Of all the popular chain restaurants in the U.S., several stand above the crowd in terms of convenience, quality, and popularity.
In its annual Taking Stock With Teens survey, Piper Sandler reported that the top restaurants among the coveted teen demographic were Chick Fil A, Starbucks SBUX, and McDonald's MCD, in that order.
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But one restaurant growing in popularity and presence is Chipotle, which has approximately 3,000 locations; Chipotle also ranks as the 10th most popular restaurant in the U.S. by sales ($8.6 billion in 2022).
And it's not done yet. Chipotle is placing its focus on some lofty expansion plans and revenue increases in the near future. That makes it something of an investor darling; Chipotle's stock is up some 30% since the beginning of 2023.
Still, despite its financial success over the past 10 months, Chipotle isn't immune to market fluctuations and customer pullback. The September Consumer Price Index (CPI), which was released on Thursday, indicated that the cost of food is up 3.7% compared to a year ago. Food away from home, such as takeout from Chipotle, is up a whopping 6% compared to the period from a year ago.
Although it's got some ambitions to accelerate growth, Chipotle continues to fight back against some strong macroeconomic currents which have pinched margins and forced the chain to pass off some of that cost to consumers, increasing prices for the first time in 13 months in October.
Chipotle reveals what's costing it
“For the first time in over a year, we will be taking a modest price increase to offset inflation,” Chipotle Chief Corporate Affairs Officer Laurie Schalow said in mid-October.
And this week, less than one month after saying it would hike prices for customers, Chipotle is back again with more news.
Noting its limited time offering Carne Asada, which is "a delicious combination of responsibly raised premium cuts of steak seasoned on the grill with a blend of signature spices that's finished with freshly squeezed lime and hand chopped cilantro," Chipotle said the menu item outstripped expectations.
The Carne Asada was met with high enthusiasm that "surpassed our expectations," Chipotle CFO Jack Hartung noted, but it could also be partly why things seem more expensive.
"The benefit from last year's menu price increases was mostly offset by inflation across several food costs, most notably beef and queso," he told investors on the Q3 earnings call on Friday.
But the price fluctuations probably aren't done yet.
"For Q4, we expect our cost of sales to be right around 30% as the benefit of the menu pricing increase we just took will be offset by the mix shift from Chicken al Pastor to Carne Asada as well as higher cheese and avocado prices," he continued.
Currently, a standard steak burrito costs $10.70 before tax at a Chipotle in coastal southern Florida. Guacamole, which has always cost extra, stands at an additional $2.65. A side of chips and queso is $4.50. Add a 22 ounce fountain drink for $2.90 and – if you're ordering pickup on the app – a $2 tip, and your total comes to $24.26. That's a pretty expensive lunch, particularly if you're doing it multiple times a week.
