- Chipotle plans to increase menu prices in August by about 4% to help offset inflation, especially from dairy, tortillas and packaging, as well as from additional wage pressures around the country, CFO Jack Hartung said Tuesday during the company’s second quarter earnings call.
- The company expects mid- to high-single-digit comparable sales growth in the third quarter following this planned menu price increase, CEO Brian Niccol said. Comparable restaurant sales rose 10.1% during Q2 2022.
- Chipotle previously raised menu prices in December, also by 4%. Menu prices were roughly 10% higher overall in 2021 compared to 2020.
Menu price increases have helped Chipotle counterbalance additional costs across the board, especially the cost of avocados, packaging, dairy, beef and chicken, Hartung said.
These price hikes also help pay for additional labor costs, which are expected to be about 25% during the third quarter. Chipotle’s Q2 operating costs fell 90 basis points to 14.3% due to menu price increases as well as a decline in delivery expenses, Hartung said.
The chain saw little customer pushback to past pricing changes, Hartung told investors during Chipotle’s first quarter call. BTIG expects Chiptole’s menu prices to be over 20% higher by the end of 2022 than they were at the end of 2020, the company said in a report emailed to Restaurant Dive.
A separate July BTIG report revealed that even with Chipotle’s pricing 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 of the Mexican fast casual segment.
“Our pricing power is strong and the brand resilient,” Niccol said. “I really believe the value proposition that we sell today is our strongest proposition. We looked really hard at this. When you look at a chicken burrito, steak burrito and you compare that to your alternatives, the value is there.”