Financing

Chipotle is raising its menu prices

The fast casual said the 4% bump is needed to cover rising labor costs. It’s one of many limited-service chains to up its prices since the pandemic began.
Chipotle Mexican Grill
Photo: Shutterstock

Chipotle Mexican Grill has raised its menu prices by about 4%, the chain’s CEO revealed at an investor event this week.

CEO Brian Niccol blamed the increase on higher labor costs in a tight hiring market.

“We really prefer not to take pricing,” Niccol said at the Baird 2021 Global Consumer, Technology & Services Conference. “But it made sense in this scenario to invest in our employees and get these restaurants staffed, and make sure that we had the pipeline of people to support our growth. And then with that, we’ve taken some pricing to cover some of that investment.”

Earlier this year, Chipotle noted it had raised its menu prices on delivery orders an average of 13% to make up for the hit its margins had taken because of the success of the off-premise channel.

At that time, Niccol said the chain was “testing a lot of different pricing levers.”

Chipotle is certainly not alone in its price increases.

Prices at limited-service restaurants jumped 6.2% during the pandemic, while full-service operations only took a 2.9% price hike, according to federal data.

Chipotle CFO Jack Hartung said he expects to see even more chains raising their prices to deal with higher wages.

“It feels like the industry is going to have to react,” Hartung said at the event. “It feels like the industry is now going to have to either do something similar or play some kind of catch up. Otherwise, you’ll just lose the staffing game. And if you lose the staffing game in this business, it’s not going to end well.”

Last month, Chipotle announced it would raise its average hourly pay to $15 by the end of June, up $2 an hour from the current rate. The move comes as the chain is looking to hire 20,000 new employees this year.

Chipotle also launched a $200 employee referral bonus for hourly workers and a $750 referral bonus for apprentices and general managers.

With the pay increase, Chipotle’s starting hourly wages will range from $11 to $18 an hour, the chain said.

The menu price increase was engineered to fully cover that wage boost, Hartung said.

“The intent there was to basically cover the dollar cost of the increase in wages,” he said. “Not to protect margin, but to cover the dollar cost. We’ll see how the rest of the year unfolds … see what our margins do.”

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Technology

4 things we learned in a wild week for restaurant tech

Tech Check: If you blinked, you may have missed three funding rounds, two acquisitions, a “never-before-seen” new product and a bold executive poaching. Let’s get caught up.

Financing

High restaurant menu prices mean high customer expectations

The Bottom Line: Diners are paying high prices to eat out at all kinds of restaurants these days. And they’re picking winners and losers.

Financing

Podcast transcript: Puttshack CEO Joe Vrankin

A Deeper Dive: The chief executive of the minigolf-centric restaurant chain discusses how the chain focuses on higher-quality games and food.

Trending

More from our partners