Chipotle’s CEO just shared the reason why sales have been down. Many fast food fans will relate

Chipotle Mexican Grill announced its second-quarter financial results on Wednesday, July 23, and the news isn’t great.

The fast casual restaurant chain failed to reach its quarterly sales estimates and reduced its targeted annual sales growth. Chipotle reported net income of $436.1 million (32 cents per diluted share), a decrease from $455.7 million (33 cents per diluted share) year-over-year (YOY). 

In premarket trading, Chipotle’s stock price (NYSE:CMG) has plummeted over 12% since the market closed Wednesday night. 

While Chipotle reported a 3% increase YOY in total revenue, it credited the $3.1 billion sum to the opening of 61 new restaurants. In reality, restaurants saw comparable sales drop 4%, thanks to smaller bills. Wall Street had predicted a 2.9% decrease, according to consensus estimates cited by CNBC. 

What’s eating American diners?

In a post-earnings investors meeting, Chipotle CEO Scott Boatwright blamed “ongoing volatility” in consumer environment trends. 

“Much of what we’re experiencing right now is due to macro and the consumer. The low-income consumer is looking for value as a price point at present,” Boatwright stated.

Tariffs are also a factor, with Chipotle estimating a 0.5% rise in cost of sales. 

Chipotle’s decline is part of a broader trend. Fast food restaurants saw a 0.9% decrease in traffic YOY during quarter two, according to a report published this month by Revenue Management Solutions (RMS). 

At the same time, prices at these quick-service restaurants increased by 1.3% YOY—though this is less than quarter one’s 3.1% increase. Meanwhile, the average bill at Chipotle increased by 0.9%.