Chipotle (CMG) is considering a price hike at its restaurants in California after a new law has been passed in the Golden State. The new law raises minimum wages for fast food and fast casual workers to $20 an hour from April 1, 2024. Chipotle recently posted good quarterly results that have been attributed to the fast-food chain increasing its prices and increasing the number of its customers. The restaurant chain’s shares rose by 2 percent, after it released its quarterly report, on Thursday.
In a call with analysts, John Hartung, who is the chief financial officer of Chipotle, said, “We haven’t made a decision on exactly what level of pricing we’re going to take.”
He said that they had been “studying” the situation and that there would be “a mid-to-high single-digit price increase” and that they were “definitely going to pass this on.”
California’s minimum wage is $15.50 per hour. The wage is set to increase to $16 per hour on January 1. Chipotle says that its current wage per hour in California is $17 per hour. It has about 457 restaurants in the state. This is approximately 15 percent of its restaurants in the nation as it has more than 3,300 restaurants all over the U.S.
California’s governor recently signed AB 1228 that will be effective from April 1. QSR brands must pay $20 per hour minimum wages from April 2024.
Chipotle has also worked on two robotic systems called Hyphen makeline and Autocado robots. Although the robots are not ready to be used as of now, the company said that it has done a good job considering that it is the fast-food chain’s first prototype.
According to its third quarter results Chipotle’s same-store sales increased by 5 percent year over year. This may indicate that customers will be willing to continue visiting the QSR brand despite a small rise in price that might translate to less than a dollar, in the near future.
CWEB News Summarized Breaking, Business and Stock Newsletter October 19, 2023
