Restaurants are short on staff. Chipotle says raising wages helps
July 21, 2021. Summarized by summa-bot.
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HOUSTON, TEXAS - JUNE 09: A woman waits in line for food at a Chipotle Mexican Grill on June 09, 2021 in Houston, Texas. Menu prices at the Chipotle Mexican Grill have risen by roughly 4% to cover the costs of raising its' minimum wage to $15 an hour for employees. The restaurant industry has been boosting wages in the hopes of attracting workers during a labor crunch. (Photo by Brandon Bell/Getty Images)
Want to attract employees? Try raising wages and promising a path to a promotion. For Chipotle, those tactics appear to be working.
The higher wages and other efforts have "worked very well," said CEO Brian Niccol during a Tuesday analyst call discussing the company's second quarter results.
Chipotle may also have to do some damage control when it comes 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 to give their employees more predictable, less hectic schedules.
Last month, the company's Chief Financial Officer John Hartung said Chipotle raised menu prices by about 3. 5% to 4% to cover the cost of higher wages for employees.
So far, customers have shrugged off the higher prices, Niccol said during Tuesday's call, noting that "we saw very little resistance to the price increase. " In the second quarter, revenue grew 39% to $1. 9 billion.
that our lunch business is coming back," said Niccol, pointing to it as a sign that people going back to offices are resuming their Chipotle lunch habits.
But customers may not always be so accepting of higher prices, said Peter Saleh, restaurant analyst at BTIG, a financial services firm that specializes in research.
Generally, restaurants raise prices by about 2. 5% each year, Saleh said, noting that the figure could be higher this year.