In a rare frank admission of the effects that the economy’s continuous price hikes are having on its finances, Chipotle announced that it is increasing its menu pricing by 2%.
We have implemented a small nationwide pricing increase of about 2% to combat inflation for the first time in more than a year,” Chipotle’s chief corporate relations officer Laurie Schalow stated in a statement that NBC News was able to receive.
The statement was made in part in reaction to an analyst analysis by the financial organization Truist Securities, which noted that 20% of the Chipotle outlets examined saw a 2% increase.
Following the departure of CEO Brian Niccol, who was snatched by Starbucks in August, Chipotle is going through a transitional phase. Following the announcement of Niccol’s resignation, Chipotle’s stock fell, but it has since increased by 23% and is currently up over 42% for the year.
Despite having continuously high profits in recent quarters, Chipotle’s most recent financial report fell short of revenue projections. Although it claimed that traffic had stayed constant, Truist analysts are also seeing that total demand appeared to be declining based on statistics on card spending.
In response to widespread online concerns about decreasing serving sizes, Chipotle also acknowledged that food prices had gone up.
In general, the cost of eating out has increased recently. The Bureau of Labor Statistics reports that since the Covid-19 outbreak erupted in the United States in the spring of 2020, the cost of food consumed outside the home has increased by more than 28%.
During that time, many restaurants had high employee turnover and rising ingredient costs, but they were nevertheless able to maintain solid profits because customers were occasionally prepared to pay more if they thought they were getting good value.
According to Truist’s exclusive card-spending data, Chipotle is increasing pricing from a position of strength, which indicates that customer traffic is still consistent. Meanwhile, Chipotle’s total operating expenses are still mostly under control.
The cost of food is infamously unstable.The USDA estimates that wholesale poultry prices will drop 0.6% on net this year, with October 2024 prices being 4.5% lower than October 2023 prices.
However, the price of beef and veal increased 1.9% in October of this year compared to October of 2023, and it is expected to rise more quickly than the majority of other meat categories in 2024 “due to tight supplies and continued demand.”
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