How do Chipotle Mexican Restaurant’s high menu prices compare to its peers

Do you think Chipotle Mexican Grill has raised menu prices more than competitors?

Think again.

A report by Wall Street analyst Peter Saleh of BTIG Thursday surveyed Chipotle’s pricing in 25 cities compared to its peers. Saleh found that Chipotle is, in fact, still a “value leader,” despite the double-digit price hike. By the end of 2022, Saleh expects Chipotle prices to be on average about 20% higher than they were at the end of 2020, including prices that rose 8.5% in 2021 and 10.5% in the first quarter of this year.

“While this level of pricing is about 4 to 5 times higher than usual, we believe Chipotle remains the value leader in the Mexican fast segment, with many of its peers raising prices at a similar or more high rate,” the report said. .

According to the survey, Chipotle prices were 10.7% cheaper than Qdoba; 9.2% less expensive than Moe’s Southwest Grill; And about 5% less than Baja Fresh.

Specifically focusing on chicken entrees, which account for about 60% of Chipotle’s sales mix, Qdoba and Moe have raised prices for these dishes by about 21.5% and 28.1%, respectively, since 2018, compared to a 19% increase in prices for chicken dishes at Chipotle.

Furthermore, the report notes that Chipotle has room for further menu price increases.

“We expect Chipotle to continue to raise list prices, but at a more moderate pace than many of its peers, while maintaining its value proposition,” Saleh wrote.

With inflation hitting 9.1% in June—the highest level since November 1981—menu pricing has been a primary concern, with restaurants keeping a close eye on consumer reactions and competitors’ moves.

And while inflation continued to push up food prices at home, which rose 12.2% for the year ending in June, food away from home also rose 0.9% during June, up 7.7% over the 12-month period.

The BTIG survey also looked at price increases among other emerging fast-food chains, including Chopt, Sweetgreen and Dig Inn. Once again, the survey finds that Chipotle’s prices are cheaper or comparable in the markets in which it competes.

The survey found that Chopt’s prices were 13.5% higher than Chipotle’s, while Dig Inn’s was essentially in line with Chipotle. However, Saleh noted that Sweetgreen and Dig Inn have historically been about 12% to 13% more expensive than Chipotle, so the value gap has narrowed somewhat.

The analyst also believes that Chipotle is relatively less expensive than Shake Shack – although the report also asserts that Shake Shack is lagging behind in list prices and likely to raise prices more aggressively in the coming months.

BTIG also notes that Chipotle’s traffic remains positive, although traffic trends have slowed over the past year as prices have risen.

Chipotle’s first-quarter same-store sales were up 9%, and restaurant-wide profit margins were up 20.7%. CEO Brian Niccol said in April that he expected margins to remain “bumpy” due to inflation, but reiterated the chain’s pricing strength, with expected margins of 25% in the second quarter with pricing planned for higher. The company is due to announce results on July 26.

The BTIG report noted that many of Chipotle’s competitors have closed stores or gone out of market since 2018, while the 3,000-unit Chipotle continues to expand, driving access to 7,000 locations across North America in a variety of formats.

“We believe Chipotle is still in the middle stages of its sales and economic transformation of the unit, with significant momentum for initiatives such as menu innovation, digital sales expansion, and stronger marketing,” Saleh wrote. “The strength of these initiatives (before COVID-19) has led to an improvement in comparable sales and restaurant margins that we expect to continue as these metrics advance toward historical levels.”

Contact Lisa Jennings at [email protected]

Follow her on Twitter: @livetodineout

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