Despite signs that Americans are still craving their favorite burrito bowls and willing to pay extra for guacamole, Chipotle is carefully watching consumer behavior amid higher labor and menu costs.
“The [California] minimum wage, higher minimum wage just took effect earlier this month,” CFO Jack Hartung said on “The Big Money Show,” Tuesday.
“We did take a modest price increase of 6 to 7%. We’ve been watching the traffic since we took the price increase. We’re not seeing anything yet, we’re not seeing any change in behavior yet,” he continued. “It’s very early, so we’ll keep a close eye on it.”
Prices at Chipotle, McDonald’s and other fast-food giants in California are reportedly rising after a minimum wage hike went into effect one month ago.
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“Chipotle said in an investor call Wednesday that prices at its nearly 500 California restaurants climbed 6% to 7% during the first week of April compared with last year, playing out across its menu,” The Wall Street Journal reported Sunday.
“The state isn’t making it easy,” Chipotle Chief Executive Brian Niccol reportedly said.
In a statement to Fox News Digital on Monday, Chief Corporate Affairs Officer for Chipotle, Laurie Schalow, clarified: “Similar to others in the restaurant industry, we implemented a statewide price increase in light of new legislation in California increasing the wages of restaurant workers.”
Hartung added that Chipotle regulars are still entering the restaurant chain’s doors and that the company expects an elastic consumer that’s sustainable for their quick service model.
“We had a great first quarter. We had a 7% comp and more than 5% of that was driven by transaction growth, which I know is tough to come by in this kind of environment. The thing we’re most proud of, when you look at our customers by income brackets, our low income consumers came at the same rate as our high income consumers,” the CFO pointed out.
“And that tells us that we are really providing great value, and we’re charging a fair price for it.”
Echoing a similar message as celebrity chef Robert Irvine, Hartung explained how Chipotle is turning to technology and investing in robots that can reallocate simple work tasks – without eliminating human workers – during a costly time for business.
Chipotle’s line chef robot will focus on online orders only, according to the CFO, and is said to minimize ingredient mistakes while ensuring on-time delivery.
“You won’t see robots at the front line. So if you want to come in and sweet talk and try to get a little extra rice, a little extra ingredients along the way, you’ll still have that opportunity,” Hartung said.
“It could be very, very busy during our peak lunch and our peak dinner,” he admitted. “We’re not going to replace employees, but we’re going to make the jobs of our employees much easier.”
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FOX Business’ Jeffrey Clark contributed to this report.
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