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Chipotle puts focus on value in menu test

Chipotle puts focus on value in menu test

DENVER Chipotle Mexican Grill Inc. said Wednesday it is testing a revamped menu at its Denver-area stores that highlights smaller, lower-priced items, suggested dishes for $6 and kids' meals.

Company officials said the new menu is designed to help customers order more easily, but analysts also noted it might help consumers get over the sticker shock of the chain's recent price increases. Bob Derrington at Morgan Keegan & Co. said in a research note that Chipotle's year-to-year price increase totaled about 8 percent in the first quarter, but only at about 60 percent of Chipotle's more than 830 restaurants. Chipotle first began raising prices through a 7-percent hike late last year, which was taken to help offset food costs.

Chipotle had seen some “consumer resistance to its recently implemented pricing,” Derrington said.

Chipotle's new menu in Denver features a "Low Roller" selection of lower-priced items and combos, such as a new vegetarian soup offering for $2.99 a cup, or $3.69 with chicken. Other Low Roller items include a single chicken taco and a cup of soup for $4.65; single tacos for $2.25 each; and a side salad for $2.95, or $3.65 with chicken.

Chipotle, which is known for its build-your-own burritos, also added to the test menu a section of Featured Items priced around $6 each. Those items include chicken pozole for $5.55; an Omnivore salad of lettuce, chicken, black beans, tomato salsa, cheese and chipotle-honey vinaigrette for $5.95; a Classic Burrito made with chicken, rice, black beans, roasted chile-corn salsa and sour cream for $5.95; and a Carnitavore burrito bowl with shredded pork, rice, pinto beans, tomatillo green-chile salsa and cheese for $6.35.

“We have found that many of our customers don’t recognize the variety that exists with in our menu and that new customers are sometimes unsure of what to order,” Steve Ells, Chipotle's founder, chairman and co-chief executive, said in a statement Wednesday. “With this menu we are communicating the nature of variety more clearly, while still making great food affordable and accessible.”

Some analysts were encouraged by the new menu board and suspect it could increase brand awareness and customer traffic.

“The test menu is expected to highlight single tacos and some of the brand's smaller portion items, which we think makes sense in the challenging economic environment, although we note the potential for negative check impact from menu trade-down,” Jeffrey F. Omohundro, managing director for Wachovia Capital Markets LLC, said in a report.

Chipotle's test menu also highlights new kids' offerings, including a build-your-own taco kit for $3.95, a single taco meal for $3.50, a small cheese quesadilla meal for $2.95 and a small meat and cheese quesadilla meal for $3.50.

Contact Dina Berta at [email protected].

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