Chipotle Mexican Grill on Wednesday tempered its annual comparable gross sales development forecast as sticky inflation and financial uncertainty pressure shoppers to dine out much less, sending the burrito chain’s shares down 3% after hours.
The corporate now expects annual comparable gross sales development within the low single-digit vary, in contrast with a previous forecast for a low- to mid-single-digit rise.
President Trump’s sweeping tariffs on commerce companions together with Mexico and Canada, in addition to an escalating commerce battle with China, have raised fears of a recession within the US and compelled corporations to pull again their annual expectations as shoppers cope with larger prices of dwelling.
Whereas Chipotle has to this point benefited from menu innovation and optimizing kitchen operations, the corporate may face some influence from import tariffs on items similar to avocados and beef, analysts have famous.
“In February, we began to see that elevated level of uncertainty felt by consumers. Consumers were saving money because of concerns around the economy, and reducing restaurant visits. These trends continued into April,” CEO Scott Boatwright stated on a post-earnings name.
Chipotle’s comparable restaurant gross sales fell 0.4% in the primary quarter ended March 31, in contrast with a 5.4% rise within the previous three-month interval.
The corporate reported complete income of $2.85 billion, falling in need of analysts’ common estimates of $2.95 billion, based on knowledge compiled by LSEG.
Restaurant-level working margin fell to 26.2% within the first quarter, in contrast with 27.5% a yr in the past
In January, Chipotle stated Trump’s tariffs on Mexico would result in a roughly 60-basis-point influence on its uncooked materials prices for the yr.
In an try to protect margins from larger enter prices, the corporate has additionally invested in introducing expertise similar to produce slicers and three-tiered rice cookers that assist optimize labor and time within the kitchen.
