On Wednesday, Hartung reportedly said while speaking on a quarterly earnings call that Chipotle executives would be forced to raise that menu price to “offset” the wage increase for the franchise’s nearly 90,000 employees.
“We’re not that far off of like for example, a $15 number,” Hartung said. “But let’s say, for example, that there’s going to be an across-the-board 10% increase in our wages.”
“And that would, to offset that with menu pricing, that would take us 2% to 3% price increase,” he added.
Hartung said forced wage increases — amounting to an average of 15% overall — and increased menu prices would be “very manageable” for his company, but not necessarily for others.
Business Insider ran the numbers.
“For customers, this could mean about a 20¢ to 35¢ additional charge per meal, as the average person spends about $11 for a burrito or other meal at Chipotle,” the news outlet reported.
What about other businesses?
Hartung said that other restaurants would predictably do the same thing.
Hartung said, “We think everybody in the restaurant industry is going to have to pass those costs along to the customer. We think we’re in a much, much better position to do that, than other companies out there.”
Texas Roadhouse and the Cheesecake Factory were other examples restaurants that had to raise their menu prices after dealing with forced wage increases, Business Insider noted.
The outlet reported, “Raising menu prices is, at this point, a tried-and-true response to minimum wage regulation for many restaurant chains.”
The CEO of the popular chain Waffle House summed up what happens when input costs increase:
“Ultimately, in any business, the customer pays for everything. We don’t have any other source of revenue other than the customer. So we have to be careful how we treat our customers, and we don’t stick it to them with giant price increases.”
A higher federal minimum wage should be phased in rather than enacted suddenly, Chipotle CFO Jack Hartung says https://t.co/Y717zf6ZVV
“Executives at Kura Sushi, The Cheesecake Factory, and Texas Roadhouse all said in recent calls with investors that, when states and cities raised minimum wage, the chains responded by raising menu prices,” the report noted.
According to Business Insider, in October, Texas Roadhouse CEO Wayne Taylor told investors, “I would say there is a short-term shock. And then long term, there’s an adjustment, both on our side and the guest side.”