Chipotle Mexican Grill has hiked menu prices by roughly 4 percent to cover the cost of raising its workers’ wages.
Across the restaurant industry, chains such as Chipotle, Starbucks and McDonald’s have been increasing hourly pay for employees of company-owned locations in a bid to attract new workers and retain their current ones. Consumer demand has come roaring back for restaurant meals, but the workforce has been slower to return, pushing eateries to sweeten the deal. In May, the leisure and hospitality industries added 292,000 jobs, but employment in those fields is still down by 2.5 million compared with pre-pandemic levels, according to the Department of Labor.
In May, Chipotle said that it would raise hourly wages for its restaurant workers to reach an average of $15 an hour by the end of June. Company executives said at the Baird Global Consumer, Technology & Services Conference that they would be passing along the price of raising pay to consumers.
“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,” CFO Jack Hartung said at the virtual conference. “Otherwise you’ll just lose the staffing gain.”
CEO Brian Niccol said the company prefers not to raise its prices but that the move made sense in this scenario.
The timing of the price hikes coincides with rising ingredient costs across the restaurant industry as suppliers grapple with the return of demand. For now, Chipotle isn’t planning on further price increases.
“Ingredient costs, there’s talk about it. We’ll see where that leads,” Hartung said.
Shares of Chipotle were trading up 1.3 preecent on Tuesday. The stock has fallen more than 3 percent this year, giving it a market value of $37.72 billion.