The slop bowl recession just sent Chipotle’s stock cratering
Chipotle dropped 18% yesterday, and its woes weighed on the wider slop bowl complex, dragging Cava and Sweetgreen down, too.
For a long time, the slop bowl and burrito scene has been a gold mine for Chipotle. But now, with competition rising and wallets getting lighter, consumers are turning away from Chipotle’s burritos and bowls.
The company posted just 0.3% growth in its same-store sales yesterday, while simultaneously cutting its outlook for the full year: the chain now expects sales to fall in the “low single-digit” percentages for this year. That news not only burned Chipotle itself, which sank 18%, but also hurt rival bowl sellers Cava and Sweetgreen, which fell 11% and 10% as of yesterday’s close, respectively.
How long such a downturn will last is hard to tell — we’ll hear from Cava and Sweetgreen on November 4 and 6 about how their sales are faring — but with comparable-store sales growth dipping below zero for two of the three companies this year, it’s hard to come to any other conclusion than: we are in a slop bowl recession. Indeed, if you were to subtract inflation from each of these companies’ growth rates, they’d all be well in the red.
Not very bowl-ish
That continued drop comes in stark contrast to fast-casual counterparts Shake Shack and Burger King owner Restaurant Brands International, which gained on Thursday after posting better-than-expected growth in established stores, despite facing the same consumer challenges.
Per Chipotle’s latest earnings call, the deciding factor might have been the youngsters — with the CEO Scott Boatwright commenting that customers in their late 20s and early 30s are “particularly challenged” due to unemployment, student loan debt, and slower wage growth.
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