Chipotle Mexican Grill will raise menu prices by single digits, starting this quarter, for the first time in three years, to compensate for high costs for ingredients like beef and avocados.
The chain said rising food costs are reducing its profits: Food, beverage and packaging costs rose 30% in the first quarter, while the restaurant chain's revenue rose 24%, to $904 million, reports The Wall Street Journal.
Despite that, however, Chipotle reported a first-quarter profit of $83.1 million, or $2.64 a share, up from $76.6 million, or $2.45 a share, a year earlier.
Many restaurants – and grocery retailers – have held off increasing prices to consumers for months, even as the effects of crises including the prolonged drought in California, a virus in the hog population and increased exports have been driving significant hikes in the prices of commodities including produce, beef, pork and eggs.
But fears of losing business to competitors or seeing order or basket sizes decline as a result of price increases are now beginning to be outweighed by margin losses.