Chipotle executives on Tuesday said they raised menu prices by about 4 percent to make up for the company’s recent decision to give its workers higher wages.
Company CFO Jack Hartung said at the virtual Baird Global Consumer, Technology & Services Conference that the restaurant chain would “lose the staffing gain” if it did not implement changes to cover the cost of raising workers’ wages to an average of $15 per hour.
“It feels like the right thing, at the right time, and it feels like the industry is now going to have to either do something similar or play some kind of catch-up,” he said, according to CNBC.
Chipotle CEO Brian Niccol said that while the company would prefer not to raise its prices for consumers, it was a necessary step to account for the recent changes.
Hartung added that despite rising ingredient costs across the restaurant industry as suppliers struggle to meet the return of demand following loosened pandemic restrictions, Chipotle was not planning on implementing any additional consumer price increases.
“Ingredient costs, there’s talk about it. We’ll see where that leads,” he said Tuesday, CNBC reported.
In May, Chipotle announced that the new starting wages for hourly crew members would range from $11 to $18 an hour.
The fast casual eatery also said at the time that it planned to hire 20,000 new employees across the U.S. to “accommodate its peak season and staff and the estimated 200 restaurants it plans to open this year.”
The company in May also unveiled a $250 employee referral bonus for crew members and a $750 referral bonus for apprentices or general managers in an effort “to attract even more talent by showcasing the potential income that can be achieved in a few short years,” Marissa Andrada, Chipotle’s chief diversity, inclusion and people officer, said at the time.
Hartung warned in April that a wage increase would result in a “manageable” menu price hike, though he said at the time that the company expected this to be about 2 to 3 percent, or an additional $0.20 to $0.35.
Chipotle is just one of several companies to raise wages or implement other measures to attract more workers amid reports of staff shortages as businesses start to reopen following the pandemic-induced economic downturn.
Both McDonald’s and Darden Restaurants, which owns Olive Garden, said earlier this year that they would increase worker wages.