Employees at Chipotle Mexican Grill are making more money, and the consumer is covering the cost through increased menu prices.
According to a report by CNBC, menu prices at Chipotle have risen by around 4% to cover the cost of increased hourly pay for the chain’s employees.
Chipotle is one of several restaurant chains that has used increased hourly pay for employees of company-owned locations, as a means to attract new workers and retain current employees needed to accommodate the returning consumer demand for restaurant meals. However, the pace of increased demand has not been matched by the workforce, which has been slower to return, the report said.
According to the Department of Labor, the leisure and hospitality industries added 292,000 jobs in May, but compared with pre-pandemic levels, “employment in those fields is still down by 2.5 million,” the news outlet cited.
The increased menu costs should come as no surprise to consumers. Reportedly, in May, Chipotle announced that by the end of June it would raise hourly wages for its restaurant workers to an average of $15 an hour. Company executives said at the Baird Global Consumer, Technology & Services Conference that the price of the pay increase would be passed along to consumers.
CFO Jack Hartung said at the virtual conference. “It feels like the right thing, at the right time.” He added that “It feels like the industry is now going to have to either do something similar or play some kind of catch-up.” He said, “Otherwise you’ll just lose the staffing gain.”
Reportedly, CEO Brian Niccol noted that although the company prefers not to raise its prices, the “move made sense in this scenario.”
As suppliers struggle with the return of demand, in addition to wage increases, ingredient costs are rising across the restaurant industry. Although the two coincide, CNBC reported that for now, Chipotle has no plans for further price increases.
“Ingredient costs, there’s talk about it. We’ll see where that leads,” Hartung said.
