The Real Reason Chipotle Is Planning To Raise Prices Yet Again

Guac is still extra, and may potentially cost even more at Chipotle after the burrito chain's CEO said it would likely raise menu prices again, the Wall Street Journal reported.

In a press release, the chain cited the rising costs of beef, food delivery, and avocados as just some of the issues it has recently faced, along with the growing cost of employee wages. And Chipotle CEO Brian Niccol told the Journal he doesn't see costs coming down anytime soon. "I just don't see the inflation, unfortunately, going away anytime soon," Niccol stated, adding: "It sure doesn't look transitory to me."

The chain already raised menu prices by 4% in mid-December 2021 to offset rising food costs, the company's chief financial officer told investors on an earnings call Tuesday, February 8. That means customers are paying 10% more for food compared with 2021, Niccol said. So, if a beef burrito cost $8 last year, customers would now be paying $8.80.

As workers demand higher wages and better benefits amid the pandemic-fueled "Great Resignation," particularly in the service and hospitality industries, many companies have attributed having to pay employees more with an increase in prices. In May 2021, Chipotle announced plans to raise employee wages to an average of $15 an hour, as well as offer referral bonuses to workers who bring in perspective new hires (via CNBC). As a result, fast food is getting more and more expensive as chains like McDonald's and Starbucks continue to raise menu prices. Indeed, the cost of menu items at fast food restaurants went up 8% in 2021, the biggest increase in more than 20 years, according to government data reported by The New York Times.

While customers have yet to sound off about the change coming to Chipotle, similar instances have prompted critics to take a closer look at company profits, with some labeling ongoing price hikes as corporate greed. Starbucks cited supply chain issues for rising costs after increasing prices in October 2021 and again in January 2022. Despite profits in the last three months of 2021 increasing by over 30%, the chain is planning to raise prices again, The New York Times reported. While the coffee giant also attributed rising menu prices to the increase in the cost of employee labor during the pandemic, some customers and company heads noted pay raises for its C-suite execs and questioned how its profits rising warrant consumers having to shell out more for the chain's lattes and egg bites.

Only time will tell if Chipotle receives the same comments from customers curious as to how these numbers add up.