[ad_1]
The higher wages and other efforts have “worked very well,” CEO Brian Niccol said on an analyst call Tuesday discussing the company’s second quarter results.
“We are in a very good working situation,” said Niccol. “We made huge progress on what was really a difficult situation,” he said in February and March. “But now our hiring is caught up.”
Chipotle explained in May that the wage hike means workers are making between $ 11 and $ 18 an hour. This still leaves some workers below the $ 15 minimum supported by labor rights advocates and the president.
Chipotle may also need to limit the damage to its reputation as an employer: In April, New York City accused the company of hundreds of thousands of violations of a law that requires fast food chains give their employees more predictability, less busy schedules. The channel said at the time that it would defend itself.
Other chains, including Olive Garden and McDonald’s, have also tried to attract employees with higher salaries. Chipotle is trying to attract more talent with unconventional hiring practices, such as accepting resumes on TikTok.
Higher prices on the menu
Last month, the company’s chief financial officer, John Hartung, said Chipotle had increased menu prices by about 3.5% to 4% to cover the cost of higher wages for employees. So far, customers have ignored the higher prices, Niccol said on Tuesday’s call, noting that “we have seen very little resistance to the price increase.” In the second quarter, revenue increased 39% to $ 1.9 billion. Sales at restaurants open for 13 months or more increased 31%.
The company was particularly pleased to see breakfast sales start to increase. “The best news I’ve probably seen in our data is… that our lunch business is starting to return,” Niccol said, indicating that people returning to the office are resuming their Chipotle lunch habits.
But customers may not always accept higher prices, said Peter Saleh, restaurant analyst at BTIG, a financial services firm specializing in research.
“It’s possible that consumers will say, ‘Hey, that’s too much,’ and they’re pushing back,” he said. Typically, restaurants increase their prices by around 2.5% each year, Saleh said, noting that the figure could be higher this year. Restaurants that exceed the industry standard tend to be punished by lower customer traffic, he said.
So far, investors don’t seem overly worried about the company’s outlook. Chipotle (GCM) sautéed stock about 12% Wednesday.
–— CNN’s Jordan Valinsky contributed to this report.
[ad_2]
Source link
