Latest news with #AdamRymer
Reuters
4 days ago
- Business
- Reuters
Stressed US low-income shoppers hunt for smaller packs, restaurant meals under $5
August 7 (Reuters) - Lower-income U.S. households are cutting back on eating out, travel and pantry staples like diapers, soda and beer, as U.S. tariffs on imports are set to push prices even higher, said executives from Procter & Gamble (PG.N), opens new tab, Coca-Cola (KO.N), opens new tab and Chipotle Mexican Grill (CMG.N), opens new tab. Consumers are increasingly seeking bargains, according to earnings reports and executive commentary from the past two weeks. Industry experts expect profit margins to shrink as companies find they can no longer rely on price hikes to boost revenue. U.S. President Donald Trump's tariffs have already pushed up prices on some of P&G products, the company has said. The tariffs, which importers are tending to pass on to consumers, are most likely to hit the poorest Americans worst, said policy researchers at the Budget Lab at Yale, opens new tab and the Foundation for Research on Equal Opportunity, opens new tab. "It does feel like there are certain cohorts of the consumer, definitely on the lower-income side, that are feeling pressure right now," Chipotle Mexican Grill Chief Financial Officer Adam Rymer told Reuters. Definitions of "low income" can vary widely, and depend on the number of dependents or children in a household and where consumers live. Bank of America (BAC.N), opens new tab, the second biggest U.S. consumer-facing bank, in research notes has described earners of $50,000 or less as "lower income," and more likely to be living paycheck to paycheck. However, Chipotle, with its $10 burritos, has a benchmark of $75,000 or less. Coke has previously said "low-income" is less than $40,000 per year, while P&G did not immediately respond to questions about its definition. Chipotle will consider the financial burdens on its lower-income consumers when weighing future price hikes, Rymer said. Consumer products bellwether P&G struck a cautious tone in its forecast for its upcoming fiscal year, saying shoppers across incomes were reining in spending due to Trump's tariffs and immigration crackdown, along with rising interest rates and inflation. Coca-Cola (KO.N), opens new tab is marketing more affordable sodas to lower-income consumers, CEO James Quincey said, and brewer Molson Coors (TAP.N), opens new tab added that such buyers are looking for smaller pack sizes. Consumers have been tightening their wallets as inflation ticks up and companies raise prices on everyday purchases like Hershey (HSY.N), opens new tab chocolate and Tide laundry detergent. Cuts to federal food assistance programs are also looming. Savings consumers might have managed to sock away during the pandemic are now long gone. "Re-engaging the low-income consumer is critical as they typically visit our restaurants more frequently than middle- and high-income consumers," said McDonald's (MCD.N), opens new tab CEO Chris Kempczinski. Visits from lower-earners across the fast food industry declined by a double-digit percentage from last year, and weaker jobs growth in July made them even more anxious, he noted. Consumer caution is also reflected in big spending events such as back-to-school shopping, which is now underway, said Dana Telsey, analyst at Telsey Advisory Group. Lower-income household credit card spending declined in the three months to June from the year-ago period, even as middle- and upper-income spending rose, Bank of America data showed. One of the few positives is a steady labor market. That has helped keep the worst of the impact at bay, analysts and executives have said. To attract consumers with tight budgets, fast-food chains are bundling select menu items at around $5, but lower-income households seek even better deals. McDonald's said sales of its reintroduced $2.99 snack wrap were "encouraging." Taco Bell introduced $1 to $3 items like fountain sodas and burritos this year, helping demand at the Tex-Mex chain remain robust, but sales for pricier pizzas and fried chicken buckets at Pizza Hut and KFC were weak, according to Yum Brands' (YUM.N), opens new tab earnings report this week. Packaged foods maker Kraft Heinz said it does not expect an improvement this year, and is working to keep prices lower, including introducing value-sized packages. "We also have a consumer who, unlike a few years ago when inflation was peaking, doesn't have savings built up in the same way that they did in 2022 and 2023," said Katherine Cullen, vice president of industry and consumer insights at trade group NRF. "We see that particularly among lower-income consumers." German shoemaker Adidas ( opens new tab said it would have to consider the sales impact of higher prices, aimed at offsetting tariffs, on its sneakers. "We do anticipate further consumer (spending) cooling in the second half as ... tariff effects play through," Citigroup Chief Financial Officer Mark Mason said in a call with reporters.
Yahoo
26-07-2025
- Business
- Yahoo
Chipotle drives more customers to loyalty program as comparable sales slide
This story was originally published on CX Dive. To receive daily news and insights, subscribe to our free daily CX Dive newsletter. Dive Brief: Chipotle's emphasis on digital experience is paying off for its loyalty program, executives said on a Q2 2025 earnings call Wednesday. Digital sign-ups for the loyalty program increased 14% year-over-year, boosted by the launch of the 'Summer of Extras' gamified program, CEO Scott Boatwright said. The fast-casual restaurant chain also updated its app to provide a more seamless experience with personalized offers. Dive Insight: Despite success in digital, Chipotle saw a 4% decline in comparable sales during the quarter, continuing a streak of negative same-store sales that began last quarter. The fast-casual restaurant was hit by consumer sentiment and confidence 'bottoming out' in May, CFO Adam Rymer said. Still, revenue increased 3% year over year to $3.1 billion, according to its earnings report. Digital sales made up 35.5% of total sales. As the company looks to return to mid-single-digit comparable sales, Chipotle must execute across five strategies, including delivering an exceptional digital experience, Boatwright said. Creating an end-to-end frictionless user experience within the app drives the top of the funnel, while the loyalty program encourages repeat spend. 'To drive more people into our loyalty program, we are ramping up our enrollment campaigns and signage, both in restaurant and digitally,' Boatwright said. Executives are encouraged by results from Summer of Extras, a three-month gamified experience with extra points, badges and prizes. The program targets low-frequency users, the cohort of customers Boatwright sees 'most at risk.' The program drove more people into the rewards program and increased their frequency and spend year over year. 'The Summer of Extras promotion really engaged that consumer in a meaningful way and caused them to transact with us more frequently over June, July,' he said. Chipotle is planning another program to target college students in the fall and is taking the lessons learned from Summer of Extras to potentially inform an evergreen program. About 20 million rewards members are active or have made a transaction at least once in the past year, according to Boatwright.
NDTV
24-04-2025
- Business
- NDTV
Tariff Turmoil: Impact On Tesla And Other Companies
New York: Uncertainty over tariffs and an unpredictable trade war is weighing heavily on companies as they report their latest financial results and try to give investors financial forecasts. Some tariffs remain in place against key US trading partners, but others have been postponed to give nations time to negotiate. The tariff and trade picture has been shifting for months, sometimes changing drastically on a daily basis. Those shifts make it difficult for companies and investors to make a reliable assessment of any impact to costs and sales. On Tuesday, Treasury Secretary Scott Bessent said he expects a "de-escalation" in the trade war between the US and China, but cautioned that talks between the two sides had yet to formally start. Here's how several big companies are dealing with the tariff confusion: Chipotle Chipotle Mexican Grill said Wednesday that its costs are rising due to the tariffs. The Tex-Mex chain said it gets some beef from Australia and packaging from Vietnam, Indonesia and Thailand. It also sources avocados from Colombia and Peru. All are now subject to a 10% tariff. The tariffs may also impact the cost of building new restaurants, since items like shelving and parts for equipment come from China, Chipotle Chief Financial Officer Adam Rymer said during a conference call with investors. But Rymer said the impact of the tariffs on imports from China is harder to predict. This week, Trump administration officials have said they expect a "de-escalation" in the trade war between the US and China. Chipotle reported weaker-than-expected revenue in the January-March period and lowered its outlook for full-year same-store sales. CEO Scott Boatwright said concern about the economy was the "overwhelming reason" consumers reduced their visits to Chipotle during the quarter. That trend has continued through April, he said. Tesla Tesla is in a better position than most car companies to deal with tariffs because it makes most of its US cars domestically. But it still sources materials from other nations and will face import taxes. The bigger impact will be seen in the company's energy business. The company said the impact will be "outsized" because it sources LFP battery cells from China. The broader trade war could also hurt the company as China, the world's largest electric vehicle market, retaliates against the U.S. Tesla was forced earlier this month to stop taking orders from mainland customers for two models, its Model S and Model X. It makes the Model Y and Model 3 for the Chinese market at its factory in Shanghai. CEO Elon Musk, an adviser to President Donald Trump, on Tuesday reiterated that he believes "lower tariffs are generally a good idea for prosperity." But he added that ultimately the president decides on what tariffs to impose. Akzo Nobel The Amsterdam-based maker of paints and coatings for industrial and commercial use said the big risk from tariffs could come in the form of lower demand for its products. The company said almost all sales of finished goods in the US were locally produced, with the majority of raw materials locally sourced. "Over the years, we deliberately localized both our procurement and production in the US," said CEO Gregoire Poux-Guillaume, in a conference call with analysts. "We also largely run China for China and use the rest of Asia instead as an export base." The company's products range from paints and coatings for the automotive industry to the do-it-yourself homeowner. Broader tariffs could squeeze consumers and businesses and hurt sales. Boston Scientific The medical device maker said it expects most of the effecs of tariffs to hit the company during the second half of the year, but that it can absorb the impact. The company raised its earnings and revenue forecasts for the year, despite the tariffs. It estimates a $200 million impact from tariffs in 2025, but said it can offset that through higher sales and reductions in discretionary spending. The company said it has a long-standing supply chain around the globe and has made significant investments in the US Boeing Boeing said much of its supply chain is in the US and many of its imports from Canada and Mexico are exempt from tariffs under an existing trade agreement. The company does have suppliers in Japan and Italy, but it expects to recover those tariff costs. The net annual cost of higher tariffs on the supply chain is less than $500 million. A bigger concern is the potential for retaliatory tariffs, which could impact its ability to deliver aircraft. China, a key target for U.S. tariffs, has retaliated in part by no longer accepting deliveries of Boeing aircraft. AT &T AT&T, like its peers in the telecommunications sector, faces higher costs for cellphones and other equipment. The company said it believes it can manage anticipated higher costs, based on the current pause in some tariffs and its supply chain. "The magnitude of any increase will depend on a variety of factors, including how much of the tariffs the vendors pass on, the impact that the tariffs have on consumer and business demand," said CEO John Stankey, on a conference call with analysts.
Yahoo
24-04-2025
- Business
- Yahoo
Chipotle Mexican Grill Inc (CMG) Q1 2025 Earnings Call Highlights: Navigating Growth Amid ...
Revenue: $2.9 billion, a growth of over 6% year over year. Comparable Sales: Decline of 0.4%. Digital Sales: Represented 35.4% of total sales. Restaurant Level Margin: 26.2%, a decrease of 130 basis points year over year. Adjusted Diluted Earnings Per Share: $0.29, representing 7% growth over last year. New Restaurant Openings: 57 new restaurants, including 48 Chipotles. Cost of Sales: 29.2%, an increase of about 40 basis points from last year. Labor Costs: 25%, an increase of about 60 basis points from last year. Marketing and Promo Costs: 3% of sales in Q1, an increase of about 10 basis points from last year. Cash and Investments: $2.1 billion with no debt. Share Repurchase: $554 million of stock purchased at an average price of $54.15. Warning! GuruFocus has detected 2 Warning Sign with SNT. Release Date: April 23, 2025 For the complete transcript of the earnings call, please refer to the full earnings call transcript. Chipotle Mexican Grill Inc (NYSE:CMG) reported a sales growth of over 6% to reach $2.9 billion in the first quarter. The launch of Chipotle Honey Chicken has been successful, driving incremental transactions and receiving positive guest feedback. The company opened 57 new restaurants in the quarter, with plans to open between 315 and 345 new restaurants this year. Chipotle Mexican Grill Inc (NYSE:CMG) is investing in technology and innovation, including the rollout of produce slicers and a new equipment package to improve efficiency. The company maintains a strong balance sheet with $2.1 billion in cash and no debt, allowing for continued investment in growth and innovation. Comparable sales declined by 0.4% in the first quarter, indicating a slowdown in consumer spending. Restaurant level margin decreased by 130 basis points year over year to 26.2%. The company faces headwinds from inflation and higher usage costs, particularly in avocados, dairy, and chicken. Chipotle Mexican Grill Inc (NYSE:CMG) is experiencing a slowdown in underlying transaction trends due to consumer uncertainty and economic concerns. The impact of tariffs on cost of sales and new store builds remains uncertain, potentially affecting margins and capital expenditures. Q: What gives you confidence that fast casual competition won't impede your target for positive traffic in the back half of this year? A: Scott Boatwright, CEO, stated that Chipotle's strong value proposition, unmatched speed, and brand strength give confidence. Despite competition, Chipotle often sees increased traffic and garners more than its fair share when competitors open nearby. Q: How should we think about the impact of tariffs on new starts or CapEx? A: Adam Rymer, CFO, mentioned that the impact of tariffs on new store builds is still in flux, but they anticipate a mid-single-digit increase. However, recent news suggests this percentage could decrease, potentially minimizing the impact on new store returns. Q: Are you seeing any fundamental change in consumer behavior, or is it just difficult comparisons? A: Scott Boatwright, CEO, noted that consumer spending is impacted by economic uncertainty, leading to reduced restaurant visits. However, Chipotle's brand remains strong, and the slowdown is attributed to a combination of factors, including tough comparisons and macroeconomic conditions. Q: Is there room to increase marketing spend if returns are positive? A: Scott Boatwright, CEO, indicated that they have ramped up marketing spend for the summer to maintain relevance. They are focused on return on ad spend and exploring digital and social channels to reach consumers effectively. Q: How did you diagnose that the slowdown was macro-related and not specific to Chipotle? A: Scott Boatwright, CEO, expressed confidence in the brand's strength, citing strong KPIs and consumer perception. The slowdown is believed to be primarily macro-related, as internal metrics and consumer studies show no specific issues with Chipotle. Q: What are the trends in your international markets, particularly Canada and the UK? A: Scott Boatwright, CEO, reported strong performance in Canada with US-level margins and plans for growth. In Western Europe, they are seeing improved restaurant-level margins and are exploring development opportunities in Central London and Germany. Q: Are you considering more frequent LTOs (Limited Time Offers) in the future? A: Scott Boatwright, CEO, mentioned that while Chipotle is not an LTO-driven brand, they may consider up to three LTOs in the future to maintain consumer engagement and avoid asking LTOs to work too hard over extended periods. Q: What impact do you expect from the high-efficiency kitchen equipment package? A: Scott Boatwright, CEO, stated that they are testing the equipment package in 100 additional restaurants. While they anticipate margin savings, they are still determining how much will be reinvested into the consumer experience versus captured as margins. For the complete transcript of the earnings call, please refer to the full earnings call transcript. This article first appeared on GuruFocus.
Bloomberg
09-02-2025
- Business
- Bloomberg
Chipotle's Avocado Worries Could Be Yours Too
The burrito chain's CFO talks tariffs and inflation. Plus, a look at why convertible debt makes sense right now. By Save Welcome to CFO Briefing, a newsletter devoted to corporate finance and what leaders need to know. This week, I talk to Adam Rymer, Chipotle's new CFO, about tariffs, avocados and more, and take a closer look at the recent increase in convertible bonds. But first, here's some other news that caught my eye:
