(The Center Square) – Consumers could soon pay more for a burrito at a popular U.S. chain as the company passes on higher food costs due to inflation.
Chipotle Mexican Grill said it would implement a 2% increase at 20% of Chipotle locations to offset inflation.
“For the first time in over a year, we have taken a modest price increase of approximately 2% nationally to offset inflation,” Laurie Schalow, Chipotle’s chief corporate affairs officer, said in a statement to The Center Square.
Schalow made the statement in response to a Truist Securities Financial Group analyst report that noted a 2% increase at 20% of Chipotle locations surveyed.
The decision comes as the casual food chain continues to balance affordability with increasing expenses after Brian Niccol, the company’s previous chief executive officer, left and Scott Boatwright took his place as CEO.
“We have a number of initiatives underway, and I envision significant back-of-the-house changes in the near future that will drive efficiencies and improve the consistency of our culinary in our restaurants,” Boatwright said in an earnings call.
The price increase applies to most menu items, although specific costs vary by location.
Chipotle Mexican Grill’s Third Quarter of 2024 saw a 13% increase in total revenue to $2.8 billion compared to the third quarter of 2023. Food, beverage, and packaging costs were 30.6% of total revenue in the third quarter of 2024, an increase from 29.7% in the third quarter of 2023.
The company’s efforts to streamline operations and expand digital ordering come as it faces higher input costs.
According to the USDA, prices for beef and veal were higher than those in October 2023, and the agency predicts that both will increase faster than most other categories in 2024 due to “tight supplies and continued demand,” with a prediction interval of 4.2% to 5.7%.
Ultimately, food away from home rose 3.8% over the last year, according to the U.S. Bureau of Labor Statistics, increasing 28% since the pandemic’s peak.
Representatives for the chain have said the modest price hike is part of the company’s strategy to ensure sustainable growth without significantly impacting customer demand.
Chipotle announced in late November that it anticipates opening 315 to 345 new restaurants in 2025, with 80% featuring a Chipotlane, or drive-thru option.
The fourth quarter and full-year financial results for 2024 are expected to be released on Feb. 4, 2025.
