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Chipotle Customers Aren't Skimping on Guac or Steak

 2 years ago
source link: https://www.businessinsider.com/chipotle-customers-arent-skimping-on-guac-or-steak-2022-10
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Chipotle says customers aren't skipping guac or choosing cheaper proteins despite price increases

6 hours ago
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Chipotle guacamole bowl

Photo by: Jeffrey Greenberg/Universal Images Group via Getty Images

  • Chipotle's CEO says customer orders have remained "consistent" despite price increases.
  • Higher priced proteins can be up to 40% more expensive than basic options.
  • Chipotle raised prices in August following two earlier increases in the last 18 months.
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Chipotle prices are up, but that's not getting between customers and their guacamole.

"We're not seeing people all of a sudden not buying guacamole," CEO Brian Niccol told investors in an earnings call Tuesday. Most customers aren't changing their regular orders or switching to less expensive proteins, he said. "Things have stayed pretty consistent."

This consistency is in contrast to Chipotle's price increases, the most recent of which came in August, when the chain raised prices for a burrito by about 50 cents to $1 each.

Chipotle has been open about raising prices over the last year. In the first quarter of 2022, Chipotle raised menu prices by 4%, CFO Jack Hartung told investors on an earlier call. Those were on top of earlier price hikes in part due to raising wages for employees in June 2021 when the fast-casual chain said that it also raised prices about 4%.

But demand for Chipotle seems resistant to price increases. Sales continue to grow faster than price increases, up 14% in the third quarter over the same period in 2021.

Lower-income customers are visiting Chipotle less frequently, but the chain has a higher proportion of customers making more than $75,000 a year, who are increasing ordering frequency, Niccol said. Chipotle previously attributed this trend to customers with more money downgrading from pricier dining options, choosing Chipotle as a budget-friendly option.

These affluent customers are ordering more premium menu options, which pushed sales to increase even as traffic was down 1%. Adding guacamole in New York City costs $2.95, more than an additional 25% increase on the base price of a chicken burrito at $10.95

Premium proteins can also drive up sales. The limited time garlic guajillo steak is 16% more expensive than steak and barbacoa on average, and nearly 40% more expensive than the cheapest option, chicken, on average according to an analysis from William Blair equity research shared with Insider.

Do you have a story to share about a retail or restaurant chain? Email this reporter at [email protected].


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