Chipotle stock trends downward while contending with rising menu prices, slowing sales growth

Same-stores sales for Chipotle fell in the most recent quarter as rising prices caught up with the company.

Video transcript

SEANA SMITH: We want to take a look at some of the top movers of the day as we round up today's trading day. Let's start with Chipotle. It was a huge mover after the bell yesterday. Shares today falling just about 5%. Investors digesting concerns over higher prices and their impact on customers. Here's what CFO Jack Hartung told Yahoo Finance about pricing earlier today.

JACK HARTUNG: We don't have any plans to dial the menu price increases back, but we don't have any plans to raise prices either. Frankly, Brian, in the last year and a half, inflation was just kind of in a runaway kind of mode. And we were just trying to keep up with it. What we are doing, though, is we've been watching very closely our customer reaction.

And most of our customers are coming the same amount of times or even more since we've taken some of these price increases. We are seeing some softness in our lower income customers, but we're also saying that they're spending less in restaurants generally, so it's not just a Chipotle thing.

SEANA SMITH: All right, it's not just a Chipotle thing. But when you take a look at these numbers, Pras, same store sales did miss, growing 5.6% compared to the estimate on the Street of 7%. So, clearly, it looks like there might be some pushback from their consumers about those higher prices.

PRAS SUBRAMANIAN: Yeah, some growth there, but transactions smaller. They're ordering fewer things, lesser priced items there. Cutting back on deliveries, they actually noted that, which is actually good for them because that's a positive impact on margins. They want higher foot traffic. Maybe you might see some people coming in more than actually ordering. Also noting that, [INAUDIBLE] that there's higher price, 100,000+ household income people coming in more so than the 70,000+ below income earners. So we're seeing a bit more of a switch in terms of the mix of people coming into Chipotle.

DAVE BRIGGS: Yeah, you're seeing those higher income trade down where you're seeing the 75k just can't afford. And that's probably why they are not continuing to raise those prices. Nothing more telling than this stat when you look at visits to Chipotle they down 10% in the quarter, where McDonald's is up 29% in the quarter. That's just a number of visits in Q4, which we talk a lot about what's happening with the macro economy, Seana.

I think that's the best look at it. They are trading down as we file in and talk about another company that has reported. It's Yum Brands as well. And who crushed it with Yum Brands? Taco Bell. Taco Bell did so well. Why? Because it is cheap. And even they said they're seeing $100,000 and up consumers trade down where you're seeing those $75,000 and under earners really go for their-- mark their combinations, their combos.

SEANA SMITH: Yeah.

DAVE BRIGGS: So that's, largely speaking, a great look at how these prices are impacting this year.

SEANA SMITH: A very good look. Their same store sales there at Taco Bell up 11%, smashing--

DAVE BRIGGS: Breakfast.

SEANA SMITH: --expectations. Breakfast was a huge hit.

DAVE BRIGGS: Breakfast did really well.

SEANA SMITH: It did.

PRAS SUBRAMANIAN: Taco Bell, 45 million Mexican pizzas sold, too.

SEANA SMITH: Wow, there we go.

PRAS SUBRAMANIAN: In only four months.

SEANA SMITH: Now you're talking our language, Pras.

DAVE BRIGGS: In four months?

PRAS SUBRAMANIAN: In only four months. Yeah, yeah, so really kind of killing it there with the Taco Bell.