Chipotle Mexican Grill on Wednesday tempered its annual comparable sales growth forecast as sticky inflation and economic uncertainty force consumers to dine out less, sending the burrito chain’s shares down 3% after hours.
The company now expects annual comparable sales growth in the low single-digit range, compared with a prior forecast for a low- to mid-single-digit rise.
President Trump’s sweeping tariffs on trade partners including Mexico and Canada, as well as an escalating trade war with China, have raised fears of a recession in the US and forced companies to pull back their annual expectations as consumers deal with higher costs of living.
While Chipotle has thus far benefited from menu innovation and optimizing kitchen operations, the company could face some impact from import tariffs on goods such as avocados and beef, analysts have noted.
“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 said on a post-earnings call.
Chipotle’s comparable restaurant sales fell 0.4% in the first quarter ended March 31, compared with a 5.4% rise in the preceding three-month period.
The company reported total revenue of $2.85 billion, falling short of analysts’ average estimates of $2.95 billion, according to data compiled by LSEG.
Restaurant-level operating margin fell to 26.2% in the first quarter, compared with 27.5% a year ago
In January, Chipotle said Trump’s tariffs on Mexico would lead to a roughly 60-basis-point impact on its raw material costs for the year.
In an attempt to shield margins from higher input costs, the company has also invested in introducing technology such as produce slicers and three-tiered rice cookers that help optimize labor and time in the kitchen.
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