Chipotle Mexican Grill announced Wednesday that it has raised menu prices by about 2% as the burrito chain combats rising ingredient costs amid an uncertain demand environment for U.S. restaurants.
The stock rose 5% to $63.99. The stock is up 42% this year.
Prices for key ingredients such as dairy products, beef and avocados have soared this year, putting pressure on restaurateurs' profits at a time when consumers are already refraining from eating out and seeking cheaper meals at home. are.
Input cost inflation caused U.S. restaurants and fast food chains to raise menu prices in 2023, suppressing consumer demand.
Despite Chipotle's price increases, executives said in a post-earnings conference in October that inflation in cost of goods sold, as well as labor costs, remains in the low single digits.
However, given some soft demand trends, Chipotle's quarterly same-store sales were lower than market expectations, and the company indicated that price increases may only occur in early 2025. .
“To offset inflation, for the first time in more than a year, we have implemented modest price increases of approximately 2% nationwide,” Chipotle's head of corporate affairs, Laurie Shallow, said in a statement Wednesday. .
“The timing of the increase is also a positive signal regarding current demand trends,” Raymond James analyst Brian Vaccaro said in a note.
The company raised prices in California in April when the FAST Act, which increases wages for fast-food chain workers, went into effect.
