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Upcoming Chipotle price increase probably won't drive away Mexican food lovers

Chipotle fans won't mind paying more for their favorite Mexican food
Chipotle fans won't mind paying more for their favorite Mexican food
Photo by Joe Raedle/Getty Images

The International Investors Times reported recently that the price of food at Chipotle Mexican Grill restaurants will increase 5 percent this summer. The fast-food-with-a-twist restaurant chain cites increases in the cost of beef, avocados, and cheese as the reasons for the price increase.

"The Times" article, written by Nadine DeNinno, refers to comments made by Chipotle CFP Jack Hartung, who reports the price hikes will begin late in the second quarter and be fully in effect by July.

DeNinno also reports Hartung commented that this is the first price increase at Chipotle in three years. Founded in 1993, and based in Denver, Chipotle currently operates approximately 1500 locations nationwide.

Another article written by Rick Aristotle Munarriz and published on the Daily Finance website claims that Chipotle reported first-quarter 2014 earnings of 8.5 percent, despite an increase of 33 percent in food costs over the same time period last year. According to Munarriz, many fast food and casual restaurants were showing minus signs for same quarter, due to bad winter weather, among other things.

While Chipotle’s first quarter earnings figures appear to be optimistic, Munarriz also reports that this week Chipotle stock hit a three-month low. He also writes that Chipotle expects food costs to rise from 33 percent of the restaurant chain’s revenue to more than 36 percent over the next few months. This has analysts thinking more conservatively when estimating Chipotle earnings for the second quarter.

A visit to three Central New Jersey Chipotle restaurants – the Menlo Park Mall in Edison, South Plainfield, across from the Middlesex Mall, and downtown Westfield – shows that the average pre-tax price for a regular chicken burrito bowl, which includes chicken, rice, beans, vegetables and salsa, was in the range of $6.50. A 5 % increase will add about another 33 cents to the price, keeping the meal, even with the addition of tax, still under $8, at least in this geographical area.

If a small sampling of Central Jersey Chipotle-lovers is any indication, the price increase won’t drive away fans of the Mexican fast-food restaurant. A few diners queried about the upcoming price increase did not seem fazed. Most said they did not think the extra 32 cents or so would stop them from purchasing and enjoying the food they love.

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