Chipotle President Jack Hartung said California consumers are spending less because of inflation and insisted that price hikes following the state's new $20 minimum wage were not a factor in the decline in sales.
“I think it's a macro resistance to inflation in general and in California.” Hartung said in an interview with CNBC's Jim Cramer. on tuesday.
Cramer said Chipotle's sales in the state came after the chain raised menu prices by about 7% in April in response to an increase in the minimum wage for quick-service restaurant workers from $16 to $20 an hour. argued that “we may have finally reached a point of resistance.''
Wendy's, Starbucks, Taco Bell and Burger King also responded by raising prices in California.
Chipotle's year-over-year growth in weekly customer traffic in California has lagged the company's national average by more than 5% since April 1, according to the company. Placer.ai.
“We continue to maintain a very good value score, with high scores for quantity of food for money and quality of food for money,” Hartung said.
“Frankly, our view on California is more of a macro effect than pricing resistance, because if you look at the restaurant industry, restaurant trade is depressed for all companies. Because there is.”
Hartun, who joined Chipotle in 2002, said some companies have made small price increases, while others have made large increases to combat inflation.
The longtime executive claimed Chipotle's price hikes fell somewhere in the “middle ground.”
“Almost across the board, there was a backlash from consumers,” Hartung said.
He emphasized that Chipotle “is not going to give up” on providing affordable prices to customers.
“We don't want just some people to enjoy Chipotle,” Hartung said. “We want everyone to enjoy Chipotle.”
He also hinted at how the chain will implement artificial intelligence technology in the future. These include an Autocado robot that cuts, cores and peels avocados, and automated systems that run entrees through make lines to make bowls and salads.
Hartung said the company is still in the “early stages” of implementing AI technology.
He said Chipotle, known for its customizable meals, does not intend to “eliminate” that “personalization.”
“Eye-to-eye contact will continue,” Hartung said. “But there are complex and time-consuming tasks happening behind the scenes, long before a restaurant even opens. If we can make these things simpler for our staff, they will have a better experience. ”
Chipotle did not immediately respond to a request for further comment.
