Chipotle cut its sales forecast for the third time in a year. Shares plummeted 22%

Fast-food restaurant chain Chipotle Mexican Grill lowered its annual sales forecast for the third time this year. The company said its core customers - young Americans - are facing particularly intense pressure due to unemployment and slow income growth. The chain's stock plunged 22%, posting its steepest intraday drop since 2012.

Chipotle lowered its forecast for the third time in a year, citing that consumers have become less likely to eat out. The company now expects full-year sales to be down a few percent from a year ago, whereas it had previously forecast stable results. In the third quarter, comparable sales rose modestly, by just 0.3 percent, falling short of Wall Street's expectations, Bloomberg writes.

Chipotle's Q3 2025 revenue increased 7.5% to $3 bln. Operating margin narrowed to 15.9% vs. 16.9% a year ago. Net income was nearly flat year-over-year at $382.1 million vs. $387.4 million. Diluted (including potential shares) EPS was $0.29 vs. $0.28 a year ago. Adjusted EPS amounted to $0.29 vs. $0.27 a year ago.

Chipotle recorded an overall decline in visit frequency across all customer groups by income level, but the most notable drop is among low-income shoppers, Bloomberg writes. About 40 percent of the company's customers are families with incomes of less than $100,000 a year, and it's this category that has significantly reduced spending on eating out because of concerns about the state of the economy and rising inflation, the chain's CEO Scott Boatwright said.

Younger clients face particular challenges because of unemployment, student loan debt and slowing wage growth, he said.

Chipotle shares were down 22% in early trading on Oct. 30, the biggest intraday drop since July 2012. Since the beginning of the year, Chipotle shares have lost 44%, while the S&P 500 index of consumer companies has gained 5.7%.

Chipotle sales are likely to remain under pressure next year as low- and middle-income shoppers increasingly forgo expensive meals, said Guggenheim analyst Gregory Frankfort.

After the report was published, several analysts reduced their target prices on Chipotle shares. Thus, TD Cowen analyst Andrew Charles lowered his target price from $45 to $40. His target price roughly corresponds to the last closing price ($39.8). In addition, Jefferies lowered its target price on Chipotle stock from $44 to $36. His estimate implies the stock will fall nearly 10%.

Nevertheless, the majority of analysts - 30 out of 40 - now advise to buy the securities of the network (ratings Buy and Overweight). The remaining 10 hold a neutral position.

This article was AI-translated and verified by a human editor