How Chipotle Is Driving Certain Customers Away From Its Restaurants

It appears that fewer and fewer lower-income customers are coming to eat at Chipotle because of the price hikes.

By Trista Sobeck | Published

It’s a fine time for Chipotle. As food prices are still on the rise and supply chains are continually strained, the fast-food juggernaut says it has not really noticed people making changes in their typical orders to save money. However, customers who aren’t inclined to pay a premium are slipping.

Chipotle had a decline in sales that equaled 1% says CNBC reporting the restaurant’s quarterly earnings. CEO Brian Niccol said that fewer and fewer lower-income customers are frequenting the restaurant and the brand is going to just keep an eye on that situation. 

As the US food economy has shifted and changed since the COVID-19 pandemic. Inflation is ballooning, however, joblessness is seeing lower numbers. Food prices are rising at supermarkets so much so that eating out at places like Chipotle can be just as expensive as cooking at home. 

So, why not go and get a Chiptole bowl and add some guac to it? That $13 meal doesn’t seem so bad when you compare it to the price of avocados at the supermarket. Or even the price of beef. You might as well just have someone make it for you. 

Chipotle did hike prices in August of this year for the third time in 15 months. The latest increases were due to pockets of inflation around the country. In-restaurant sales climbed showing that people are ready to come back and get their burritos in person. 

However, Chipotle is not immune to the strife and struggles fast food restaurants and the like are seeing when it comes to workers demanding better pay, benefits, and other perks. Even Chipotle workers were trying to unionize. 

According to the report, the company did have to pay $3.5 million in separation costs tied to an employee (the report did not clarify or expand on that), it seems Chiptole is enjoying this time of catering to the semi-middle class. 

Chipotle is even putting drive-thru lanes in some of their locations called Chipotlanes These are reserved for digital orders only. The restaurant also opened 43 new locations in the last quarter. Perhaps more and more upper-level, casual fast food will give Chipotle some competition.

The chain reported a third-quarter net income of $257.1 million up from $204.4 million a year earlier. Chipotle reported paying more for dairy, tortillas, avocados, packaging, and labor. This does not seem out of the norm with how the price of food has increased.

Chipotle earned $9.51 per share outside of corporate restructuring and other miscellaneous changes. However, shares of Chipotle were off more than 2% in extended trading Tuesday.

Last year, the company stated it has set science-based targets to reduce greenhouse gas emissions by 50% by 2030 from a 2019 base year. These targets are in line with the long-term global temperature trajectories. Hopefully, as things heat up for the restaurant, it can stay the course.

Chipotle has a long-term goal of owning 6,000 restaurants in North America. It has stated that pilot programs will continue to explore construction that uses reclaimed and recycled building materials.