Chipotle said it’s raising its menu prices by 2%, a rare direct admission about the impact of ongoing price increases in the economy on its finances.
“For the first time in over a year, we have taken a modest price increase of approximately 2% nationally to offset inflation,” Laurie Schalow, Chipotle’s chief corporate affairs officer, said in a statement.
The comment came, in part, as a response to an analyst report by Truist Securities financial group that observed the 2% increase at 20% of Chipotle locations surveyed.
Chipotle is in a period of transition after the exit of CEO Brian Niccol, who was poached by Starbucks in August. Shares of Chipotle dropped on the news of Niccol’s departure but have since climbed 23% and are up about 42% year to date.
While Chipotle has enjoyed consistently strong earnings in recent quarters, it missed revenue forecasts in its most recent financial report. While it said traffic had remained steady — which the Truist analysts are also seeing in data on card spending — overall demand showed signs of slumping.
Chipotle also acknowledged higher food costs that came as it responded to viral online complaints about shrinking portion sizes.
Dining out has generally become more expensive in recent years. The price of food away from home as measured by the Bureau of Labor Statistics has soared more than 28% since spring 2020, when the Covid-19 pandemic roared to life in the U.S.
Many restaurants have had high turnover alongside increasing costs for ingredients during that time — yet they have continued to enjoy strong earnings as consumers proved willing, in selected cases, to accept the higher prices if they believed they were getting good value.
In the case of Chipotle, Truist said, it is raising prices “from a point of strength,” meaning traffic continues to be steady, according to Truist’s proprietary card-spending data. Chipotle’s overall operating costs, meanwhile, remain largely in check.
Food prices are notoriously volatile. According to the Agriculture Department, wholesale poultry prices were 4.5% lower in October than in October 2023, and wholesale poultry prices are predicted to decrease 0.6% on net this year.
Yet prices for beef and veal were 1.9% higher in October than in October 2023 and are predicted to increase faster than most other meat categories in 2024 “due to tight supplies and continued demand.”