Chipotle raises prices citing increased wages for staff

Company denies recent cost of CEO pay package and relocation of headquarters had any effect on decision

Helen Elfer
Thursday 10 June 2021 00:50 BST
Fast-food chain raised its hourly rate from $11 to $18 last month
Fast-food chain raised its hourly rate from $11 to $18 last month (AP)

Burritos, tacos, salads and other Chipotle menu items are going to be around 4 per cent more expensive, as the Mexican-inspired restaurant chain bumped its prices.

The company says its increased costs are a result of its decision to pay staff higher wages.

While commentators pointed out that the company has undertaken other big ticket investments in recent years, including a relocation of its headquarters and a substantial pay packet for its CEO, Chipotle denied either issue had played any part in its decision.

Workers at the fast-food chain had their hourly rate raised from $11 to $18 last month, an indicator of the tight labour market faced by restaurant chains in the US.

Businesses are struggling to hire employees as the US economy recovers, with job openings reaching record levels in recent months.

The leisure and hospitality sector, which was hit hardest by Covid 19, opened up 292,000 jobs in May, as restaurants and bars sought to rehire employees that had been let go during the pandemic. Chipotle’s announcement came after a drive to recruit 20,000 new staff.

Chief executive Brian Niccol, speaking at the Baird Global Consumer, Technology and Services conference on Tuesday, said that while they prefer not to raise prices, “it made sense in this scenario to invest in our employees and get these restaurants staffed and make sure we had the pipeline of people to support our growth”.

Mr Niccol insisted that the cost of the chain’s food remained reasonable, reported the New York Times, with the price of a chicken burrito still “well below $8” in most markets.

However, some media commentators took issue with the argument that the price rise was necessitated by paying staff more.

Alex Press, a staff writer at Jacobin, tweeted: “Chipotle also recently burned around $100 million relocating its HQ from Denver to Orange County because the new CEO lived there and didn’t want to move.”

And Ken Klipperstein, a reporter at The Intercept, posted the headline to a Bloomberg story claiming that Mr Niccol’s pay nearly doubled in 2020 to $38m, adding: “Funny how price increases are blamed on modest wage increases instead of executive compensation.”

Asked by The Independent whether either issue had affected the price increase, the company said: “No.”

Chipotle is not the only restaurant chain to increase pay in an effort to attract applicants. In May, McDonald’s entry-level wage for new employees in company-owned restaurants rose between $11 and $17 an hour. Current employees’ pay rose by an average of 10 per cent.

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