Chipotle shares plunge 18% after third sales forecast cut

Shares of Chipotle Mexican Grill fell 18.5% to $32.4 in premarket trading on Thursday after the US restaurant chain lowered its annual sales forecast for the third time this year, pointing to continued weakness in consumer spending that could extend into early 2026.

The burrito chain’s management cited pressure across both lower- and middle-income customers as inflation, unemployment and slower wage growth crimp discretionary spending.

Chief Executive Scott Boatwright told analysts that even higher-income diners were showing signs of restraint.

“We’re losing them to grocery and food at home,” Boatwright said on a Wednesday conference call.

“They feel the pinch, and we feel the pullback from them.”

Younger and lower-income customers cut back

Chipotle said its largest sales segment — guests with household incomes below $100,000 — accounted for around 40% of total sales and had been reducing restaurant visits.

The company added that customers aged 25 to 35 were especially pressured by rising unemployment, resumed student loan payments, and sluggish wage growth.

The company’s third-quarter same-store sales rose a modest 0.3%, although in line with FactSet estimates.

Overall revenue increased 7.5% year-on-year to $3 billion, slightly below expectations of $3.02 billion.

Net income fell 1.4% to $382.1 million, or 29 cents per share.

While menu price increases helped offset part of the slowdown, the company said it was focusing on “value preservation” rather than aggressive price adjustments.

Tariffs, beef costs and inflation squeeze margins

Chipotle’s margins came under strain from rising input costs, particularly beef — the company’s largest commodity — and the broader impact of tariffs.

Restaurant-level margins slipped to 24.5% from 25.5% a year earlier.

Chief Financial Officer Adam Rymer said the company would adopt a “slow and measured” approach to price hikes in 2026.

“While this will pressure margins, we think it’s the right thing to do to provide extraordinary value to our guests during this challenging economic backdrop,” Chief Financial Officer Adam Rymer said on a post-earnings call.

Executives said the company will continue to focus on operational improvements, including fixing issues with digital order accuracy, ingredient availability, and restaurant cleanliness.

Internal surveys had identified these as key areas for improvement.

Expansion continues despite a weaker outlook

Despite near-term challenges, Chipotle plans to open between 315 and 345 restaurants this year and as many as 370 in 2026, all company-owned.

The chain opened 84 new outlets in the third quarter.

Analysts at JP Morgan said the sharp drop in Chipotle’s stock reflected investor disappointment that comparable sales growth had failed to rebound to mid-single digits as hoped.

As of the latest close, Chipotle’s shares were down about 34% for the year.

With inflationary pressures, weakening demand from younger and lower-income consumers, and cautious pricing strategies, Chipotle faces an uphill battle to regain momentum — even as it continues to expand its footprint across the United States.

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