Chipotle Mexican Grill Inc. has been raising prices to combat inflationary pressures with the company’s chief marketing officer revealing another 4% increase next month.
Inflation is "hitting us," Chipotle Chief Marketing Officer Chris Brandt told "Varney & Co." on Thursday.
Brandt stressed that, due to the economic circumstances, the company "had to" increase prices.
The Denver-based burrito chain, like restaurants across the country, has been grappling with higher food, labor and freight costs that are showing little signs of easing.
The Labor Department revealed earlier this month that inflation accelerated more than expected to a new four-decade high in June as the price of everyday necessities remains painfully high.
The department said the consumer price index, a broad measure of the price for everyday goods, including gasoline, groceries and rents, rose 9.1% in June from a year ago. Prices jumped 1.3% in the one-month period from May. Those figures were both far higher than the 8.8% headline figure and 1% monthly gain forecast by Refinitiv economists.
The data marked the fastest pace of inflation since December 1981.
Chipotle has already hiked prices at least three times since August 2020, including a 4% increase in June of last year to cover the cost of raising wages for its restaurant workers to an average of $15 per hour.
Restaurants like Chipotle have struggled to find help in recent months despite the boost in wages as supplemental unemployment benefits, stimulus checks and child tax credits have given many the wherewithal to stay at home during the pandemic. A record number of job openings has given workers the upper hand over employers, which could put even further upward pressure on wages.
Higher prices for food is another cost pressure for Chipotle. Meat prices, for example, have risen 8.2% this year compared to the same time last year with beef and veal increasing 4.1% and chicken soaring 18.6%, according to the June consumer price index.
Chipotle is also having to pay higher prices for other items that are in short supply like paper products and construction materials that are needed for new store buildouts.
Management has said that some of the issues, like higher freight prices, are "temporary" and that those pressures will abate as supply chain bottlenecks ease. More concerning is the impact of higher wages increases, which are permanent.
Brandt told host Stuart Varney on Thursday that he would "prefer" not to increase prices, but "unfortunately, with these circumstances, we have to."
"We’re seeing rapid price increases in all of our inputs," he added, noting that that includes food, paper products and wages.
"The good news is, so far with the price increases we have taken, consumers are very resilient," he said.
Brandt added that even with the next price increase, the company still believes it offers "great value" given "the quality of the food and the amount of food that we give you."
He noted that the most popular item on the menu, the chicken burrito, will cost about $9 after the next price increase, adding that it will cost more in places that are more expensive, like New York City.
Brandt explained that before the pandemic, the same item was a little more than $8.