Shares of Chipotle Mexican Grill (NYSE:CMG) fell more than 10% on Thursday following the company’s decision to cut its full-year sales outlook amid growing concerns over economic uncertainty that could dampen consumer spending.
The introduction of broad U.S. tariffs has raised worries about faster inflation and slower economic growth, prompting some customers to rethink spending on premium experiences such as dining out.
During a call with analysts, Chipotle’s leadership revealed they expect tariffs to reduce margins by about 40 basis points in the current quarter, with “a little bit more than that” expected in the fourth quarter.
CEO Scott Boatwright commented, “I don’t think we’re getting credit with the consumer today,” adding that the company is focusing on how to “better communicate our value proposition” to budget-conscious diners while “center[ing] around the core equities of the brand.”
Reflecting these challenges, Chipotle now anticipates flat comparable restaurant sales for the year, down from its earlier projection of low single-digit growth.
For the quarter, revenue reached $3.1 billion, up 3% year-over-year but slightly missing analyst expectations of $3.11 billion. Comparable restaurant sales fell 4%, driven by a 4.9% drop in customer transactions, partially offset by a modest 0.9% rise in average check size. Adjusted earnings per share came in at $0.33, narrowly surpassing Wall Street’s forecast.
Margins came under pressure as operating income margin declined to 18.2% from 19.7% a year prior, and restaurant-level margin decreased to 27.4% from 28.9%.
Digital sales continued to shine, representing 35.5% of total food and beverage revenue. Chipotle also repurchased $435.9 million of its own shares during the quarter, at an average price of $50.16.
Chipotle Mexican Grill stock price
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