Chipotle Raises Menu Prices Following Announcement That They Will Increase Wages for Employees
Many people would like to see minimum wage increased to $15 per hour. Even without a law requiring them to increase starting salaries, some big companies have decided to increase what they pay their employees to $15 per hour or even more. Amazon, Costco, Walmart, Target and McDonald’s are among these companies. Now, we can add Chipotle to that list.
Chipotle announced that they will be raising the starting salary for employees to an average of $15 per hour with a range of $11 to $18 per hour. Depending on how far employees move up in the company, there is the potential for them to earn six figures. The Restaurateur position, which is the highest level of general manager, earns on average $100,000 per year.
At the Baird Global Consumer, Technology & Services Conference, Chipotle CFO Jack Hartung said, “It feels like the right thing, at the right time, and it feels like the industry is now going to have to either do something similar or play some kind of catch-up.”
Chipotle is raising the starting salary because it is desperate to recruit more employees. The restaurant chain wants to hire approximately 20,000 new employees. Besides raising the starting salary, the company is also offering referral bonuses for current employees. A crew member who refers a new employee gets a $200 bonus. An Apprentice or General Manager who refers a new employee gets a $750 bonus.
While paying employees more and giving current employees bonuses for referring their friends sounds good, it comes with a catch for customers. In order to cover the costs of these bonuses and increases to the starting salary, Chipotle has raised their menu prices by 3.5% to 4%.
Chipotle CEO Brian R. Niccol explained, “We really prefer not to take pricing. But it made sense in this scenario to invest in our employees and get these restaurants staffed and make sure that we have the pipeline of people to support our growth. And then with that, we’ve taken some pricing to cover that.”
Along with paying employees more, Chipotle will also be paying more for their ingredients. Many restaurants are currently dealing with increased costs for ingredients for their food, but Chipotle says it will not increase menu prices again, at least not right now. Hartung said, “Ingredient costs, there’s talk about it. We’ll see where that leads.”
Do you think customers will be put off by the increased menu prices at Chipotle? Do you think other companies will increase prices to cover increases to employee wages and increased costs for ingredients?