Many of us can admit to having a slight obsession with the fast casual restaurant chain, Chipotle. I myself, am partial to the burrito bowl or salad in my attempts to eat “healthy,” which is immediately offset by the globs of guacamole loaded onto the fresh veggies and costing an additional $1.80 (but so worth it).
Now the dreaded day has finally come; Chipotle has announced that for the first time in three years, it will raise prices as the Mexican food chain’s popularity continues to soar. Price increases will adjust approximately 3 to 5 percent, which is roughly an extra 24 to 40 cents for the $8 burrito bowl; think you can handle that? Chipotle’s Chief Financial Officer, Jack Hartung, tells analysts that affordable price is not the reason customers come to the restaurant, but rather for the experience of watching staff prepare their food in an assembly line fashion and enjoying high-quality meats and produce.
The decision to raise prices stems from the higher costs for beef, avocados, and cheese, which negatively impacted the bottom line as Chipotle’s first quarter earnings for the quarter ended March 31, 2014 fell below analyst expectations. While falling short of projections, Chipotle sales rose 13.4%, net income rose 8 % to $83.1 million, or $2.64 per share. These figures are up from $76.6 million, or $2.45 per share, in the same quarter a year ago. Analysts expected $2.86 per share, according to FactSet.
This Denver based chain is also rapidly expanding, opening 44 locations during the quarter and planning to open 180-195 total locations in 2014. With popularity and profit on the rise, it was only a matter of time before the price increase hit consumers. According to a Chipotle representative, price increases are said to begin rolling out in a few weeks, with all menus adjusted by summer 2014. So for now, enjoy your ridiculously large chicken burrito without the 30 extra cents added to your bill.