By Leslie Patton | Bloomberg
Chipotle Mexican Grill’s Chief Executive Officer Brian Niccol said he’s not seeing any signs that inflation is slowing down, specifically highlighting higher beef costs.
Newport Beach-based Chipotle, which last year added smoked beef brisket to its menu as a limited-time item, has already raised prices, but more increases may be on the table as expenses rise. Beef and freight have been the two largest pressures for the company, Niccol said in an interview after the company reported earnings.
“I wish I could forecast when this inflation is going to slow down. But unfortunately, we’re not getting a sign that it’s going to slow down,” he said, adding the company may have to raise prices again.
Companies across industries are increasing prices amid higher manufacturing and shipping costs and a shortage of available labor. Meanwhile, global food prices jumped toward a record last month, pushed up by more expensive vegetable oils and dairy, according to the United Nations’ index of prices. Chipotle raised its menu prices 4% in the middle of December. So far, U.S. consumers have been willing to pay more, according to the company.
The burrito chain, which also recently introduced plant-based chorizo and a new chicken item, sees food costs as a determining factor for promotions and menu options. For example, Niccol said the company may “think twice” before introducing new steak-based menu items.
“You don’t want to do all this work, develop it, and then find out six months later that the cost is 20% higher,” he said.
Chipotle shares surged 7.5% at 9:48 a.m. in New York trading on Wednesday, the most since July. The company reported sales that topped estimates following the market close on Tuesday.
Source: Orange County Register
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