Paying More For That Burrito

McDonald’s and Chipotle have raised menu prices lately with few consequences, at least so far.

In August, Chipotle raised prices for the third time in 15 months, according to CNBC. During a call with analysts this week, CEO Brian Niccol said he saw “minimal resistance” to higher menu prices, though transactions declined 1%

In July, a Chipotle employee ranted on Reddit about the price increases. “It’s so stressful being a cashier and having people yell at you over it,” the employee wrote. “I hate the price increase too, man. Why won’t corporate stop being so greedy?”

Chipotle has said that lower-income consumers are visiting less frequently, but that most of its customer base is in a higher-income bracket.

Customers also claim that the portions are getting smaller.  It started with a report in Eat This, Not That that said with the rise in digital orders the pandemic has wrought, the chain realized  that “saving on their own bottom line could be as simple as making portion sizes strictly consistent—and smaller than what most of us might ask when visiting the store.”



Despite the pressure, Chipotle has no plans to launch a value menu deal.  “We don't think Chipotle is the brand where somebody is looking for a dollar menu or bundle meal," Chipotle CFO Jack Hartung told Yahoo. "They look for customization. Most customers get the same exact entree every single time, and that's what they crave."

In its third quarter, McDonald’s same-store sales rose 9.5%, topping Wall Street’s expectations. That came as menu prices rose about 10% t compared to the year-ago period.

As with Chipotle, McDonald’s is scaring away some of its low-income customers with the price hikes, but McDonald’s is also getting some higher-income customers, who are opting for fast food over a full-service restaurant.

McDonald’s raised its prices 11.3% over the past year, compared to Burger King (21%), Wendy’s (18.9%), Jack in the Box (15.6%) and Five Guys (13.5%), according to research from MoneyGeek.

Next story loading loading..