By Natalie DeCoste
A dreaded day has come for burrito lovers. Chipotle has announced that it will be raising its prices across the board.
The beloved Mexican fast-food chain announced on June 8 that it would increase the prices of its food by roughly 4% to cover the cost of increased wages for its workers. In May, the company announced that it would increase restaurant wages to a $15 average hourly wage by the end of June.
“Chipotle is committed to providing industry-leading benefits and accelerated growth opportunities, and we hope to attract even more talent by showcasing the potential income that can be achieved in a few short years,” said Marissa Andrada, Chief Diversity, Inclusion, and People Officer at Chipotle when the company announced the wage increase.
A roughly 4% increase in food prices translates to roughly 30 to 40 cents for the average Chipotle meal.
“We really prefer not to take pricing. But 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,” said CEO Brian R. Niccol at the Baird Global Consumer, Technology, & Services Conference.
As a reopened economy brings a surge in sales across the U.S., several companies in the food and retail industry are taking measures like Chipotle and increasing hourly wages to hire more workers and meet demand. These companies include the likes of Walmart and McDonalds, and they too may have to pass off the wage increases to consumers.
“We think everybody in the restaurant industry is going to have to pass those costs along to the customer. We think we’re in a much, much better position to do that, than other companies out there,” said Chipotle CFO Jack Hartung.
The workforce in the leisure and hospitality industries has returned at a much slower pace than demand from consumers. According to the Department of Labor, although the leisure and hospitality industries added 292,000 jobs in May, those industries’ workforces are down by 2.5 million compared to pre-pandemic levels.
According to QSR Magazine, 40% of restaurants said they are understaffed. The U.S. Chamber of Commerce called the labor shortage a “national emergency.” Companies have taken measures beyond increasing wages, including hiring bonuses, paying people to show up to interviews, and referral bonuses for existing employees.
The price hikes also come as the cost of ingredients is on the rise for restaurants as suppliers struggle to meet the returning demand. Chipotle said that it is not planning any further price increases despite rising costs of goods, but Hartung said the company would keep an eye on the situation.
