Chipotle raised prices on the menu by 4% because the company raised the hourly pay for employees.
From NBC News:
In May, Chipotle said that it would raise hourly wages for its restaurant workers to reach an average of $15 an hour by the end of June. Company executives said at the Baird Global Consumer, Technology & Services Conference that they would be passing along the price of raising pay to consumers.“It feels like the right thing, at the right time, and it feels like the industry is now going to have to either do something similar or play some kind of catch-up,” CFO Jack Hartung said at the virtual conference. “Otherwise you’ll just lose the staffing gain.”
It makes financial sense.
The economy continues to open, which means businesses need employees. But with the government handing out money people do not want to go back to work.
Therefore, businesses have raised the minimum wage (on their own!) to entice people to work.
Unfortunately, they need to raise prices on the menu to offset the costs.
The companies need to make a profit.
The May jobs report showed a decent number of new jobs. The leisure and hospitality industries added 292,000 jobs.
But does the formation of new jobs matter if the companies do not hire anyone since no one applies? The leisure and hospitality industries’ “employment in those fields is still down by 2.5 million with pre-pandemic levels.”
Plus, restaurants have to deal with a rising cost for supplies as those companies dash to accompany demand.
Chipotle is not the only business raising prices.
Kitchen on Klinton Wings and Things in Lafayette, LA, had to change prices since the price of chicken has hit “an all-time high.”
Co-owner Tre’Jan Vinson said he cannot “get a case of chicken for under $160.”
Emaco Food Services, one of Vinson’s suppliers, admitted the country has a chicken shortage. It raised the cost of chicken, but the situation is fluid so each week businesses have a different price.
Hakan Swahn, the owner of Aquavit in New York City, said he spends “15 percent more on supplies, while customers’ checks are on average about 15 to 20 percent.”
San Matteo Pizzaria in New York City faces the same problems:
Ciro Casella, the co-owner of San Matteo Pizzeria on the Upper East Side, said the price for “everything” has gone up “sky high.”“Even pizza boxes, they raised like crazy,” he griped.“I used to pay $12.95 for a bundle. Now it went to $17.95 . . . Delivery fees are up. Olive oil went up 30 percent. Buffalo mozzarella went up $30 a case. Tomatoes went up 30 percent. If the prices don’t go down in a few months, I’m going to have to raise the menu prices.”
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