- Chipotle CEO Brian Niccol told the Wall Street Journal inflation “doesn’t look transitory.”
- The fast-food chain hiked menu prices by 4% in December to deal with inflation.
- It still reported better-than-expected sales for the fourth quarter of 2021.
Chipotle is likely to increase prices again this year as inflation persists, CEO Brian Niccol told the Wall Street Journal.
“I just don’t see the inflation, unfortunately, going away anytime soon,” said Niccol. “It sure doesn’t look transitory to me,” he added to the WSJ.
Niccol’s comments come as the fast-food chain reported better-than-expected sales in the fourth quarter of 2021, with revenue soaring 22% on-year to $2 billion, the company said in an announcement on December 31.
Even so, Chipotle’s fourth-quarter margin was hit by inflation, primarily in the price of beef and freight, said the company’s chief financial officer, John Hartung, according to a transcript of the company’s Tuesday earnings call. Avocados also cost more now, he said.
Wholesale beef prices rose as much as 46% over the course of 2021, data from the US Department of Agriculture shows. Meanwhile, US trucking freight rates in October rose at a pace not seen in decades, Bloomberg reported, citing data from Cass Information Systems. Avocado prices have also hit recently a record high due to a surge in production costs, a labor crunch, and a supply chain logjam, per Bloomberg.
The rising cost of ingredients prompted Chipotle to hike prices by about 4% in December, said Hartung. The fast-food chain also increased prices across the menu in June. Menu prices now are about 10% higher than they were in the first quarter of last year, said Niccol in the earnings call.
The fast-food industry is grappling with inflation, which hit a four-decade high of 7% on-year in December, according to the Bureau of Labor Statistics. Restaurants are also dealing with rising labor costs in a tight labor market amid the Great Resignation as many workers remaining in the workforce demand pay hikes.
At the end of June, Chipotle raised its minimum wage to $15 an hour, up from about $11 an hour.
Chipotle CEO Niccol said on the Tuesday earnings call that the company will remain competitive on wages and added that some staff who left the company have since returned. “Those employees that go out on an exclusion, they’re coming back,” he said.
The chain plans to open 235 to 250 new restaurants in 2022, it said in its press release. There were 2,950 Chipotle restaurants across the US, Canada, UK, France, and Germany at the end of last year. The company did not specify where the new outlets will be located.