With California’s wage increase for fast food workers going into effect, Chipotle’s CFO was heard on an earnings call saying that they would have customers pay for it and increase prices on their menu.
In September, California Gov. Gavin Newsom signed legislation that would raise fast food workers minimum wage from $15.50 to $20/hr. On that same earnings call, the CFO said that currently, Chipotle pays employee’s $17/hr.
CFO, John Hartung said in reference to the wage increase and how the resulting costs would be passed onto Chipotle’s customers:
“But to take care of the dollar cost of that and/or the margin part of that … it’s going to be a mid- to high single-digit price increase,” he said. “We are definitely going to pass this on.”
The word on the street is that prices would raise 7% but that isn’t confirmed at this point in time.
Chipotle recently announced that a price increase is on the horizon citing the “state of the economy. The chain has had four price hikes over the past two years, and so far it hasn’t hurt their bottom line with customers still willing to pay at the new price levels.
Prices increased 10% across the board in 2021 from the year 2020. The average cost of a meal at Chipotle at this time is around $15 per person, so a bit on the higher end of the fast food chain spectrum.
During that same earnings call, Chipotle’s revenue growth was discussed which came out to be a 11.3% increase…in dollar signs, that’s $2.5 billion during their last quarter alone.
