Shares of Chipotle Mexican Grill (NYSE: CMG) have plunged more than 18% in premarket trading Friday, following Thursday’s second-quarter report that indicated a slowdown in customer traffic growth.
The fast-casual restaurant operator reported that net income rose to $81.7 million, or $2.56 per share, compared with $50.7 million, or $1.59 per share, in the same quarter a year earlier. And revenue rose 20.9% year-over-year to $690.9 million. While the bottom line beat consensus estimates, the top line fell short of expectations.
Slower U.S. consumer spending have hurt the company’s sales as the year proceeds. And the severe drought in the United States likely will increase food costs later this year and next.
This morning, UBS lowered its price target on Chipotle to $355 from $443 following Q2 results, citing expectations for weaker same-store sales growth and rising food costs.
Chipotle was the best-performing restaurant stock in the Standard & Poor’s 500 Index last year, a standard it may be unable to live up to this year. It closed Thursday at $403.86. Year to date, the stock is more than 18% higher — so far.