Well, the burrito bubble might finally be deflating. In case any of you missed it or were too busy trying to book your next Jet2 holiday, Chipotle shares were absolutely guac’d into oblivion after hours Wednesday, tumbling 9% following a brutal admission: same-store sales are flatlining, and traffic is down nearly 5%. The company’s second quarter revenue missed expectations, same-store sales shrank 4%, and the full-year outlook was quietly taken out back and shot. 

(Source: Giphy) 

Translation: For a brand that’s built its identity around immunity to macroeconomic gravity… the idea that nothing short of a nuclear event would keep Americans from paying $19 for rice and beans, this is a seismic crack in the queso. 

For starters, revenue  came in at $3.06 billion vs. the $3.11 billion the Street expected. Earnings per share hit the target at 33 cents adjusted, but that was little comfort given the top-line miss and the steady erosion in foot traffic. While Chipotle opened more restaurants (which boosted overall sales), people are walking into them less. Average check sizes were up ~1%, but that was nowhere near enough to cover the 4.9% plunge in traffic.

(Source: CNBC) 

This of course, marks the second consecutive quarter Chipotle trimmed its comp sales guidance. They're now guiding for flat same-store growth in 2025… down from the previous “low-single-digit” range, and a far cry from the Chipotle of yore that could throw a tortilla at a wall and still beat estimates. CEO Scott Boatwright, tried to calm investors by pointing to a recovery in June and July, citing summer promos and the launch of Adobo Ranch dip (Ok, now I’m interested…).  Apparently, America just needed a little more of dat white sauce to come crawling back. But stiil, even his optimism felt half-baked. “There’s no smoking gun here,” he insisted. Right… just a consumer slowdown, weather disruptions, and two straight quarters of decelerating traffic. Totally normal burrito business. (Spoiler: Wait until he finds out consumer spending for low and middle income households jumped 5.5% and 1.8% in June LOL.) 

(Source: Giphy) 

But alas, as for net income, the receipts came in at $436.1 million, down from $455.7 million a year earlier. And while Chipotle reiterated plans to open up to 345 new stores this year, the long-term vision of $4 million in average unit volumes now feels like trying to book a happy ending with a maxed-out credit card and a Groupon.

The takeaway here? If Chipotle, the last bastion of price-insensitive millennial indulgence, is wobbling, the consumer might be more tapped out than we thought or Jamie Dimon is a psychic and we really are in hot water. Keep in mind, this is the chain that outlasted E. coli, norovirus, a literal employee revolt, and avocado inflation… yet now finds itself getting clipped by a little economic drag and Reddit apathy.

(Source: Giphy) 

So yeah… either we’re witnessing the start of a broader consumption breakdown… or America just realized that $20 for lukewarm chicken on rice is actually insane. Regardless, Chipotle’s aura of invincibility just got knee-capped. Of course, things can turn around next quarter. But the writing on the wall to be cautious is staring right back at us. Meaning, keep your head on the swivel and place your bets accordingly, friends. Until next time…

At the time of this writing, Stocks.News does not hold positions in companies mentioned in the article.