A Chipotle logo is displayed on a sign at a store June 1, 2025 in Washington, DC.
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Actions of Chipotle Mexican Grill fell 19% on Thursday after the company cut its full-year same-store sales forecast for the third straight quarter.
Including Thursday’s move, the stock has fallen 45% this year, bringing its market value to about $43 billion. At least five Wall Street analysts cut their price targets for the stock after the report was released, anticipating investor discontent over declining traffic and the burrito chain’s bleak outlook.
“It is difficult to set a floor for sales given the multitude of factors weighing on demand,” Citi analyst Jon Tower wrote in a research note, revising his price target from $54 to $44 per share.
In the third quarter, Chipotle’s same-store sales rose 0.3%, but the chain’s traffic declined. While many restaurant chains have suffered in recent years as inflation-hit diners eat out less, analysts were unsure whether the chain’s perceived value contributed to Chipotle’s problems. While its burritos and bowls average about $10, consumers often assume its average prices are closer to the $15 of its fast-casual peers, executives said on the conference call.
“Even though we knew traffic had slowed for Chipotle in the fall, we were surprised by the magnitude reported last night and the resulting deleveraging,” BTIG analyst Pete Saleh wrote in a note. “We are certainly perplexed by the suddenness of this traffic weakness, and we are not convinced that affordability issues are the primary driver of this situation.”
CEO Scott Boatwright said during Wednesday’s earnings conference call that diners are coming in less frequently, particularly those aged 25 to 35, a key demographic for the company. Same-store sales have deteriorated so far in October, and the company now expects sales at restaurants open at least a year to decline in the fourth quarter and decline by a low single-digit percentage for the full year.
“We are very concerned that the menu and marketing measures taken so far have not sufficiently compensated for the drop in traffic,” said Danilo Gargiulo, an analyst at Bernstein.
Still, most analysts attribute the slowdown to industry-wide challenges, not the company-specific problems Chipotle needs to resolve. Unemployment, rising student loan payments and slowing real wage growth, which account for inflation, are weighing on consumer spending, according to Boatwright.
“We believe the brand remains fundamentally healthy (stable share of restaurant customer wallet) and we expect a return to growth as the macroeconomic situation improves,” Bank of America Securities analyst Sara Senatore wrote in a note to clients.
Chipotle’s weak performance bodes poorly for its fast-casual peers, such as Soft green And How are you. Morgan Stanley analyst Brian Harbor called fast-casual restaurants “this season’s Halloween scare” in his research note covering Chipotle’s earnings report.
Shares of Sweetgreen fell 6% on Thursday, while shares of Cava fell 8%. Both are expected to report third-quarter results next week.
Correction: The company now expects sales at restaurants open at least a year to decline by a low single-digit percentage for the full year. An earlier version incorrectly stated the movement percentage.