The latest news from Chipotle is crushing the company’s stock, but it’s even worse news for the economy. Here’s a quote from the CEO:
“Earlier this year, as consumer sentiment declined sharply, we saw a broad-based pullback in frequency across all income cohorts. Since then, the gap has widened, with low to middle-income guests further reducing frequency. We believe that this guest, with household income below $100,000, represents about 40% of our total sales, and based on our data, is dining out less often due to concerns about the economy and inflation. A particularly challenged cohort is the 25 to 35-year-old age group. We believe that this trend is not unique to Chipotle and is occurring across all restaurants, as well as many discretionary categories.”
We’re hearing this from many companies, but here it’s even more explicit. The middle and lower classes are getting hurt by inflation and a slowing economy. And this suggests that it’s going to get worse. We’ll see if this leads to a recession.
Now we do have to put this in context. Chipotle has its own problems as it doesn’t seem to know how to cater to this younger demo in this environment. One use on X put it simply:
i could fix chipotle in 1 day as ceo. You just introduce a half priced burrito that isn’t the size of a newborn. Instead of 1500 calories, maybe you only eat 700. It’s under $10. There would lines would be out the door
This hit’s home.
So we may have a combination of factors here, but it’s difficult to deny the economic slowdown. We’ll be posting more examples.
