It’s not your imagination. Your Chipotle burrito costs more. The fast-casual chain raised menu prices 3.5 to 4% to help offset any increase in employee wages, Chipotle Chief Financial Officer Jack Hartung said at the Baird Global Consumer, Technology & Services Conference Tuesday.
Chipotle announced in May it was hiring 20,000 employees and raising its average hourly wage to $15 by the end of June. Starting pay will range from $11 to $18 an hour, the company said. “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 had the pipeline of people to support our growth,” CEO Brian Niccol said at the Baird conference. “We’ve taken some pricing to cover some of that investment.”
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Niccol said the percentage increases equate to “quarters and dimes that we’re layering in.” After the rise, he said, a chicken burrito was still “well below $8,” except for higher price markets such as New York. In New York City, a chicken burrito costs $9.50 versus $7.65 in Fort Lauderdale, Florida, or $7.75 at a Chipotle in Topeka, Kansas. Hartung said the industry was feeling inflation pressures, which are focused on labor.
“Our approach was to get in front of this and lead, to first invest in our people and then to do the right thing,” he said. “It feels like the industry is now going to have to either do something similar or play some kind of catch-up.” McDonald’s said in May it was raising wages by an average of 10% at company-owned locations.
Hiring picked up nationwide in May as employers added 559,000 jobs amid falling COVID-19 cases, a loosening of business constraints, and stepped-up vaccinations, more than offsetting persistent worker shortages. LThesector hit hardest by the pandemic, aLeisure and hospitality dded 292,000 jobs in May as restaurants and bars rehired laid-off workers.
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Contributing: Paul Davidson