By skyforbes Chipotle’s third guidance cut this year just exposed how fragile the fast-casual ecosystem really is. Margins are collapsing under tariffs, wage pressure, and consumer fatigue. DoorDash depends on those same restaurants and that same consumer base. When the restaurants break, the delivery app follows.
Thesis
1. Restaurant margin compression: Higher beef and labor costs are killing profitability. Restaurants are cutting promo and delivery budgets. DoorDash loses order flow and take rate.
2. Consumer fatigue: Menu prices and delivery fees have both hit the ceiling. Average DoorDash ticket sizes are flat while frequency falls.
3. California “Dasher Benefit” surcharge: California now forces DoorDash to tack on a $2-$5 fee per order to fund driver health benefits under Prop 22 revisions. That directly raises delivery sticker prices, which reduces conversion and order volume in the largest U.S. market.
4. Tariffs and inflation: Import costs and menu inflation keep food-away-from-home CPI elevated. There’s no sign of relief this quarter.
5. Sector sentiment: CMG’s miss signals a wider slowdown across quick-serve chains. Analysts will drag down estimates for DASH next.
Trade Logic
This position is a play on delivery elasticity breaking. Food inflation, California surcharges, and promo pullbacks will drive negative revisions for DoorDash. If sentiment turns and DASH trades under $240, this setup can triple fast.
TLDR
Chipotle cracked under the same cost structure DoorDash depends on.
The California surcharge just made delivery more expensive at the worst possible time.
The consumer is done, the restaurants are bleeding, and DASH is next in line.
BONUS ROUND EDIT:Somebody call Stephen Miller and tell him DoorDash’s labor force runs on borrowed logins and overstayed visas. I doubt enforcement lands before earnings, but if it does, it is game over for DoorDash.
Post Earnings Edit: I’m rich