Chipotle Mexican Grill Increases Menu Prices by 2%

(Reuters) – Chipotle Mexican Grill (NYSE:CMG) announced a 2% increase in menu prices on Wednesday as a response to rising input costs amid fluctuating demand in the U.S. restaurant industry.

Key ingredients like dairy, beef, and avocado have become more expensive this year, impacting profit margins for restaurant operators. Simultaneously, consumers are opting for less expensive meals at home, contributing to a decrease in dining out.

Inflation in ingredient costs has prompted U.S. restaurants and fast-food chains to raise prices in 2023, which has further restrained consumer demand.

During an October post-earnings call, Chipotle executives reported ongoing low-single-digit inflation on sales costs and labor. Despite this, the company missed market expectations for quarterly same-store sales, leading to speculation that further price increases might only occur in early 2025.

Laurie Schalow, Chipotle's corporate affairs chief, said, "For the first time in over a year, we have taken a modest price increase of approximately 2% nationally to offset inflation."

Analyst Brian Vaccaro from Raymond James noted that the timing of this increase reflects current demand trends positively. Chipotle previously raised prices in California in April due to the implementation of the FAST Act, which increased wages for fast-food workers.