Chipotle Mexican Grill raises menu prices as input costs rise

(Reuters) – Chipotle Mexican Grill said on Wednesday it has raised menu prices by about 2% as the burrito chain faces higher input costs amid a choppy demand environment for U.S. restaurants.

Key ingredients such as dairy, beef and avocado have been more expensive this year, weighing on margins for restaurant operators in an environment where consumers are already turning away from eating out in favor of cheaper meals at home.

Inflation in input costs helped US restaurants and fast-food chains increase menu prices in 2023, dampening consumer demand.

As Chipotle chalked up those price increases, executives said in October during a post-earnings call that they still saw low-single-digit inflation on cost of sales as well as on labor.

But given some softness in demand trends — Chipotle missed market expectations for quarterly same-store sales — the company had hinted that a price increase might not come until early 2025.

“For the first time in over a year, we have taken a modest price increase of approximately 2% nationally to offset inflation,” Laurie Schalow, Chipotle’s head of corporate affairs, said in a statement Wednesday.

“The timing of the increase is also a positive signal about the current demand trend,” Raymond James analyst Brian Vaccaro said in a note.

The company had raised prices in California in April when the FAST Act, which raised wages for workers at fast-food chains, went into effect.

(Reporting by Juveria Tabassum; Editing by Alan Barona)