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Chipotle Raised Prices, But That Didn't Deter Its Fans

Chipotle Raised Prices, But That Didn't Deter Its Fans

Despite higher prices, Chipotle has seen revenues and same-store sales rise in the third-quarter for 2018.

Last week, Chipotle Mexican Grill Inc. CEO Brian Niccol hosted a fairly cheerful earnings call with investors, saying that the company seemed to have finally turned the corner on years of health scandals. Niccol announced third-quarter revenue had increased by 8.6% to roughly $1.23 billion since the same time last year, according to CNBC. This was in line with analyst expectations.

Chipotle’s increased earnings are mostly due to an increase in pricing that began in April of 2017. According to Business Insider, Chipotle raised prices an average of 5% across their entire menu, equating to paying roughly an additional $0.34 on a chicken burrito bowl in Washington DC.

Despite rising prices, same-store sales increased 4.4%, indicating that Chipotle’s customers were willing to bear the additional cost.

It seems that Chipotle has mostly recovered from a string of viral and bacterial outbreaks over the past two years. In 2017, a norovirus outbreak in Virginia sickened over 130 Chipotle customers, while last July health officials launched an investigation into an Ohio location after receiving 368 complaints from patrons.

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After another scandal last December, Chipotle founder Steve Ells was forced to resign as CEO as investors bolted from the company. Niccol took over as CEO after turning around another faux-Mexican restaurant chain: Taco Bell.

In addition to raising prices, Niccol also began an online initiative to improve Chipotle’s digital presence. Mobile and online orders grew 48.3% after Niccol took over and now account for 11.2% of all sales.

Chipotle Raised Prices, But That Didn't Deter Its Fans
via Fast Company

Chipotle invested $135 million in order to speed up their restaurant’s ability to serve online customers. One of the improvements made was to create a second burrito line in Chipotle kitchens that only served online orders. So far, 750 of Chipotle’s 2,450 have this additional second line, and the burrito chain expects to have all locations remodeled by 2019.

Another addition is the online order pick-up shelf that allows customers to pay online and then simply pick up their completed order in-store, bypassing the line and greatly speeding up order processing through automation.

Chipotle plans to open between 140 and 155 new locations in 2019.

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