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Chipotle stock craters as company says young people without jobs can't afford their food anymore

Chipotle (CMG) on Wednesday cut its full-year sales outlook for the third straight quarter as the company continues to deal with a traffic decline and economic pressure on its core customer, particularly young people.

CEO Scott Boatwright said in the company's earnings release that the chain continues to see "persistent macroeconomic pressures.”

On a call with analysts, the executive expanded on this idea, noting that Chipotle is "over-indexed" to a younger consumer, who he said are particularly under pressure.

"A particularly challenged cohort is the 25- to 35-year-old age group," Boatwright said. "This group is facing several headwinds, including unemployment, increased due loan repayment and slower real wage growth."

In August, the unemployment rate for Americans ages 20-24 stood at 9.2%, up from 7.9% a year ago.

Boatwright said the pullback in all income cohorts seen earlier this year has now widened, "with low- to middle-income guests further reducing frequency." Households that make $100,000 or less make up about 40% of its total sales.

He later added that Chipotle expects the first quarter to "be the toughest" for middle- and low-income consumers, meaning the company is expecting to endure several more months of pressure on sales attributable to younger, poorer customers who aren't eating there as often.

Chipotle stock fell as much as 19% on Thursday following the results.

The company said in its third quarter earnings release that it now expects same-store sales to decline in the low-single-digit range this year. This marked the third consecutive quarter the company cut its sales outlook.

Wall Street expected the company's same-store sales to decline 0.7% this year, which was below Chipotle's forecast in July for sales to be flat, but remained a more conservative drop-off than what the company had told investors.

In its third quarter, revenue at Chipotle came in $3 billion against $3.02 billion expected, according to Bloomberg data. Digital sales made up 36.7% of total food and beverage revenue.

Adjusted earnings per share of $0.29 were in line with the Street's expectations. Same-store sales grew 0.3%, less than the 1% expected. Higher menu prices and an increase in the average ticket size offset lower foot traffic in the quarter.

Boatwright said Chipotle is "doubling down on restaurant execution," increasing marketing spend, plans to create more digital experiences, and introduce more innovation.

"As we execute this plan, we are confident that we will return to consistent positive transaction growth," he said.

https://finance.yahoo.com/news/chipotle-stock-craters-as-company-says-young-people-without-jobs-cant-afford-their-food-anymore-155415667.html

Al_Sharpton_for_President says

Chipotle stock craters as company says young people without jobs can't afford their food anymore

I don't think it's affordability. I gave it two chances. Both were awful. Worse than Taco Bell if that's possible. Never understood the Chipotle fan boys.

Fact is it's food you can make in the morning and nuke it at work and pay $1 for the food if that. Also I don't understand how Starbucks stays in business. You can brew a cup of coffee for roughly 0.20¢ You can program the coffee maker for the next morning. Less time sitting in a drive thru. Same with a line at Chipotle. I don't think people value their time anymore.

Yeah. We run our dishwasher a lot because we always make food at home. It’s fun throwing things together and coming up with a tasty meal. Last nite, halved red and yellow peppers, removed seeds. Brushed insides with olive oil, seasoned with salt and pepper, baked for 10 minutes. Filling: mixed together shredded chicken, small can of green chils, black beans, and rice, and added one small can of red enchilada sauce and heated on the stove top. Generously filled the halved peppers with the mix, and topped off with cheese. Baked 20 minutes. Simple recipe and dang tasty.

Al_Sharpton_for_President says

Chipotle stock craters as company says young people without jobs can't afford their food anymore

Chipotle (CMG) on Wednesday cut its full-year sales outlook for the third straight quarter as the company continues to deal with a traffic decline and economic pressure on its core customer, particularly young people.

CEO Scott Boatwright said in the company's earnings release that the chain continues to see "persistent macroeconomic pressures.”

Wendy's stock has dropped a lot also to around $8.43 a share and almost same price it was in 1993. Its all time high was around $24 in January 2022.

Granted it has around a 6.5% dividend yield which I wonder how long its going Wendy's is going to pay out that much in dividend per share.

"Wendy’s earnings are dropping due to weak consumer demand, falling traffic, and pressure on lower-income households—especially those earning under $75,000. These factors have led to missed revenue targets and lowered profit forecasts throughout 2025."

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Al_Sharpton_for_President says

Chipotle (CMG) on Wednesday cut its full-year sales outlook for the third straight quarter as the company continues to deal with a traffic decline and economic pressure on its core customer, particularly young people.

I used to work with a guy that loves Mexican food, so Taco Bell and Chipotle was always a favorite lunch stop for us.
I just didn't get the allure to the place, their product is mostly an instant rice burrito with a spoon full of meat thrown in. And the luke warm meats and beans makes for a cold flaccid shitty burrito. Burritos are supposed to be hot gooey and soft.
And for what they charge, I could go to a counter at a nice American diner and get a proper meal.

WookieMan says

I don't think it's affordability. I gave it two chances. Both were awful. Worse than Taco Bell if that's possible. Never understood the Chipotle fan boys.

My problem with Taco Bell is when did they start putting artificially colored green, purple, red and blue corn chip slivers, and rice(shitty instant rice at that!) in their product? Of course my other gripe with them, is their kiosk where you have to spend 15 minutes to make sure you get a classic Taco Bell item, and not a bunch of other horse shit.

I think if one likes Mexican, you're better off going to one of the hundreds of mom and pop Mexican joints that keeps growing in every town.

https://finance.yahoo.com/news/chipotle-stock-craters-as-company-says-young-people-without-jobs-cant-afford-their-food-anymore-155415667.html

Chipotle stock craters as company says young people without jobs can't afford their food anymore

AD says

Wendy's stock has dropped a lot also to around $8.43 a share and almost same price it was in 1993. Its all time high was around $24 in January 2022.

It pays a good dividend, so I am going to watch it. Thanks for bringing it up.

HeadSet says

It pays a good dividend, so I am going to watch it. Thanks for bringing it up.

Probably gonna be one of those Wall Street Slime episodes. You know where they tank the stock price and then "magically" it goes private just to reappear years later at an inflated price for new investors.

Misc says

HeadSet says

It pays a good dividend, so I am going to watch it. Thanks for bringing it up.

Probably gonna be one of those Wall Street Slime episodes. You know where they tank the stock price and then "magically" it goes private just to reappear years later at an inflated price for new investors.

Can't provide proof, but my gut tells me that fast food is dying out kind of like news papers did and main stream media is now. There are so many meal subscription companies out there and I think the younger generations are more health conscious. Have less kids or don't even have a family. So there's a ton of free time to make your own food or meal prep for the day.

Also used to be a hangout place for younger people. Might meet a girl. I think those days are over. If I was 18 again knowing what our women have turned into, I wouldn't even talk to a female at a fast food joint eating with her friends. It used to be cheap, but now it's $15-20pp if you're not doing the kids menu as an adult. And the food sucks is a bigger factor. I don't need an eruption of brown lava 2 hours after eating that crap.

Correct on all counts.

Also, the Diner is $8.99 for a burger with fries. With tax, tip, iced tea, I get sit down service for not much more than a "Meal".

On the run? Call 10-15 minutes ahead and it's waiting.

Nothing quite says living like a triple Baconator with a large Frosty on your EBT card.

It's almost winter in the northeast - I will seriously miss grilling for the next 6 months.

stereotomy says

It's almost winter in the northeast - I will seriously miss grilling for the next 6 months.

ABG, always be grilling. If you got your timing down on what you like to grill it's not too bad. Also a grill caddy for the tools is nice to have. Bring it out when you start and then back into the house. You can do it with 3-4 trips in and out in only about 4 minutes total of dealing with the weather. Slow cooks or smoking are even easier.

Only time I don't grill is when it's snowing or a brutal wind chill. So there are restrictions at times. But if it's 25ºF and calm I'll grill. 10ºF or lower I'm probably out, but that's maybe 10 days a winter here in IL. Now I probably just jinxed myself.

Grilling when the humidity is high, especially when there's an overcast, and the air is thick with moisture like fog, is always challenging. I wont do it anymore. You have to put the grill on the covered patio, then the smoke just stays in the patio, and it takes for ever for the coals to get to temp. If you crowd the grill it will go out.

I once tried to cook a whole pig in a china box. It was for New Years eve, that year there was brisk wind, and about 40f. But with the wind it felt like 30f. I went through about 8 bags of charcoal, the wind just ate it up. I cooked it for well over 12 hours, and was still under cooked in in the center of the hams. I'll never do wind and cold again.

DemoralizerOfPanicans says

Correct on all counts.

Also, the Diner is $8.99 for a burger with fries. With tax, tip, iced tea, I get sit down service for not much more than a "Meal".

On the run? Call 10-15 minutes ahead and it's waiting.

$7.99 for Whopper meal at Panama City Beach across from Navy base