The cost of avocados is up nearly 20% over last year, and beef and dairy costs are also up
Chipotle has raised its menu prices by 2% nationwide, marking the chain’s first increase since October 2023.
“For the first time in over a year, we have taken a modest price increase of approximately 2% nationally to offset inflation,” Chipotle chief corporate affairs officer Laurie Schalow confirmed in an email to Nation’s Restaurant News.
That inflation has particularly hit avocados, which are up about 19% year-over-year. Additionally, according to the Consumer Price Index, beef prices are 1.9% higher than last year.
Prior to this increase, the company raised prices twice in 2022 and once in 2021. The exception is in California, where the company raised prices by about 6% to 7% in April to offset the state’s AB 1228 law that went into effect raising quick-service wages to $20 an hour, or by about 20%.
During the company’s third-quarter earnings call in late October, chief financial officer Adam Rymer said the cost of sales was 30.6% – an increase of about 90 basis points versus last year. He said the October 2023 price increase was “more than offset by inflation across several menu items,” including avocados and dairy, as well as “higher usage ensuring generous portions.” The cost of sales is expected to be about 31% in the fourth quarter, which will be reported Feb. 4.
Rymer added that a “2% to 3%” price increase was needed to offset food and labor inflation and maintain margins.
William Blair analyst Sharon Zackfia noted Thursday that Chipotle will enter 2025 with approximately a 3% price increase, “which should be sufficient to offset expected low-single-digit food cost inflation.” Truist analyst Jake Bartlett added that Chipotle is taking the menu price “from a point of strength,” given strong traffic trends. The announcement Wednesday drove Chipotle’s share price to a five-month high.
Contact Alicia Kelso at [email protected]
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