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Habit Burger plans 5.3% price increase to offset labor

The fast-casual burger chain is raising prices as it sees revenue and same-store sales increase while traffic falls.
Photograph: Shutterstock

The Habit Burger Grill plans to raise prices an average of 5.3% later this month to offset rising labor costs, the fast-casual burger chain’s executives said this week.

Prices will be highest in California, where the minimum wage in Los Angeles County rises to $14.25 an hour on July 1. Price hikes will be “less aggressive” in Habit Burger units outside of California, CFO Ira Fils told analysts during a call.

The Irvine, Calif.-based chain has logged significant price increases recently. Same-store sales grew 3.2% for the quarter ended March 26, while traffic fell 4.2%. A 7.4% increase in average ticket offset the falling traffic. Total revenue grew 17.6%, to $108.2 million.

Habit Burger regularly tracks the price of a burger, fries and a drink at quick-service and fast-casual chains, executives said.

“Our prices have been generally lower than our fast-casual competitors,” Fils said. “And that gap has actually widened a little despite our recent price increases. This gives us continued confidence that we offer everyday value.”

The chain is looking to grow traffic by boosting convenience. It added six new drive-thru locations during Q1, bring the chain’s total number of drive-thrus to 41.

A mobile app is being tested at 30 stores in three markets. Same-store sales via Habit’s website and app grew 23.7% in Q1, the chain said.

Habit Burger has installed ordering kiosks in eight locations and is noting higher check averages for orders placed on the devices.

Habit Burger offers delivery through Postmates at 225 units and systemwide through DoorDash. “We are getting great reviews from our guests and also continue to see higher check for delivery compared to our dining or carryout business,” CEO Russ Bendel told analysts.

 

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