It’s bad news for Chipotle lovers. The Mexican fast-casual food chain said Tuesday that it plans to raise menu prices again, marking the third time it has increased prices in two years.
The amount for the price hike is unknown, but is expected to take effect in August. The company previously noted it had raised prices 4% in the first quarter, with the increase helping boost overall profits despite weaker-than-expected sales during the April-June period. The price increase also resulted in fewer lower-income customers, but CEO Brian Niccol said he wasn’t too worried about it.
“The low-income consumer definitely has pulled back their purchase frequency,” Niccol said during a conference call with investors. “Fortunately for Chipotle, you know, the majority of our customers are a higher household income consumer.”
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Remaining Competitive
Despite inflation battering the U.S. economy, the burrito chain reported total revenue of $2.2 billion for the second quarter, up 17% compared with the same period a year ago. It attributed the increase in revenue to new store openings across the country and a 10% increase in sales at existing restaurants.
To counteract the rising cost of doing business, price increases have become the norm across the restaurant industry, including McDonald’s, the nation’s largest fast-food chain.
According to McDonald’s CFO Kevin Ozan, menu prices rose 8%-9% in the second quarter as the fast-food giant sought to counteract rising labor and commodity costs.
Still, McDonald’s reported U.S. sales rose nearly 4% in the second quarter but said the growth was also consistent with customers cutting back and ordering cheaper items on the menu.
