Chipotle's Prices Will Continue to Rise, Company Says
Coming off a fourth quarter that beat market expectations, Chipotle revealed yesterday during its earnings call that its prices are likely to keep increasing as the cost of ingredients and labor continues to rise.
The Mexican chain upped the price of its food by 4% in December to offset the ongoing commodity inflation on items like beef and avocados, as well as transportation. Customers are spending about 10% more now than they were a year ago, and the company has already raised the cost of menu items by 6% in 2022 alone.
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According to Brian Niccol, Chipotle's CEO, prices will likely increase further this year, as he doesn't see inflation going away any time soon. Despite having to pay more for their meals, customers are showing "very little resistance," Niccol said.
Chipotle's price hikes initially started last spring when the chain implemented a 4% increase to cover the cost of higher employee wages. This made the average Chipotle meal about 30 to 40 cents more expensive. Niccol said this week that the higher pay has resulted in "better employee recruitment and retention," helping Chipotle "make progress on labor challenges."
Going forward, Chipotle plans to open between 235 and 250 restaurants in 2022. More than 80% of the new locations will have Chipotlanes—drive-thru lanes designed for digital-only orders. As far as Chipotle's long-term trajectory, Niccol said the chain expects to operate at least 7,000 locations in North America. This is up from the company's previous goal of 6,000 restaurants, which Niccol attributes to the financial success of restaurant locations in smaller towns.