- Chipotle increased prices by 4% in the first quarter of 2022 after earlier price increases in 2021.
- Customers don't seem to mind, and sales were up 16%.
- Executives say they expect food costs to continue growing through the rest of the year.
Chipotle keeps raising prices to handle inflation, but customers don't seem to mind.
The fast-casual chain reported earnings on April 26 that beat analyst expectations. Part of the continued success is customers' acceptance of higher prices. In the first quarter of 2022, Chipotle raised menu prices by 4%, CFO Jack Hartung told investors on the call. Those are on top of earlier price hikes in part due to raising wages for employees. In June 2021, the fast-casual chain said that it raised prices about 4%, making the average meal 30 to 40 cents pricier.
Prices jumps haven't hurt sales, though. Nearly a year after the highly publicized price increases last summer, Chipotle has seen "very little resistance to the pricing so far," Hartung told investors. Year over year price increases could go as high as 12.5% in the coming quarter, Hartung said. Even so, sales were up 16.2% over the same period last year, with almost half of those coming from digital orders.
Price increases are part of a trend across the industry and the entire economy, thanks to a 41-year high inflation rate. Inflation especially pushed up prices for avocados, tortillas, beef, and dairy, Hartung said, hurting the chain's margins. Beef prices were up 16% over last year, and dairy was up 7% in March according to the Consumer Price Index (CPI).
CEO Brian Niccol told investors that while he hopes there's no need for further price increases over those already planned, the chain will consider them if costs keep going up. "It really is the last thing I'd like to do," he said.
Prices seem to be stabilized for the moment, Hartung said, but he doesn't expect a reduction in food prices until at least early 2023.
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