Chipotle Sees 'Significant Pullback' in Younger Customers

Chipotle's stock dropped 17% Thursday. The burrito chain reported weaker revenue and cut its sales forecast for the year.

Young customers are bailing. People between 25 and 34 who make less than $100,000 a year are buying way fewer burritos.

CEO Scott Boatwright said on a call with analysts that Chipotle is seeing a "significant pullback" from that group. "We're losing them to grocery and food at home. It is one of our core consumer cohorts. And so, they feel the pinch and we feel the pullback from them as well."

Pretty direct admission. Their core customers can't afford to eat there as much anymore.

They Keep Cutting Forecasts

Chipotle now expects comparable sales to be down slightly for the full year. July forecast said sales would be "about flat" in 2025. Earlier this year they projected low- to mid-single digit growth.

Every quarter brings another downward revision. The year started optimistically but is now projecting declines.

Third-quarter revenue hit $3.00 billion. That's up 7.5% year-over-year but below the $3.06 billion analysts expected. Adjusted earnings matched expectations at $0.29 per share.

Stock's Getting Destroyed

Shares were already down about a third for the year before Thursday. With the 17% drop, the stock hit its lowest level since early 2023.

That's an over 40% decline when you count Thursday. That’s a rough year.

Why People Stopped Going

A burrito bowl at Chipotle costs $12-15 depending on what you order. Making the same thing at home costs maybe $5 in ingredients.

When you're dealing with student loans, rising rent, higher costs for everything, that $10 difference matters. Eating out gets cut first when budgets are tight.

That 25-34 age group earning under $100,000 makes up a huge part of Chipotle's customer base. Losing them hurts bad.

Not Just a Chipotle Problem

Other fast-casual chains are seeing the same thing. Rising prices and tight budgets are pushing people to grocery stores instead of restaurants.

Consumers are trading down across the board. Even bringing back carne asada doesn't fix the problem that people can't afford to eat out as much.

What Chipotle's Doing About it

The company says it's "accelerating menu innovation and creating more engaging digital experiences."

New menu items and a better app. That's the plan.

Hard to see how that solves the fundamental issue though. If customers can't afford $15 burrito bowls, a better app doesn't change that math.

The Bigger Issue

Boatwright mentioned "persistent macroeconomic pressures" in the earnings release. People are being more careful with spending. Restaurant meals are discretionary spending. When times get tough, that's what gets cut.

Chipotle can't fix that on its own. They can try promotions, improve the menu, and make the app work better. But if people are choosing groceries over restaurants because money's tight, there's a limit to what menu innovation does.

What it Means

Chipotle's a bellwether for fast-casual restaurants. When they struggle with core customers pulling back, it signals problems across the sector.

The challenge for Chipotle is figuring out how to win back those 25-34 year olds without destroying margins. Cutting prices hurts profitability. Not cutting prices means continuing to lose customers.

Sales projections keep dropping. Stock keeps falling. Younger customers keep choosing to cook at home. That's the situation.

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