Chipotle is struggling to retain its younger clientele as many scale back on eating out amid financial worries and an uncertain economy, according to the company’s CEO.
Younger millennials and Gen Z, who once made up a quarter of the Mexican fast-casual chain’s sales, are dining out less overall due to rising student loan payments, unemployment and wages that haven’t grown to keep up with inflation.
As these younger consumers, ages 25 to 35, worry more about affording necessities, they’ve become less likely to splurge on a $15 burrito and pay extra for guacamole.
Chipotle’s customer traffic decreased over the three months ending September 30, and for a third consecutive quarter, the company cut its forecast for same-store sales growth, the chain said last week.
“They’re just eating with us less frequently, and they’re eating at home more often,” Chipotle’s CEO Scott Boatwright told the Wall Street Journal.
Chipotle’s shares have taken a dip since October 29, and are down about 47 percent so far this year, according to the report.
The Mexican-inspired eatery, popular amongst younger people due to being a “healthier” fast-food option, with a variety of customizable options including salads, burritos and bowls, is not the only fast-casual location to take a hit this year. Stocks of salad chains, Cava and Sweetgreen, have also declined ahead of the companies reporting earnings this week.
Some customers agreed with the Chipotle boss’s assessment of the situation. Sean Chopra, a 23-year-old student at the University of California, Los Angeles, said he used to order a Chipotle chicken and rice bowl several times a week – but has since opted to make his own Mexican-inspired dishes at home.
“It isn’t that difficult to replicate what you get there,” Chopra, who now eats at Chipotle only twice a month, told the Journal.
Some young people said they were becoming more money-conscious as they look for jobs in a tough market.
“This is directly linked to less spending among people my age,” said Jack Saia, a 21-year-old senior at Bentley University in Massachusetts. “There is more thought behind small decisions like eating out.”
Meanwhile, others said they now only order from Chipotle if they are given a coupon or there is some kind of promotion promising free guacamole or other extras.
Many young Americans are eating out less to save money. A recent survey by accounting firm PricewaterhouseCoopers found that, out of 1,000 Gen Z and teenage respondents, more than half said they planned to spend less at restaurants over the next six months.
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While Chipotle raised menu prices after the pandemic, it was largely able to hold onto many customers until recently, thanks to their patrons having higher incomes than those of other fast food chains, according to the report.
Currently a burrito bowl costs $14.95, whereas a “high protein bowl” with a double chicken portion runs customers a whopping $20.95. A salad costs $14.95 and a quesadilla is $15.65. Meanwhile, the chain’s beloved side of guac will run customers $3.85, or $6.45 to include chips.
Meanwhile, in 2015, customers could get two chicken bowls and one chicken burrito with guacamole for a little over $20, according to the New York Post. At the time, a side of guacamole cost $1.95.
Boatwright, the CEO, told the Journal that the company planned to increase promotions targeting younger consumers, including by introducing a rewards program for college students called Chipotle U.
The chain has also started rolling out deals for customers through digital games. Customers can now earn food by playing Chipotle-themed trivia, according to the report.
Despite many stepping back, some regulars have taken notice of the brand’s efforts to retain customers. Spencer Winston, 26, a self-proclaimed “Chipotle Boy,” said that recent deals have kept him going back for his burrito bowl.
“It honestly felt like Chipotle was paying attention to its regulars,” he told the outlet.
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