Editor’s note: This article has been updated with a comment from Chipotle.
Dive Brief:
- Chipotle is raising prices nationwide by roughly 2% to help offset inflation, Laurie Schalow, Chipotle’s chief corporate affairs officer, said in a statement emailed to Restaurant Dive. This is the first time the chain has raised prices in over a year, she said.
- Entree price increases have ranged from 1.4% in Washington, D.C., to 2.7% in Atlanta, according to a report from William Blair analyst Sharon Zackfia.
- Chipotle previously took price in April in California to offset a 20% increase in wages, and the chain is lapping a 3% increase taken in late 2023. Chipotle will start next year with another increase in price of about 3%, which should offset expected low single-digit food cost inflation, Zackfia said.
Dive Insight:
Chipotle’s price increase may not have a significant impact on consumer traffic. During the third quarter, the chain reported positive transaction growth each month continuing into October, executives said during the company’s most recent earnings call. The fast casual segment continues to draw in consumers looking for quality despite higher prices on entrees. Both Cava and Sweetgreen boasted comparable traffic increases last quarter, as well.
Revenue grew 13% in the third quarter to $2.8 billion, driven by 6% comparable sales and 3% transaction growth and store growth, CEO Scott Boatwright said. The chain rolled out its limited time Smoked Brisket in September, which is helping drive transactions and spend during the fourth quarter.
“Chipotle is poised to achieve another impressive year in 2024, with traffic likely accelerating modestly from 2023 while achieving margin expansion despite reinvestments in portion sizes,” Zackfia said.
Despite raising prices last year, another price increase was needed, CFO Adam Rymer said during the earnings call. Inflation across different items, namely avocados and dairy, and higher usage of ingredients from serving consistent portions, offset the impact of the 2023 increase. The chain received significant consumer complaints of irregular food portions earlier this year.
Chipotle will continue to focus on finding efficiencies and innovation over the next several quarters that can help offset the cost of investing in consistent portions. It has focused on adding expeditors to the makeline to speed up orders during peak periods. It also has been testing various pieces of equipment including an automated, digital makeline from Hyphen and an avocado cutting robot. Chipotle is also evaluating a produce slicer that can help with food prep and is in the process of adding a dual-sided grill, which Chipotle calls a plancha, that can improve cook times and consistency.
