Kris Mirasola
- Chipotle hiked the prices on its menu by about 4% last week.
- The company said the price increase will help offset its new $15 average hourly wages.
- Last month, the company's CFO warned that Chipotle would have to pass the extra cost onto customers.
- See more stories on Insider's business page.
Chipotle raised the prices on its menu by about 4% last week.
A spokesperson told Insider the price hike is designed to help offset a wage increase that Chipotle has begun offering its workers. The higher prices mean the average chipotle meal will cost about 30 to 40 cents more.
Last month, the chain said it would raise its hourly wages to an average of $15 per hour by the end of June. At the time, Chipotle CFO Jack Hartung warned the company would have to increase prices to offset the higher pay.
"We think everybody in the restaurant industry is going to have to pass those costs along to the customer," Hartung said during the company's quarterly earnings meeting in April. "We think we're in a much, much better position to do that, than other companies out there."
The price hike comes at the same time that the cost of many ingredients has risen. The price of several staple imported goods including corn and avocados has steadily risen over the past few months as shipping delays meet rising demand.
For now, Hartung said the company does not plan to further increase prices in the near future.
"Ingredient costs, there's talk about it. We'll see where that leads," Hartung said at the Baird Global Consumer, Technology & Services Conference on Tuesday.
Chipotle is one of many restaurant chains that has increased worker pay. Starbucks and McDonald's have also been working to combat the labor shortage and draw in new employees with higher wages.
Demand for restaurants is returning to pre-pandemic levels, but employees have been hesitant to return to the industry. Forty percent of restaurants say they're understaffed, and 80% say that they're keeping at least one hiring role posted at all times, QSR Magazine reported in April. Last week, the US Chamber of Commerce called the labor shortage a "national emergency," pointing to data that there are more job vacancies than available workers in South Dakota, Nebraska, and Vermont.
Many companies have launched new incentives to bring workers back. This week, a California Jersey Mike's offered hiring bonuses up to $10,000. Other chains have implemented similar measures. In April, Insider's Kate Taylor reported that a McDonald's in Florida was paying people $50 just to show up for a job interview.