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Chipotle (CMG-1.83%) fans, brace yourselves: Burritos, bowls, and chips are about to cost more. The company is raising prices by 2% nationwide to offset rising costs.
“For the first time in over a year, we have taken a modest price increase to offset inflation,” Laurie Schalow, Chipotle’s chief corporate affairs officer, confirmed to Quartz in an email.
Despite the price hike, Chipotle has remained resilient, even after raising prices four times over the past two years. At the time, the fast casual giant pointed to California’s minimum wage hike as a key factor. As CFO Jack Hartung pointed out during the company’s March earnings call, the company knew it would need to implement “significant price increases” to manage the roughly 25% rise in wages. Other chains, like McDonald’s (MCD+0.85%), have said they would follow a similar strategy.
However, the price bump comes at a tricky time for the chain. In November, the company found itself in the middle of a class action lawsuit from shareholders, who allege Chipotle had misled investors by failing to address inconsistent portion sizes. According to the suit, these inconsistencies led to higher costs and a steep drop in stock value.
Internet outcry over smaller portions began earlier this summer when former CEO Brian Niccol publicly acknowledged that portion sizes had become a problem. Customers weren’t happy, and as the company worked to fix the issue, costs continued to climb.
Even so, the chain has pushed forward. Despite the backlash, Chipotle is seeing strong sales in staple menu items like Al Pastor chicken and Braised Beef Barbacoa. In September, the company introduced two robots to improve service and to meet growing demand. The new tech appears to be paying off, with visits up, according to foot traffics analytics firm Placer.ai. At the California location using the avocado-cutting robot “Autocado,” nearly 44% of visits lasted 10 minutes or less, the firm noted.