- Chipotle could raise menu prices again, it said Tuesday.
- It already raised its prices by 4% in June.
- Rising labor and supply chain costs are putting pressure on retailers and manufacturers.
Chipotle isn’t ruling out another price hike this year.
In a call with investors Tuesday, the burrito chain’s executives said it may still raise prices to offset ongoing and rising labor, ingredient, and supply chain costs.
“There’s still that possibility that we could take additional pricing action to fully close the gap,” CEO Brian Niccol said. “I just think there’s so much going on right now with inflation and the question about whether inflation is transitory or permanent. We’ve got labor inflation. We took a big move there. We’ll see how that shakes out. And now we’ve got the Delta variant as well. There’s just a lot of unknowns.”
As for timing, CFO John Hartung said it would take months to get the full picture of inflation currently affecting the US economy.
“Let’s see what happens to inflation, and let’s see what happens to the economy over the next several months, and we’ll make the appropriate decisions at the appropriate time,” he said.
Chipotle raised its menu prices by 4% in June, shortly after putting its minimum hourly wage up to $15. This means that the average Chipotle meal now costs 30 to 40 cents more.
So far, consumers are responding well to these hikes, Hartung said. The chain is “seeing no resistance whatsoever” to price changes, he said.
This is reflected in the sales numbers. Same-store sales at the burrito chain were up 31% in the most recent quarter versus the quarter before as dining-in sales picked up as customers gradually return to normal life.
With ongoing uncertainly around labor and supply chain woes dragging on, many retail chains and manufacturers are having to raise prices to offset these expenses.
The Bureau of Labor Statistics’ June Consumer Price Index showed that prices surged 0.9% from May. The highest month-over-month change since April 2008.
Chipotle has also not been immune to labor pressure facing restaurants and other services industries. In May, the chain raised its average wage to $15 an hour and announced plans to hire 20,000 workers.