FILE PHOTO: The logo of Chipotle is seen on one of their restaurants in Manhattan, New York City, U.S., February 7, 2022. REUTERS/Andrew Kelly/File Photo

By Savyata Mishra

(Reuters) -Chipotle Mexican Grill on Wednesday cut annual sales forecast for the third time this year, warning that consumer spending on dining out is likely to remain under pressure through early 2026, sending its shares down 15% after the bell.

U.S. households earning less than $100,000 a year, which make up about 40% of Chipotle's sales, have pulled back sharply, executives said. Customers aged 25-35 years were particularly pressured, owing to rising unemployment, resumed student loan payments and sluggish wage growth, CEO Scott Boatwright said.

President Donald Trump's shifting trade policies, persistent inflation and growing fears of a prolonged U.S. government shutdown have rattled consumer confidence in recent months, hurting even higher-income consumers.

Tariffs and surging costs of beef, Chipotle's largest commodity, have fueled inflation, with executives saying the company would take a "slow and measured" approach to price hikes in 2026 rather than fully offset cost pressures.

"While the move will pressure margins, we think it's the right thing to do," Chief Financial Officer Adam Rymer said on a post-earnings call.

Chipotle also flagged issues with digital order accuracy, ingredient availability and cleanliness, based on an internal survey. The company is retraining staff and tweaking bonus incentives to bolster customer experience and digital execution.

"Even though Chipotle has long argued it offers strong value given its high-quality ingredients, many consumers aren't buying it," Emarketer analyst Zak Stambor said.

Third-quarter comparable restaurant sales at the burrito chain rose 0.3%, compared with analysts' estimate of a 1.36% rise, according to data compiled by LSEG.

Adjusted earnings per share came in at 29 cents, in line with the estimate, while restaurant level margin fell to 24.5% from 25.5% a year ago.

The company expects 2025 comparable restaurant sales to decline in the low-single digit range, compared with prior forecast of about flat.

(Reporting by Savyata Mishra in Bengaluru; Editing by Shilpi Majumdar)