Chipotle reported disappointing third quarter results Wednesday that sent shares down 13% in extended trading. The restaurant chain cut its full-year sales outlook for the third consecutive quarter.
Chipotle Mexican Grill, Inc., CMG
Revenue came in at $3 billion, missing analyst estimates of $3.03 billion. Earnings per share met expectations at 29 cents.
The company now expects full-year same-store sales to decline by a low single digit percentage in 2025. Back in February, management had projected growth in the low to mid single digit range.
Same-store sales grew just 0.3% in the quarter. But that tiny gain came entirely from a 1.1% increase in prices. Traffic dropped 0.8% as customers visited less often.
CEO Scott Boatwright pointed to “consistent macroeconomic pressures” affecting the business. This marks the third straight quarter of traffic declines for the burrito chain.
Customers between ages 25 and 35 are particularly struggling right now. This group faces challenges from higher unemployment, increased student loan payments and slower wage growth.
“We tend to skew younger and slightly over-indexed to this group relative to the broader restaurant industry,” Boatwright explained. He said these customers aren’t leaving permanently, they’re just coming in less frequently.
Shoppers earning under $100,000 annually make up about 40% of Chipotle’s customer base. This group has pulled back spending even more as they dine out less often.
After performing better than competitors in 2024, economic headwinds finally caught up with Chipotle this year. The chain’s higher-income customers previously protected it from spending slowdowns that hit fast-food restaurants last year.
Now consumers across all income levels are cutting back on visits. The shift represents a change for a chain that historically maintained strong customer loyalty.
Operating margin fell to 15.9% from 16.9% a year earlier. Higher beef and chicken costs squeezed profitability despite the company raising prices.
The chain opened 84 new company-operated locations and two licensed international stores during the quarter. Those new openings helped push net sales up 7.5% to $3 billion.
CFO Adam Rymer said trends remained challenged throughout the quarter and into October. The company accelerated marketing spending and introduced carne asada and red chimichurri to boost traffic.
Boatwright said Chipotle won’t use discounting to attract customers back. He defended the chain’s value but noted consumers are comparing Chipotle to other fast-casual options that charge around $15 per entree.
Chipotle’s average check is closer to $10 per entree. Management plans to focus on restaurant operations, marketing, digital ordering and new menu items to improve traffic.
For 2026, Chipotle expects to open 350 to 370 new locations. That includes 10 to 15 international restaurants run by partners as the company expands globally.
The company recently announced a joint venture with Korea-based SPC Group. Development deals are also in place for the Middle East and Latin America regions.
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