Operations
Despite the quarterly volatility, the company remains confident in its long-term goals of surpassing $4 million in average unit volumes and expanding to 7,000 North American locations.
Photo: Chipotle
October 30, 2025
Chipotle Mexican Grill Inc. reported quarterly revenue that missed Wall Street estimates Wednesday, leading to a sharp drop in its stock price and its third straight quarter of declining customer traffic.
The company’s shares plunged 13% in extended trading after management lowered its full-year guidance. The stock continued to trade lower Thursday, reflecting investor anxiety over softening consumer demand.
Chipotle now expects full-year comparable sales to fall in the low single-digit range, a significant revision from the low- to mid-single-digit growth projected earlier in the year, CEO Scott Boatwright said Wednesday during an investor call.
The company’s third-quarter sales reached $3 billion, a 7.5% year-over-year increase, but comparable sales grew by only .3%. Restaurant-level margins also slipped by 100 basis points to 24.5%.
Macroeconomic pressures hit core customer
Boatwright acknowledged that after outperforming the broader industry in 2024, the sluggish consumer environment has hit the chain this year, with overall traffic falling by 0.8% in the quarter.
He emphasized that the pullback is now affecting customers across all income levels, a change for a brand that previously skewed toward higher-income diners.
“We’re not losing that customer. They’re just coming less often,” Boatwright said, explaining that customers making less than $100,000 annually — who account for roughly 40% of the company’s customer base — have cut their spending by opting for food at home due to concerns over the economy and inflation.
A particularly challenged cohort is the 25 to 35-year-old age group.
“We believe that this trend is not unique to Chipotle Mexican Grill, Inc. and is occurring across all restaurants as well as many discretionary categories,” he said. This group is facing several headwinds, including unemployment, increased student loan repayment, and slower real wage growth. We tend to skew younger and slightly over-indexed to this group relative to the broader restaurant industry.”
Boatright, however, reminded investors that Chipotle’s value proposition includes “food made fresh, the highest quality ingredients prepared using classic culinary techniques, served in generous portions with reliable accuracy and fast, friendly service.”
“Currently, all of this is delivered at a price point that is 20 to 30% below our peers,” he said. This gap has widened over the last few years as our pricing has consistently trailed the broader restaurant industry. In fact, our pricing has tracked more closely with food at home and food away from home. Bottom line, our value proposition has never been stronger.”
Pricing strategy under review
Compounding the demand issue, Chief Financial Officer Adam Rymer warned that the company anticipates mid-single-digit inflation to persist into 2026, driven by tariffs and rising beef costs.
Despite this, Rymer doubled down on the company’s commitment to protecting its value proposition, even at the cost of near-term margins.
“We do not plan to fully offset this incremental inflation in the near term, and while this will pressure margins, we think it is the right thing to do to continue to provide extraordinary value to our guests during a challenging economic backdrop,” Rymer said.
He said the company would be “rolling off two points of price in early December,” signaling further near-term revenue headwinds as the chain trails the industry’s average pricing.
Operational, growth initiatives
To drive transactions, the company is focusing on operational consistency and innovation including.
- Accuracy redesign: To address a reported decline in digital order accuracy — a crucial factor given digital sales make up 36.7% of total sales — the company is redesigning its system-wide bonus targets to incentivize flawless execution.
- HEEP rollout: The rollout of the high-efficiency kitchen HEEP equipment is accelerating and is now in 75 restaurants. The equipment is intended to improve throughput, food quality and labor efficiency across its kitchens.
- Innovation magnet: The launch of Adobo Ranch and Red Chimichurri sauces helped drive incremental traffic, validating the strategy to accelerate menu innovation to appeal to younger diners.
Moving forward
Despite the quarterly volatility, the company is confident in its long-term goals of surpassing $4 million in average unit volumes and expanding to 7,000 North American locations. For 2026, the company is accelerating unit growth, targeting 350–370 new restaurant openings, including international expansion into markets like South Korea and Singapore.
“I want to reiterate that our brand and value proposition are in a great place, and we are leveraging this challenging time to refocus and provide clarity for our organization,” Boatright said.
