Back in October, Chipotle announced in its third-quarter earnings report that food, beverage and packaging costs went up from 29.7% to 30.6% of total revenue due to inflation. Now, the burrito chain may implement another price increase to offset the costs of raw ingredients that have been hit hard by inflation — like avocados, queso, and sour cream — according to a recent report from the Wall Street Journal.
“With inflation for its ingredients in the low single digits, Chipotle executives are considering raising prices but want to maintain its appeal to consumers looking for deals and discounts,” the Journal’s Jennifer Williams wrote. Despite the higher menu prices, Chipotle will remain a more cost-effective option for customers compared to similar alternatives, Chipotle’s Chief Financial Officer Adam Rymer told the outlet.
Rymer, who was slated to become the company’s CFO in January, assumed his position three months earlier than anticipated due to former Chipotle Chief Executive Officer Brian Niccol, who now leads Starbucks, leaving his position in August. Rymer succeeds longtime finance chief Jack Hartung, who is staying with the company indefinitely to help with management transitions, the Journal reported. Hartung currently serves as president of strategy, finance and supply chain.
Company executives have yet to decide when the price increases will take place, or how large the hikes will be. Rymer, however, described the potential price increases as “modest.”
Analysts are confident that the upcoming lift will not deter Chipotle consumers and negatively impact the chain’s business. David Tarantino, a senior analyst covering restaurants at Baird, told the Journal that there hasn’t been much customer resistance in response to Chipotle’s previous price increases. Between 2021 and early 2024, the chain has increased its prices six times. The latest price hike was in April and only affected California restaurants after the state’s $20 minimum wage mandate went into full effect.
Tarantino said another price increase “will likely be digestible.” That’s because Chipotle customers tend to be wealthier (Business Insider has described the chain as “a budget restaurant for rich people”) and more loyal to the chain. Additionally, the chain’s “menu items are a better overall value than other options,” Tarantino told the Journal.
“Price increases are lagging what we’re seeing elsewhere, and that leads to a much stronger value proposition,” he said, citing Chipotle’s chicken burrito as an example. The price of the popular menu item has increased by 41% in the past decade, while overall restaurant prices increased 50%, per Tarantino’s research, the Journal wrote.
Chipotle’s decision to further hike up menu prices comes after the chain received countless online complaints targeting its inadequate portion sizes. Last month, Chipotle interim CEO Scott Boatwright said the company has since been serving “consistent and generous portions.”
“We know that portioning is a core equity of ours in the organization,” Boatwright said. “We are committed to ensuring that we give the right portion to every guest that walks into the building.”
“We’ve seen strong improvement, even through our social channels … Now it’s a reverse of what we saw earlier in the year, around people posting big burritos, big bowls, and really excited about portioning they’re getting in the Chipotle brand,” he added.
