Whether it’s for a burrito, guacamole, or something else, diners have consistently gone out to eat at Chipotle Mexican Grill (NYSE: CMG) more and more over the last 10 years. Of course, there was an exception to this trend at the outset of the COVID-19 pandemic — comparable sales were down nearly 10% in the second quarter of 2020. But that was understandable. After all, people were being told to stay home to slow the spread of the virus at the time.
Chipotle’s comparable sales have increased year over year in every quarter since the second quarter of 2020. That is, they had increased until the first quarter of 2025, which is the most recent quarter. In Q1, comparable sales fell by less than 1%, which is small. But they did fall nonetheless.
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Investors need to understand why sales are dropping for Chipotle in 2025. Only when they know what’s happening can they figure out what to do about it.
On one hand, the recent drop in sales per restaurant location isn’t unique to Chipotle. For example, Domino’s Pizza reported financial results for the first quarter of 2025 on April 28, showing a similar drop in comparable sales. In short, consumers are increasingly stretched thin and they’re cutting back on eating out.
On the other hand, Chipotle might have a problem of its own to deal with as well. In Q1, transactions at the company’s restaurants dropped by more than 2% year over year. For perspective, they rose by more than 5% in 2024. In other words, Q1 sales fell less than transactions because the company is making up the difference by charging higher prices.
Higher menu prices in a sputtering economy could explain why Chipotle’s transactions are quickly trending the wrong way. And it’s a trend that’s expected to continue, at least for a while.
Chipotle’s management says that the second quarter had a tepid start from a transaction standpoint, but it hopes trends will improve late in the quarter before turning positive in the back half of the year.
Assuming that uncomfortably high prices are contributing to its sales struggles, Chipotle is in a challenging spot for the near term. If menu prices still rise, it could deter people from eating out at Chipotle. Outright lowering prices rarely happens in the restaurant world. But promotional activity is a common way to stimulate traffic. And if Chipotle chooses this approach, it could hurt the company’s profit margins instead.
