Customers seem to be abandoning chipotle and its high prices

Chipotle has long boasted an extremely loyal fan base who can’t get enough of its fresh ingredients and Mexican-inspired dishes. And thanks, in part, to those enthusiasts, the chain has felt comfortable making frequent and notable price increases, many of which have taken place in the past year alone. But its latest earnings report appears to show that customers are finally fed up and turning their backs on overpriced bowls, burritos and tacos.

In a Feb. 6 earnings call, Chipotle reported fourth-quarter earnings, revenue and same-store sales that fell short of expectations. The chain said customer spending was lower than normal, leading to a “challenging” quarter. “As we moved through the holidays, we just didn’t see that pop, that momentum, that we normally see… frankly, we started the quarter soft and we ended the quarter soft,” said the Chief Financial Officer Jack Hartung.

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Executives attributed the weak results to factors including weather, comparisons to the popular smoked brisket that rolled out in 2021 and a performance below expectations from the Garlic Guajillo Steak launched September 2022. The limited-time menu item received scorching reviews from customers.

CEO Brian Niccol said Chipotle hasn’t seen a negative reaction to its higher prices, even though transactions have declined for two straight quarters, CNBC reported. But customers seem to be fed up with the higher costs nonetheless.

Although Chipotle has gained major popularity and success for its relatively small menu, the fast-casual hasn’t been able to escape the effects of soaring US inflation, which has slowed for the sixth consecutive month. in December 2022, but still experienced year-on-year. 6.5% increase. Faced with rising costs for ingredients such as avocados, dairy and meat, the chain raised prices by 4% in August 2022. This came after another 4% increase in early 2022, as well as previous price increases in 2021.

Chipotle’s price increases reportedly helped the company deal with higher ingredient costs last year. He noted that his food costs “benefited from higher menu prices and, to a lesser extent, lower avocado prices.”

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In an interview with Yahoo! Finance this week, Hartung again pleaded for higher prices, saying the chain was monitoring the reaction to price hikes and that “most” customers visited stores the same number of times, if not more.6254a4d1642c605c54bf1cab17d50f1e

But that’s not the case for Chipotle customers who have less to spend. Hartung admitted that the company “sees some sweetness in our low-income customers, but we’re also seeing that they’re spending less in restaurants overall, so it’s not just Chipotle.”

He said the chain doesn’t currently plan to cut its high costs, but further hikes aren’t on the horizon either.

Zoe Strozewski