Investor Outlook: Chipotle’s slowdown highlights industry-wide strain as young diners pull back

Jon Tower, restaurant analyst at Citi Research, joins BNN Bloomberg to discuss Chipotle earnings as the company cuts outlook for third time in 2025.

Chipotle has lowered its sales forecast for the third consecutive quarter as younger customers cut back on dining out. The restaurant chain’s stock dropped sharply after its latest results showed weak demand from millennials and Gen Z diners facing inflation and higher living costs.

BNN Bloomberg spoke with Jon Tower, restaurant analyst at Citi Research, about what’s driving the slowdown and how restaurant operators are adapting. Tower said Chipotle’s challenges reflect an industry-wide downturn rather than a company-specific issue, noting that its long-term fundamentals and brand strength remain intact.

Key Takeaways

• Chipotle’s sales forecast was cut for a third straight quarter as younger diners eat out less.
• Analysts say inflation, student loan payments and slower wage growth are pressuring Gen Z and millennials.
• The slowdown is seen across the restaurant industry, not just at Chipotle.
• Chipotle plans to emphasize value and expand menu innovation to re-engage customers.
• Long-term investments in technology and operations could help it rebound faster once demand improves.

Jon Tower, restaurant analyst at Citi Research Jon Tower, restaurant analyst at Citi Research

Read the full transcript below:

ANDREW: Chipotle is cutting its sales forecast for a third quarter in a row. Apparently, young diners are cutting back. Let’s get more from Jon Tower, restaurant analyst at Citi Research. Jon, thanks very much for joining us. Obviously, investors are displeased with Chipotle today. We saw the stock dropping almost 20 per cent in early trading. What do you think is the concern here?

JON: Hey, Andy. I think it’s the question of what the causes are and when it’s going to get better — and there doesn’t seem to be a clear answer. That’s the biggest concern in the marketplace. Management pointed to younger guests and those with household incomes under $100,000 cutting back. Heading into October, it seems like trends have slowed even more meaningfully with the government shutdown. So until some of that gets resolved, there doesn’t seem to be a clear line of sight into the business improving.

On top of that, I think the broader concern for investors is that management has accelerated the pace of innovation and marketing in 2025, but it has yet to translate into a meaningful uptick or change in traffic trends. Investors are broadly questioning the transaction trajectory, the company’s growth rate and whether it needs to reinvest back in margins going forward. Numbers moved lower last night after the print.

I actually think it’s a great buying opportunity right here because I don’t think the company’s longer-term algorithm or business opportunity is impaired. Frankly, the whole industry is feeling a bit of pain right now. I don’t think it’s a company-specific issue.

ANDREW: Can you remind us where Chipotle fits in the price spectrum? Is it a little more expensive than, say, McDonald’s?

JON: It depends on how you use it — and what market you’re in. Chipotle consistently says you can get a chicken burrito bowl for under $10 at many of its U.S. stores. McDonald’s, depending on how you use its meal deals, you can get something for around eight bucks.

When you compare Chipotle to its fast-casual peers, it’s about 20 to 30 per cent cheaper than those direct competitors. They’ve got a lot of value on the plate, and they’ve been emphasizing that across their social media channels this past year. They need to do more of it. They’ve been testing new media and are changing their creative over the next several months to emphasize that value across different channels — to try to engage guests differently and remind them, “Hey, don’t forget, we’ve got a lot on our plate for the dollar you’re spending.”

ANDREW: So you think it’s not specifically a problem with Chipotle, this sales weakness?

JON: Right. A lot of the industry data from the summer months shows a slowdown — particularly in late July, through August and into September, and even more so in October. A few companies providing quarter-to-date updates haven’t been encouraging. Each has a different backdrop, but it’s clearly an industry-wide phenomenon.

That’s where I take some comfort — Chipotle isn’t alone in this. Importantly, it’s not taking steps that would compromise its brand over the long term. The company is investing in parts of the business that enhance its value proposition, improve operations for employees and guests, and increase customer access over the longer term. Those moves will make the business stronger. When this slowdown eventually lifts, Chipotle should accelerate faster on the back end of it.

ANDREW: It’s interesting — we’re tight for time — but the company says it skews younger, and you touched on that. Normally, for a business, that’s great because you hope to keep those people for life. But in the short term, it sounds like it’s hurting because young people are under economic pressure.

JON: Yeah, it seems like higher youth unemployment is a factor. Another thing to watch is immigration and birth rates in the U.S. If you look at population trends, the number of people born in the U.S. peaked around 2007 and has been moving lower. That’s when a lot of these consumers start moving into their peak restaurant spending years. So that’s another headwind the industry will face over the next several years.

When you think about where to place investments going forward, it’s with brands that continue to resonate with those consumers — and I think Chipotle is doing a lot with its business to do that.

ANDREW: Jon, thanks very much. Jon Tower, restaurant analyst at Citi Research.

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This BNN Bloomberg summary and transcript of the Oct. 30, 2025 interview with Jon Tower are published with the assistance of AI. Original research, interview questions and added context was created by BNN Bloomberg journalists. An editor also reviewed this material before it was published to ensure its accuracy and adherence with BNN Bloomberg editorial policies and standards.