Chipotle Plans to Raise Prices Again to Offset Inflation
Chipotle Mexican Grill is preparing to raise its menu prices once more in response to inflation. According to Laurie Schalow, Chief Corporate Affairs Officer at Chipotle, this will be the first price increase in over a year and is intended to offset the effects of inflation. However, the company has not disclosed the extent of the price hike.
In June 2021, Chipotle began raising its menu prices, citing the rising wages of its employees as a primary reason. It increased prices again during the early months of 2022 and once more in July of that year. These increases were prompted by the company’s efforts to manage rising costs.
However, Chipotle temporarily halted its price hikes when some customers reduced their restaurant spending, and ingredient costs stabilized. In April, Chipotle’s CEO, Brian Niccol, stated that the company had demonstrated its pricing power but would refrain from further price hikes. At that time, prices were approximately 10% higher compared to the previous year.
As Chipotle heads into its fourth quarter, the company has decided to reconsider its pricing strategy. The decision to raise prices comes in response to inflation that has been moderating, with prices of many goods and services continuing to rise but at a slower pace. In August, the 12-month consumer price index increased by 3.7%, down from 8.3% the previous year, as reported by the U.S. Bureau of Labor Statistics.
Chipotle’s stock has seen a 30% increase in value this year, giving the company a market capitalization of $50.1 billion. The company is expected to announce its third-quarter earnings on October 26.
These price increases align with broader trends in the restaurant industry, where many businesses have been raising their prices to cope with inflation and increased operating costs.
