Chipotle Is About to Get More Expensive, Again

Your next burrito could be a little more expensive at Chipotle.

The fast-casual chain confirmed to reporters this week that it will be raising its prices in 2024 to keep up with the cost of goods. A spokesperson told Today, "For the first time in over a year, we will be taking a modest price increase to offset inflation." The spokesperson did not specify which menu items would be getting a price increase. 

As Business Insider first reported, this will be the fourth time the company has raised prices on its goods in the last four years, including in early 2022, when it raised prices by 4%, and in July 2022, when customers started paying more than $1 more for entrees.

In September, CNBC reported the latest numbers from the U.S. Bureau of Labor Statistics, which showed the consumer price index had increased 3.7% from 12 months earlier. The good news is that it has remained unchanged since August. 

However, it appears the cost increase isn't because the company is struggling for cash. In May 2023, the Wall Street Journal reported Chipotle's shares hit a record high, with quarterly sales up and its "restaurant-level operating margin improved by roughly 25%." That growth, shared Jack Hartung, the company's chief financial offer, was largely due to the falling price of avocados. 

"Around half of our transactions include guacamole, so when avocados are more expensive, that impacts us," he said. "Right now, we're seeing avocado prices that are the lowest we've seen in a number of years, and that's definitely helping us. While costs for some of our ingredients have gone up during the first quarter, avocados went down, and it had an offsetting effect."

Hartung added that the company is changing where it sources its avocados from. Typically, Chipotle sourced from Mexico (the leading global producer of avocados), but in the summer and fall, it switched to sourcing from much smaller producers in California, Peru, and Colombia, causing a shift in pricing. 

Additionally, Hartung explained that the thing that causes the company to raise prices like it's doing now, is when higher inflation rates that may last for "a number of quarters" are forecast and if that forecast is paired with low unemployment numbers. 

"So we'll watch what happens with inflation, we'll watch what happens with the economy," he said. "We know we have pricing power, but we're going to be very thoughtful and it'll be kind of a last resort." And it seems as though, for Hartung, the company has hit that last resort. Chipotle is expected to release its third-quarter earnings on Oct. 26.