Chipotle (CMG) appears to be on a steady road to recovery after it faced backlash on social media earlier this year for serving what some consumers claimed were “skimpy” food portions in burrito bowl orders.
Despite the recent criticism, the Mexican fast-food chain revealed in its third-quarter earnings report for 2024 that it managed to boost its comparable restaurant sales by 6% year-over-year during the quarter. This contributed to Chipotle also facing a 13% year-over-year increase in its total revenue.
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Chipotle’s improved performance comes after the company underwent a significant leadership shakeup. Brian Niccol resigned as the company’s CEO on Aug. 31, and he was later replaced by Scott Boatwright, who was officially appointed to the position on Nov. 11.
Related: Chipotle isn’t shy about making a controversial move
The company also promoted Adam Rymer to chief financial officer on Oct. 1. He is reportedly among a group of executives contemplating a major change to Chipotle’s menu that customers may not like.
Chipotle considers a change that could put a strain on customers' pockets
According to a new report from the Wall Street Journal, Chipotle is considering a “modest” price increase at the company’s restaurants to help pay for higher costs associated with avocados, sour cream and queso.
The report also notes that while the executives are considering raising prices, they still want to maintain the menu’s value by making it affordable for customers who are already battling inflation.
The move from Chipotle comes after it hiked menu prices at its California restaurants by 6% to 7% in April due to a minimum wage increase that went into effect earlier that month in the state.
The last time Chipotle officially announced a price increase for menus nationwide was in October 2023. At the time, the company claimed that the higher prices would help “offset inflation.”
Related: Chipotle faces lawsuit for serving 'inconsistent' portion sizes
The price increase was the fourth one the restaurant chain announced in the last two years. Before that, Chipotle raised its prices by 4% in 2022.
Chipotle’s consideration of another price increase comes after Rymer told investors during an earnings call on Oct. 29 that the company is facing “single-digit inflation” on the cost of sales and labor.
Chipotle's potential price hike could help it dodge another upcoming headwind
The company's potential solution to battling higher costs also comes after President-elect Donald Trump vowed to impose tariffs of 60% to 100% on all goods coming from China and 10% to 20% on goods imported from all other countries. He also recently proposed tariffs of 25% on all goods from Mexico and Canada.
More Food + Dining:
- Chipotle faces lawsuit for serving 'inconsistent' portion sizes
- Even deals can’t reverse startling trend in the fast-food industry
- McDonald’s is facing the brutal aftermath of price increases
Tariffs are taxes companies pay to import goods from overseas. Often, the extra costs are passed down to consumers, resulting in higher prices for goods/services.
Chipotle sources many of its fresh ingredients from local farms and suppliers, but the company’s main source for avocados is Mexico, though it also sources them from California, Chile and Peru.
Chipotle has been criticized by consumers over the past few years for its high menu prices, so another price increase due to tariffs may not be well received.
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