(Reuters) - Chipotle Mexican Grill (NYSE:CMG) said on Wednesday it has raised menu prices by about 2%, as the burrito chain counters higher input costs in the midst of a choppy demand environment for restaurants in the United States.
Key ingredients such as dairy, beef and avocado have been costlier this year, weighing on margins for restaurant operators in an environment where consumers are already paring back on dining out in favor of cheaper meals at home.
Inflation in input costs contributed to U.S. restaurants and fast-food chains increasing menu prices in 2023, which tempered demand from consumers.
As Chipotle lapped those price increases, executives said in October during a post-earnings call that it was still seeing a low-single-digit inflation on the cost of sales, as well as on labor.
However, given some softness in demand trends — Chipotle missed market expectations for quarterly same-store sales — the company had hinted that a price increase might come only in early 2025.
"For the first time in over a year, we have taken a modest price increase of approximately 2% nationally to offset inflation," Laurie Schalow, Chipotle's corporate affairs chief said in a statement on Wednesday.
"The timing of the increase is also a positive signal regarding current demand trends," Raymond (NS:RYMD) James analyst Brian Vaccaro said in a note.
The company had raised prices in California in April when the FAST Act that raised wages for workers at fast-food chains went into effect.