Chipotle Mexican Grill executives revealed Tuesday at the Baird Global Consumer, Technology & Services Conference that the Newport Beach, Calif.-based fast-casual chain raised their menu prices by 3.5-4% last week to offset the costs of its minimum wage increases. Those will increase to an average of $15 an hour by the end of the month, or a range of $11-$18 per hour.
The average Chipotle steak burrito costs $8.85 and will see a 35-cent hike to $9.20.
“It made sense in this scenario to invest in our employees and get these restaurants staffed and make sure that we have the pipeline of people to support our growth,” Chipotle CEO Brian Niccol said at the conference. “And then with that, we've taken some pricing to cover some of that investment.”
Chipotle first announced the hourly wage increase in May (along with referral bonuses and a six-figure salary path for store managers), noting that the wage raise was linked to the need for “attracting more talent.”
Increasing menu prices is a common tactic that operators — including both chains and independent restaurants — have taken to be able to afford increased demand for higher wages industry-wide. For many operators, raising wages significantly is the only way they can stay competitive in an increasingly tight labor market.
“It feels like the right thing, at the right time, and it feels like the industry is now going to have to either do something similar or play some kind of catch-up,” Chipotle CFO Jack Hartung said during the conference, as reported by CNBC. “Otherwise, you’ll just lose the staffing gain.”
Although there are no current plans for further price increases, Hartung revealed that rising supply chain costs could lead them to reconsider, saying “We’ll see where that leads.”
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