Chipotle plans to hike menu prices again, citing inflation
Chipotle Mexican Grill is jacking up its menu prices, citing higher costs linked to surging inflation.
The restaurant chain plans to raise prices a little more than 6% this year, CEO Brian Niccol told Wall Street analysts in an earnings call on Tuesday. Chipotle also hiked its prices by 4% in December, with its offerings now about 10% more costly than they were only a year ago.
"It's really the last thing we want to do, but we're fortunate that we can pull it off," the executive said of its pricing moves and customer behavior. "We see no resistance to date with the levels that we're currently at."
Chipotle's costs have increased in recent months, especially for labor, freight, beef and avocados, both Niccol and Chief Financial Officer John Hartung said during the call.
Beef prices have jumped more than 20% over the past year, as companies including Tyson Foods protect their bottom lines by passing along higher grain, labor, transportation and other costs. Overall, the Consumer Price Index, which tracks the price of a broad range of goods and services, rose 7% last year — the fastest pace of inflation in nearly 40 years. The Labor Department releases its latest inflation readout Thursday.
"We keep thinking that beef is going to level off and then go down. It just hasn't happened yet," Niccol said.
Peter Boockvar, chief investment officer at Bleakley Advisory Group, thinks inflation is likely to continue at least for the next few months before cooling later this year.
"Inflation will top out in the coming months, and many of the intense pressures will ease this year, but at least right now and until demand really falters, we will still see widespread increases in prices that won't total just 1-2% year-over-year. It will be higher," he said in a note to clients.
Other large restaurant chains have also lifted their prices, passing costs along to consumers. McDonald's raised its menu prices by about 6% last year, helping the burger chain offset a spike in food and paper costs. Starbucks is also planning to hike prices this year, which would be the coffee chain's third increase since October. At Little Caesars, its signature Hot-N-Ready pizza now sells for $5.55, an 11% increase.
Prices have risen sharply in the past year as Americans have spent freely, helped by large stimulus checks in the spring and higher pay. Spending on autos, electronics and other goods climbed 12% in 2021, the government recently reported, the biggest increase since 1946.