Shares of Chipotle Mexican Grill (NYSE: CMG) fell on Thursday, finishing the day down 18.2%. The move came as the S&P 500 and the Nasdaq Composite lost 1% and 1.6%, respectively.
The fast-casual restaurant chain saw its stock plummet after reporting less-than-stellar earnings after the bell on Wednesday.
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Chipotle third-quarter earnings disappoint
Chipotle reported third-quarter earnings yesterday that disappointed investors. While the company's earnings per share (EPS) of $0.29 hit the mark, they only narrowly missed consensus estimates for total revenue. Chipotle was forced to cut its sales projections for the third quarter in a row. It also said that it expects its full-year same-store sales -- a critical measure -- to decline.
CEO Scott Boatwright said his company faces "consistent macroeconomic pressures" and that younger customers, a core group for the company, are tightening their belts and visiting Chipotle less often. He explained that the company is "not losing that customer," rather "they're just coming less often."
Things aren't looking too good for Chipotle
While Chipotle's top-line sales grew nearly 7.5% during the quarter, that growth was almost entirely fueled by opening new locations. Its modest 0.3% jump in same-store sales was due to higher average ticket cost, not increased traffic. Chipotle is not in a great position at the moment, and I don't see it reversing in the near future.
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Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Chipotle Mexican Grill. The Motley Fool recommends the following options: short December 2025 $45 calls on Chipotle Mexican Grill. The Motley Fool has a disclosure policy.
