The Newport Beach, California-based burrito-bowl chain reported sagging earnings Wednesday, including a 4% same-store sales decline and 4.9% dip in quarterly traffic. While Chipotle saw a 3% total revenue increase to $3.1 billion, the company cut its guidance, now expecting flat same-store sales growth for the year compared to its previous prediction of a low single-digit increase.

Chipotle CEO Scott Boatwright attributed the rough quarter—Chipotle’s second consecutive sales decline—in part to rocky economic conditions leading consumers to pull back. Chipotle’s same-store sales improved in June, and that’s likely to be the case for July as well, according to the company, but lackluster sales in April and May correlated with “consumer sentiment bottoming around that time.” 

Boatwright added consumers have seemingly forgotten that Chipotle, compared to its fast-casual rivals, is a bargain.

“I don’t think we’re getting credit with the consumer today,” Boatwright told investors on Wednesday. “So what I talked to the team about internally is, How do we better communicate our value proposition and center around the core equities of the brand?”

“I think we’ve got to figure out a way we can communicate value for the consumer and showcase the value we are to [quick-service restaurants] and fast-casual,” he added.

Boatwright claimed in the earnings presentation Chipotle is 20% to 30% cheaper than comparable fast-casual restaurants. He told Fortune in April the chain wouldn’t increase prices due to tariffs because “it’s unfair to the consumer to pass those costs off…because pricing is permanent.”

Changing perceptions of value

The CEO was firm in attributing Chipotle’s sales slump to external macroeconomic factors, telling investors, “There’s no smoking gun here that says we’ve had a misstep.” However, he said low-income consumers in particular are looking for value when choosing where to dine.

“Look no further than what’s going on with our competitors with snack occasions or five-dollar meals, and that’s where the consumer is drifting towards…because of low consumer sentiment.”

Indeed, fast-food giants like McDonald’s are continuing to offer meal deals amid softening sales, particularly as these restaurants have seen more traffic from high-income consumers while those on a budget pull away. As Chipotle similarly tries to compete in an environment of cautious consumers, it will need to focus on its public perception and sell itself as an affordable option, according to Raymond James restaurant analyst Brian Vaccaro.

“Over the last two years, the industry has gotten more aggressive on value promotions and messaging,” Vaccaro told Fortune. “There are certain brands that have a strong value proposition in the mind of the average consumer. But they didn’t effectively message that, and it caused them to lose some mind share.”

Olive Garden suffered this fate in 2024, Vaccaro said, when the fast-casual Italian chain’s parent company Darden Restaurants reported a pull back from customers making less than $75,000. 

“That could be something that’s happened to Chipotle, where their value almost gets taken for granted a little bit,” Vaccaro said.

In March, Olive Garden announced the return of its “buy one, take one” promotion—essentially a buy one, get one free deal—for the first time in five years. The restaurant group attributed a modest earnings beat in June in part to the return of the offer.

“Everyone knows Olive Garden is a good value,” Vaccaro said. “But if you’re not reminding the guests of that, they could get distracted and wooed away by all of these value promotions that are floating around.”