Chipotle plans 4% menu increase in August

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Diving Brief:

  • Chipotle plans to raise menu prices in August by about 4% to help offset inflation, particularly of dairy, tortillas and wraps, as well as additional wage pressures nationwide, it said Tuesday. CFO Jack Hartung. during the company’s second quarter earnings call.
  • The company expects mid- to high-single-digit mid-single-digit sales growth in the third quarter following this expected menu price increase, CEO Brian Niccol said. Restaurant comparable sales increased 10.1% during the second quarter of 2022.
  • Chipotle previously raised menu prices in December, also by 4%. The menu prices were about 10% higher overall in 2021 compared to 2020.

Overview of the dive:

Menu price increases have helped Chipotle offset additional costs across the board, particularly the cost of avocados, wrappers, dairy, beef and chicken, Hartung said.

These price increases also help pay for additional labor costs, which are expected to be approximately 25% in the third quarter. Chipotles Second-quarter operating costs fell 90 basis points to 14.3% due to higher menu prices as well as lower delivery costs, Hartung said.

The chain has seen little reaction from customers to past price changes, Hartung told investors during Chipotle’s first quarter call. BTIG expects Chiptole menu prices to be more than 20% higher by the end of 2022 than they were at the end of 2020, the company said in a report sent by e e-mail Restaurant Dive.

A separate July BTIG Report revealed that even with Chipotle’s price increases, the chain was still 10.7% and 9.2% cheaper, respectively, than Qdoba and Moe’s Southwest Grill. Even though the pace of price increases is four to five times higher than normal, BTIG still sees Chipotle as the value leader in the Mexican fast casual segment.

“Our pricing power is strong and the brand resilient,” said Niccol. “I really believe that the value proposition that we’re selling today is our strongest proposition. We looked at that very carefully. When you look at a chicken burrito, a steak burrito, and compare it to your alternatives, the value is there.

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