Chipotle Mexican Grill stated Wednesday it has raised menu costs by about 2%, because the burrito chain counters increased enter prices within the midst of a uneven demand surroundings for eating places within the US.
Shares jumped 5% to $63.99. The inventory is up 42% this yr.
Key elements equivalent to dairy, beef and avocado have been costlier this yr, weighing on margins for restaurant operators in an surroundings the place customers are already paring again on eating out in favor of cheaper meals at house.
Inflation in enter prices contributed to US eating places and fast-food chains growing menu costs in 2023, which tempered demand from customers.
As Chipotle lapped these worth will increase, executives stated in October throughout a post-earnings name that it was nonetheless seeing a low-single-digit inflation on the price of gross sales, in addition to on labor.
Nonetheless, given some softness in demand tendencies — Chipotle missed market expectations for quarterly same-store gross sales — the corporate had hinted {that a} worth improve may come solely in 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 company affairs chief stated in a press release on Wednesday.
“The timing of the increase is also a positive signal regarding current demand trends,” Raymond James analyst Brian Vaccaro stated in a notice.
The corporate had raised costs in California in April when the FAST Act that raised wages for employees at fast-food chains went into impact.
