Chipotle: Where food inflation really bites
Chipotle’s (CMG) perceived decline in quality has come with an unwelcome side effect: steep price increases that now, it seems, vary by location.
Chipotle’s food inflation has been a sore point for customers for years. A widely shared Reddit thread last year estimated that a typical order rose roughly 43% between 2015 and 2025.
Analyst Charlie Bilello has pegged Chipotle’s price inflation even higher - closer to 75% over a comparable 10-year period.
Chipotle Revenue Growth, YoY: -23.4%. By far the worst quarter in its history. $CMG pic.twitter.com/FWqrDktafJ
undefined Charlie Bilello (@charliebilello) April 26, 2016
Now, Chipotle is raising prices again, but not uniformly.
According to menu checks by Baird Equity Research, the restaurant chain quietly hiked prices in a limited number of stores beginning in mid-November. This was not a nationwide move.
Burritos at some Chipotle locations are 3% more expensive than other locations, creating a risk-free arbitrage. Very rare that the market gives you these kinds of fat pitches.
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So far, only about 10% of locations have raised prices, Baird said. Even within the same city, some stores increased prices while others did not, suggesting a highly targeted approach rather than a broad pricing decision.
Where prices did rise, the increases averaged just over 3% on burritos and roughly 3% on a typical order. The selective rollout points to pricing tests, not a companywide shift.
Still, customers have noticed, and they’re not pleased.
Price increases are easier for consumers to tolerate when they believe the product is improving. However, Chipotle has been battling a growing perception that quality has slipped, making each additional price hike harder to justify.
Its business and stock price have suffered as a result.
Chipotle’s growth engine is slowing
Chipotle’s rising costs are colliding with growing complaints about shrinking portion sizes — a combination that’s proving difficult for consumers to stomach.
As food prices remain elevated and household budgets stay under pressure, more Americans are pulling back from the Mexican fast-casual chain.
That shift showed up in Chipotle’s most recent quarterly results. The company missed Wall Street revenue expectations and cut its same-store sales outlook for the third consecutive quarter.
Same-store sales are a key measure of a restaurant’s health because they strip out the impact of new store openings and focus on how existing locations are performing. When same-store sales slow or turn negative, it typically signals weaker customer traffic, reduced spending per visit, or both.
Chipotle now expects full-year same-store sales to decline in fiscal 2025, underscoring the pressure on its core business.
As InvestorsObserver has reported, customers in what was once Chipotle’s strongest demographic — the 25-to-35 age group — are becoming increasingly price sensitive, raising concerns about the company’s ability to push through further price increases without hurting demand.
CEO Scott Boatright blamed “consistent macroeconomic pressures,” such as rising unemployment, persistent inflation, and higher student loan payments.