Chipotle Says Menu Prices Could Increase If Minimum Wage Hike Imposed

Chipotle, the Mexican fast-food casual restaurant chain, said that it might need to increase the prices of its menu options if there is a mandatory increase to the minimum wage.

According to Business Insider, Jack Hartung, Chipotle’s CFO, spoke of the effect of a $15 minimum wage during the company’s quarterly earnings call on Wednesday. “He said hourly employees’ average minimum wage is about $13 per hour, while Glassdoor indicated that a starting hourly wage at Chipotle is about $11,” the outlet reported. 

“We’re not that far off of, for example, a $15 number. But let’s say, for example, that there’s going to be an across-the-board 10% increase in our wages,” Hartung said. “And that would, to offset that with menu pricing, take us 2% to 3% price increase,” he explained. 

“All of that is very manageable,” Hartung added. 

An increase might result in an additional charge of around $0.20 to $0.30 per meal, since the average customer spends about $11 on a burrito or different meal at the food chain, the outlet reported. 

Hartung said that other restaurants will have to take similar actions in order to be successful if there is a mandatory minimum wage. “We think everybody in the restaurant industry is going to have to pass those costs along to the customer,” he said. “We think we’re in a much, much better position to do that, than other companies out there.”

Last fall, Business Insider reported that increasing prices of items on menus is known to be a successful action for restaurants responding to the regulation of a minimum wage. “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 outlet reported.

“Ultimately, in any business, the customer pays for everything,” Walt Ehmer, CEO of Waffle House, recently said. “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.”

Democrats tried to get a $15 minimum wage hike into the stimulus package signed by President Joe Biden last month, but were ultimately unsuccessful. Their goal was to gradually increase the minimum wage over time, but the provision was taken out of the final version.

Conservatives pushed back against a mandated minimum wage hike due to the fact that it could harm small businesses which can’t afford to hire additional staff if they are required to pay a higher hourly wage to their workers.

The Daily Wire reported that some Democrats opposed the minimum wage hike in the stimulus bill last month, as well. Democratic Senator Joe Manchin of West Virginia said that every senator wants to increase the minimum wage, but noted that requiring the same minimum wage for every area of the country is not logical.

“Once we get to $11, then it should be indexed for inflation, so it never becomes a political football again,” Manchin said. He also responded to criticism from Rep. Alexandria Ocasio-Cortez (D-NY). “We come from two different areas of the country that have different social and cultural needs, [and with] that, you have to respect everybody,” he said.

“I look for that moderate middle. The common sense that comes with the moderate middle is who I am. That’s what people expect,” Manchin said. “My state of West Virginia, they know me, they know how I’ve governed. I’ve tried to basically represent them in the best of my ability. These are hard-working, good, commonsense people. That’s what I want and that’s what I keep trying — I try to do.”

Large corporations like Chipotle might be able to manage the mandatory increase, but conservatives argue that workers end up being the ones who are hurt by wage increases when businesses are not able to take on more employees. In addition, some companies might lose customers if they increase their prices, which could lead to lay-offs, as well. 

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