Chipotle says customers aren’t skipping guac or choosing cheaper proteins despite price increases

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Chipotle guacamole bowl
  • Chipotle’s CEO says buyer orders have remained “consistent” despite price increases.
  • Higher priced proteins may be as much as 40% costlier than fundamental choices.
  • Chipotle raised costs in August following two earlier increases within the final 18 months.

Chipotle costs are up, however that is not getting between customers and their guacamole.

“We’re not seeing people all of a sudden not buying guacamole,” CEO Brian Niccol informed traders in an earnings name Tuesday. Most customers aren’t altering their common orders or switching to cheaper proteins, he stated. “Things have stayed pretty consistent.”

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This consistency is in distinction to Chipotle’s price increases, the newest of which got here in August, when the chain raised prices for a burrito by about 50 cents to $1 each.

Chipotle has been open about elevating costs during the last yr. In the primary quarter of 2022, Chipotle raised menu prices by 4%, CFO Jack Hartung informed traders on an earlier name. Those had been on high of earlier price hikes partially due to raising wages for employees in June 2021 when the fast-casual chain stated that it additionally raised costs about 4%.

But demand for Chipotle appears proof against price increases. Sales proceed to develop sooner than price increases, up 14% within the third quarter over the identical interval in 2021.

Lower-income customers are visiting Chipotle much less steadily, however the chain has a better proportion of customers making greater than $75,000 a yr, who’re rising ordering frequency, Niccol stated. Chipotle beforehand attributed this development to customers with more money downgrading from pricier eating choices, choosing Chipotle as a budget-friendly choice.

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These prosperous customers are ordering extra premium menu choices, which pushed gross sales to extend whilst visitors was down 1%. Adding guacamole in New York City prices $2.95, greater than a further 25% enhance on the bottom price of a hen burrito at $10.95

Premium proteins may drive up gross sales. The restricted time garlic guajillo steak is 16% costlier than steak and barbacoa on common, and almost 40% costlier than the most affordable choice, hen, on common in line with an evaluation from William Blair fairness analysis shared with Insider.

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