Chipotle Is Getting This Much More Expensive In August
Chipotle will stay the course with its strategy of higher pricing as customers continue to come back for more, according to the chain's latest earnings call.
The fast-casual said it expects its menu prices to increase by 4% in August and by the end of 2022, your go-to burrito bowl will be about 20% more expensive than in 2020, according to Restaurant Dive.
Meanwhile, the chain's revenue grew 17% in the most recent quarter with the help of dine-in sales, which increased by almost 40% as diners returned to restaurants in the post-pandemic era.
So why is Chipotle increasing prices again? The move is intended to offset continued inflationary pressures related to the cost of ingredients. Avocados, dairy, beef, chicken, and even the company's packaging have all continued to go up in price, CFO Jack Hartung said on the July 27 earnings call.
In 2021 the chain implemented an 8.1% price increase and at the beginning of this year, a 10.5% increase was also attributed to offsetting wage pressures and growing food costs.
However, although Chipotle may be making headlines with its price hikes, it is far from being the most expensive place to grab a burrito. Compared to its rivals, Qdoba, Moe's Southwest Grill, and Baja Fresh, it's still the cheapest option—about 10% cheaper than Qdoba and Moe's and 5% cheaper than Baja Fresh–which makes it a "value leader" in the Tex-Mex category.
Chipotle CEO Brian Niccol believes that the brand will maintain an edge over its competitors, despite the price hikes.
"I really believe the value proposition that we sell today is our strongest proposition. We looked really hard at this. When you look at a chicken burrito, steak burrito and you compare that to your alternatives, the value is there," Niccol said on the call.