An employee sprinkles cheese on a burrito at a Chipotle Mexican Grill restaurant in Hollywood, California.
Patrick T. Fallon | Bloomberg | Getty Images
Chipotle Mexican Grill raised menu prices by around 4% to cover the cost of raising workers’ wages.
Throughout the hospitality industry, chains like Chipotle, Starbucks and MC Donalds have increased hourly wages for Employees at company-owned locations to attract new workers and keep their current. Consumer demand for restaurant meals has risen again, but the workforce has slowed to return, pushing restaurants to sweeten the business. In May, the leisure and hotel industry has created 292,000 jobs, but employment in these areas is still down 2.5 million from pre-pandemic levels, according to the Department of Labor.
In May, Chipotle said it was would raise the hourly wages for his restaurant workers raise averaging $ 15 an hour by the end of June. Company executives said at the Baird Global Consumer, Technology & Services Conference that they would pass the price of the wage increase on to consumers.
“It feels like it’s the right thing at the right time, and it feels like the industry needs to either do something similar now or play some sort of catch-up,” CFO Jack Hartung said at the virtual conference. “Otherwise you will only lose the increase in staff.”
CEO Brian Niccol said the company prefers not to increase its prices, but the move makes sense in this scenario.
The timing of the price increases coincides with rising ingredient costs across the restaurant industry as suppliers struggle with the return of demand. Chipotle is not planning any further price increases for the time being.
“Ingredient costs, that’s the talk. We’ll see where that leads,” said Hartung.
Chipotle’s shares were up 1.3% on Tuesday. The stock is down more than 3% this year for a market value of $ 37.72 billion.