Chipotle stock craters: young people without jobs cannot afford their food

Chipotle (CMG) on Wednesday cut its full-year sales outlook for the third straight quarter as the company continues to deal with a traffic decline and economic pressure on its core customer, particularly young people.

CEO Scott Boatwright said in the company's earnings release that the chain continues to see "persistent macroeconomic pressures."

On a call with analysts, the executive expanded on this idea, noting that Chipotle is "over-indexed" to a younger consumer, who he said are particularly under pressure.

"A particularly challenged cohort is the 25- to 35-year-old age group," Boatwright said. "This group is facing several headwinds, including unemployment, increased due loan repayment and slower real wage growth."

In August, the unemployment rate for Americans ages 20-24 stood at 9.2%, up from 7.9% a year ago.

Boatwright said the pullback in all income cohorts seen earlier this year has now widened, "with low- to middle-income guests further reducing frequency." Households that make $100,000 or less make up about 40% of its total sales.

He later added that Chipotle expects the first quarter to "be the toughest" for middle- and low-income consumers, meaning the company is expecting to endure several more months of pressure on sales attributable to younger, poorer customers who aren't eating there as often.

Chipotle stock fell as much as 19% on Thursday following the results.

The company said in its third quarter earnings release that it now expects same-store sales to decline in the low-single-digit range this year. This marked the third consecutive quarter the company cut its sales outlook.

Wall Street expected the company's same-store sales to decline 0.7% this year, which was below Chipotle's forecast in July for sales to be flat, but remained a more conservative drop-off than what the company had told investors.

In its third quarter, revenue at Chipotle came in $3 billion against $3.02 billion expected, according to Bloomberg data. Digital sales made up 36.7% of total food and beverage revenue.

Adjusted earnings per share of $0.29 were in line with the Street's expectations. Same-store sales grew 0.3%, less than the 1% expected. Higher menu prices and an increase in the average ticket size offset lower foot traffic in the quarter.

Boatwright said Chipotle is "doubling down on restaurant execution," increasing marketing spend, plans to create more digital experiences, and introduce more innovation.

"As we execute this plan, we are confident that we will return to consistent positive transaction growth," he said.