by retraining staff and revising bonus structures aimed at improving customer experience and digital performance.
Sales Performance Indicators
In its third-quarter report, Chipotle noted a modest increase of 0.3% in comparable restaurant sales. This figure fell short of analysts’ expectations, which were anticipating a rise of 1.36%. Adjusted earnings per share matched estimates at 29 cents, while restaurant-level margins decreased to 24.5% from 25.5% a year prior.
Looking ahead, Chipotle projects that comparable restaurant sales for 2025 will decline in the low single-digit range, a downgrade from earlier forecasts that predicted stable sales.
