- For the first time since 2020, Chipotle saw a decrease in quarterly same-store sales. CEO Scott Boatwright pointed to cautious consumers and a spending slowdown as the primary culprits for a sales dip and lower-than-expected quarterly revenues. Boatwright has previously said Chipotle would not raise its prices.
Chipotle is beginning to notice the impact of consumers spooked by volatile economic conditions.
The company reported on Wednesday a 6.4% increase in quarterly revenues to $2.88 billion, falling short of the $2.95 billion expected. Same-store sales dipped 0.4%, Chipotle’s first quarterly same-store sales decrease since 2020. While the chain saw a 1.9% average increase in checks, transactions dropped 2.3%. Chipotle previously projected same-store sales for the year to grow by low- to mid-single digits, but now expects those sales to be in the low-single digits.
The Mexican-inspired fast-casual chain blamed a spending slowdown for the weaker than forecasted sales.
“Saving money because of concerns around the economy was the overwhelming reason consumers were reducing the frequency of restaurant visits,” CEO Scott Boatwright said during a call with investors, citing an internal visitation study.
He cited poor weather, as well a late Easter holiday delaying Chipotle’s busy “burrito season,” as additional reasons for the slower quarter.
“We believe it’s a culmination of many things. Whether it’s weather, the Easter shift; whether it’s consumer slowdown on consumer spending, and/or tough compares, I really believe it’s all the above,” Boatwright said. “But I think the underlying trend…is really tied to the consumer sitting on the sideline.”
Boatwright has previously warned the industry can expect to see a slowdown as a result of economic uncertainty and market turmoil.
“It’s my take that the consumer is being very cautious and optimistic at present,” Boatwright told the Fortune Leadership Next podcast earlier this month. “Many are preserving cash because of the unknown, or potential consequences, downstream consequences, intended or unintended from the current administration. And so you’re seeing a pullback, a market pullback, at present.”
Downplaying tariff concerns
But despite the uncertainty, the company has held fast that it is prepared to weather the storm. Chipotle announced earlier this week plans to make its first foray into the Latin American market, opening a handful of locations in Mexico in 2026. The company, which operates its 3,700 locations, will test the waters with a new outside restaurant operator, partnering with Alsea, which operates franchises for Domino’s, Starbucks, and other chains in Latin America.
Chipotle has also taken steps to dodge the impact of tariffs, diversified the sourcing of produce like avocados since 2018, when President Donald Trump introduced levies on Mexico during his first administration. Mexico supplied as much as 85% of Chipotle’s avocados in the past, but the chain has since turned to countries like Dominican Republic, Guatemala, and Colombia for the key guacamole ingredient, now sourcing about half of its avocados from Mexico. Chief financial officer Adam Rymer said during its earnings calls that Chipotle is also contending with increased costs of beef and packaging due to tariffs.
Chipotle holds the stance it will not pass down tariff costs on customers, calculating Trump’s tariff plan would cost about 0.5% of margin per year. Boatwright said the company would absorb the increased costs.
“We don’t understand which components of the tariffs are transitory and which will be permanent,” Boatwright told Fortune. “And I think it’s unfair to the consumer to pass those costs off to the consumer, because pricing is permanent.”
