Chipotle warns it could raise prices even further to stave off labor issues and supply chain struggles

Chipotle
Chipotle’s average meal went up by 30 to 40 cents.

  • Chipotle could raise menu prices again, it said Tuesday.
  • It already raised its prices by 4% in June.
  • Rising labor and supply chain costs are putting pressure on retailers and manufacturers.
  • See more stories on Insider’s business page.

Chipotle isn’t ruling out another price hike this year.

In a call with investors Tuesday, the burrito chain’s executives said it may still raise prices to offset ongoing and rising labor, ingredient, and supply chain costs.

“There’s still that possibility that we could take additional pricing action to fully close the gap,” CEO Brian Niccol said. “I just think there’s so much going on right now with inflation and the question about whether inflation is transitory or permanent. We’ve got labor inflation. We took a big move there. We’ll see how that shakes out. And now we’ve got the Delta variant as well. There’s just a lot of unknowns.”

As for timing, CFO John Hartung said it would take months to get the full picture of inflation currently affecting the US economy.

“Let’s see what happens to inflation, and let’s see what happens to the economy over the next several months, and we’ll make the appropriate decisions at the appropriate time,” he said.

Chipotle raised its menu prices by 4% in June, shortly after putting its minimum hourly wage up to $15. This means that the average Chipotle meal now costs 30 to 40 cents more.

So far, consumers are responding well to these hikes, Hartung said. The chain is “seeing no resistance whatsoever” to price changes, he said.

This is reflected in the sales numbers. Same-store sales at the burrito chain were up 31% in the most recent quarter versus the quarter before as dining-in sales picked up as customers gradually return to normal life.

With ongoing uncertainly around labor and supply chain woes dragging on, many retail chains and manufacturers are having to raise prices to offset these expenses.

The Bureau of Labor Statistics’ June Consumer Price Index showed that prices surged 0.9% from May. The highest month-over-month change since April 2008.

Chipotle has also not been immune to labor pressure facing restaurants and other services industries. In May, the chain raised its average wage to $15 an hour and announced plans to hire 20,000 workers.

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Halal Guys’ new restaurant designs include subway tiles and branded manhole covers, which pay homage to its origins as a Manhattan food truck

The Halal Guys new restaurant design
The Halal Guys’ new redesign.

  • The Halal Guys started rolling out its new restaurant design in the spring.
  • The design pays tribute to the brand’s humble origins as a Manhattan street cart.
  • The new restaurants feature subway tiles, branded manhole covers, and park bench-style seating.
  • See more stories on Insider’s business page.
The Halal Guys had already coming up with its new restaurant design before the pandemic, Margaret Carrera, chief development officer at the Halal Guys, told Insider.

The Halal Guys

The fast-casual chain, which has close to 100 restaurants worldwide after opening its first in 2014, started rolling out the new designs in the spring.

The Halal Guys new restaurant design seating

The design pays tribute to the brand’s early days as a lone Manhattan street cart back in 1990. Carrera said that the Halal Guys wanted to keep its New York roots clear throughout the restaurant.

The Halal Guys new restaurant design mural

Read more: California Pizza Kitchen is quietly testing a dining room robot amid a national labor crisis that is forcing more restaurants to lean on autonomous technology

This includes hinged graphic metal panels and subway tiles …

The Halal Guys

… as well as manhole covers on the floor of the ordering queue, which the chain says is reminiscent of what it was like to visit the original New York City street cart.

The Halal Guys

The new design also includes park bench-style seating around New York City-themed photo tables, as well as window barstools.

The Halal Guys new restaurant design seating

The restaurants also have an open design, which means that diners can watch their orders being made.

The Halal Guys new restaurant design

The new designs don’t just focus on dine-in. Carrera said that dine-in customers are flocking back, but that delivery and collection makes up a huge part of the business. The new restaurants have a designated space for both customers and delivery drivers to collect takeout orders.

The Halal Guys
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Fast food has gotten way more expensive in the last year

McDonald's
  • Fast food prices are rising across the industry.
  • Dunkin’, McDonald’s, and Taco Bell have seen the biggest increases, according to analysts.
  • Shipping issues, labor shortages, and weather events all contribute to rising prices.
  • See more stories on Insider’s business page.

Prices at fast-food chains will continue to rise as ingredients and labor grow more expensive.

Chipotle raised prices across the menu by about 4% in June, a move the company says was prompted by increased wages for workers.

The average Chipotle meal will cost 30 to 40 cents more than it did before, and a spokesperson told Insider that the price hike will compensate for the recent wage increases for workers. In April, the fast-casual chain said it would raise average hourly wages to $15 per hour by the end of June, an increase of $2 over the $13 an hour average pay.

Nearly every fast food and fast-casual chain will likely follow, according to analysts at Gordon Haskett in a report released Thursday.

Read more: Kraft Heinz employees and analysts say 3G Capital’s cost-cutting business strategy is setting it up for failure. Here’s how the private equity firm’s playbook left it playing catchup to its rivals.

Analysts looked at 24 restaurant chains over the span of a year and found 17 of them are currently running price increases, and price increases, on the whole, are growing in both size and frequency. Quick service restaurants have seen the largest increases, averaging 6% compared to 3% at fast-casual and 1% in casual chains. Most of these increases have been implemented since March 2021.

Based on Gordon Haskett analysis, the greatest price increases have been 10% at Taco Bell, 8% at McDonald’s, and 8% at Dunkin’, follow by Chipotle and The Cheesecake Factory. Exact prices vary by market. Applebee’s, Papa John’s, Red Robin, and a few others have not adopted any price increases over the past year.

Labor costs are partially the cause of these rising prices. A truck driver shortage is making transportation more expensive, while restaurants, grocery stores, and factories are all struggling to keep fully staffed. Processing plants and farms are facing the same problems, for example, chicken farms don’t have enough employees, so they’re struggling to process birds quickly.

Labor costs might have increased for restaurants over the last year, but so did the price of ingredients. US consumer prices hit their highest level in 13 years in May, increasing 5% over the previous year. Staple Chipotle items, like corn and avocados, grew more expensive this year as demand rose and shipping delays drove prices further up. Experts say rising food costs are a combination of growing demand as consumers increase spending and supply chain struggles. Shipping delays and severe weather events have made crucial commodities more expensive and difficult to obtain.

Do you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.

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Applebee’s offered free appetizers in hopes of luring in 10,000 job candidates and more than 40,000 applied

applebees
  • Applebee’s “Apps for Apps” promotion was a huge success and brought in 40,000 applicants.
  • Restaurants are increasingly turning to application perks to attract potential employees.
  • Retail is facing a labor shortage industry-wide.
  • See more stories on Insider’s business page.

Applebee’s says it drew in 40,000 job applicants for 10,000 openings with its free appetizer incentives.

Restaurants are offering up all kinds of perks to attract workers, and Applebee’s seems to be one of the most successful. On May 17, the chain hosted a national hiring day in the hopes of filling 10,000 open positions. Interviewing candidates received coupons for a free appetizer through the “Apps for Apps” program. It got four times as many applicants, Applebee’s president John Cywinski told The New York Times.

“Our No. 1-selling category is appetizers, so we decided to offer an app for an app. I’ve got guests coming back in droves, but I don’t have all the team members I’d like,” Cywinski said.

Hiring has been difficult for many companies that have reported a lack of candidates for open positions. But retail and restaurants are are also struggling to retain workers who want to leave for new opportunities. That’s making the sector’s labor crunch even worse.

Read more: Ghost kitchens operators like CloudKitchens, Kitchen United, and All Day Kitchens are expanding their business models beyond the rent-a-space model as competition heats up

Subway, McDonald’s, and Taco Bell, along with others, are advertising thousands of open positions online in hopes of staffing up and returning to pre-pandemic hours with open dining rooms. Some hiring managers are advertising perks like $50 for an interview, signing bonuses, and referral programs. Chipotle got thousands of applications after announcing it was boosting the minimum wage.

It seems perks aren’t always enough to restaff restaurants as thousands of people leave the industry for good. Some workers who were furloughed or laid off early in the pandemic may never return to fast food and customer service work.

In place of customer-facing retail jobs, some workers are turning to warehouse employment with companies like Amazon, even as those jobs make headlines for poor working conditions. The e-commerce giant has hired about 2,800 people a day since July, mostly in warehouse roles.

Do you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.

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Chipotle attracted nearly 24,000 applicants through an online job fair a week after the chain announced it was boosting its minimum wage

Chipotle
  • Chipotle got nearly 24,000 applicants in a one week period through Discord.
  • Chipotle announced it would raise average wages to $15 per hour.
  • The restaurant industry is struggling to hire workers.
  • See more stories on Insider’s business page.

Chipotle says it received more than 23,000 job applications through online chat platform Discord. The thousands of applicants came just after the fast casual chain announced it would raise the average hourly wage to $15 and hire 20,000 new workers.

As retailers struggle to hire workers, Chipotle became the first brand to launch a career fair on Discord, the company said. Discord is a group chatting platform originally built for gamers, but the service is now used by all kinds of online communities. The Discord server hosted recruitment content and sessions with Chipotle employees on benefits and career paths.

Read more: Chipotle CEO Brian Niccol answers 9 questions about the chain’s future including the fight for delivery profits, menu innovation, and franchising

Over a one-week period, Chipotle told Insider that it received 23,873 total applications following the career fair, an increase of 77% over the previous week and 298% over the first week of April.

Earlier in May, Chipotle announced plans to raise hourly wages for workers, bringing the average up $2 from $13 to $15. Wages will range from $11 to $18 an hour, going into effect by June.

Chipotle is hiring for thousands of jobs, including 20,000 open roles, plus workers to staff the 200 new locations planned to open this year. Hiring has been difficult for many companies that have reported a lack of candidates for open positions. But retail and restaurants are are also struggling to retain workers who want to leave for new opportunities. That’s making the sector’s labor crunch even worse.

Subway, McDonald’s, and Taco Bell, along with others, are advertising thousands of open positions online in hopes of staffing up and returning to pre-pandemic hours with open dining rooms. Some hiring managers are advertising perks like $50 for an interview, signing bonuses, and referral programs.

It seems perks aren’t enough to restaff restaurants as thousands of people leave the industry for good. In that case, raising wages as Chipotle did may be the only way to attract workers.

Do you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.

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Hundreds of Subway, Dunkin’, and Burger King locations closed in 2020 – here are the chains with the most closures

Subway Restaurant
Subway assembly line.

  • More than 10% of all US restaurant locations closed during the pandemic.
  • Dunkin’, Burger King, and Subway were the hardest hit large chains.
  • But others like Domino’s and Starbucks added locations last year.
  • See more stories on Insider’s business page.

10% of all restaurants have closed since the beginning of the pandemic in 2020, including hundreds of locations of major chains, according to food industry research firm Dataessential’s new report.

No sector of the industry was safe. Closures affected fast food, fast casual, casual, and fine dining. Subway closed more stores than any other large chain examined by Dataessential, closing out the period with 1,557 fewer stores, a 6.6% loss. Dunkin’ lost a net 559 stores, the report said.

Read more: Chipotle CEO Brian Niccol answers 9 questions about the chain’s future including the fight for delivery profits, menu innovation, and franchising

Even fast food staples were hit by the pandemic. Burger King closed 319 locations, while McDonald’s closed 173. However, that only amounts to a 1.2% loss for McDonald’s, which still has well over 13,000 locations. Baskin Robbin’s, Hardees, and Steak N Shake each closed restaurants, while Little Caesar’s bucked the positive trend for pizza chains this year, closing 120 locations.

Some restaurants did manage to open new locations. Domino’s came out on top, opening 358 new stores. This isn’t necessarily surprising: pizza and wings were hailed as early winners in the pandemic as Americans increasingly ordered from brands that were already set up to accommodate delivery, like Papa John’s and Wingstop.

The rest of the pizza industry saw huge losses, up to $30 billion in March and $50 billion in April. The trend doesn’t apply to all pizza chains, though, as Little Caesar’s shows.

Starbucks, Taco Bell, and Chipotle all also all ended the year with over 200 additional stores apiece. Each of these chains has invested in drive-thrus throughout the pandemic.

Starbucks is making efforts to improve drive-thru efficiency with digital drive-thru screens for ordering and handheld devices for baristas to input orders on. Taco Bell cut more than a dozen items in 2020 to make drive-thru lines move more quickly, and sales grew as a result. Chipotle is opening hundreds of Chipotlane drive-thru lanes, with plans to more than double locations.

Most restaurants that added locations have embraced drive-thrus and mobile ordering, while chains that didn’t suffered, though this doesn’t explain every chain.

Do you have a story to share about a retail or restaurant chain? Email this reporter at mmeisenzahl@businessinsider.com.

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Smashburger is opening 40 restaurants in 2021. Take a look at its plans for open kitchens, food lockers, and more.

Smashburger
The dine-in experience is getting a makeover option, too.

Fast-casual chain Smashburger is planning on adding to its global network of 250 corporate and franchise restaurants by opening 40 new restaurants in 2021.

The chain has focused on a dine-in model in the past but plans to offer more takeout and collection services, accelerated partly by the pandemic.

Smashburger
The restaurants will offer a range of collection and delivery options, as well as traditional dine-in.

The company plans to focus on “aggressively” opening new stores in busy suburban areas of Brooklyn, Chicago, New York, and Washington DC, its president, Carl Bachmann, told Insider.

Though the new restaurants were planned before the pandemic, they’ll offer customers contactless ways to collect food. This includes using food lockers to keep food hot until customers collect their meals. These are also in the works for other fast-food chains, including KFC and Burger King.

Smashburger
Customers will be able to collect their orders from heated food lockers.

The new restaurants won’t only have enhanced collection options. The dine-in experience is getting a makeover, too.

This includes open kitchens, so customers can see their orders being cooked, and restaurant interiors that are specific to the city.

Smashburger
The restaurants will have open kitchens.

Smashburger also launched a new website and app during the pandemic, but still plans to offer delivery through a network of delivery service apps.

Other fast food chains are also redesigning their restaurants as demand for drive-thru and digital ordering continue to boom during the coronavirus pandemic. Shake Shack is opening its first drive-thru in Orlando, Florida, later this year, and plans to debut new delivery and collection methods, too. Burger King is also rolling out new-look stores will open in Miami, Latin America, and the Caribbean in 2021.

Read the original article on Business Insider

Smashburger is opening 40 restaurants in 2021, complete with food lockers and open kitchens. This is what they will look like.

Smashburger
The dine-in experience is getting a makeover option, too.

Fast-casual chain Smashburger is planning on adding to its global network of 250 corporate and franchise restaurants by opening 40 new restaurants in 2021.

The chain has focused on a dine-in model in the past but plans to offer more takeout and collection services, accelerated partly by the pandemic.

Smashburger
The restaurants will offer a range of collection and delivery options, as well as traditional dine-in.

The company plans to focus on “aggressively” opening new stores in busy suburban areas of Brooklyn, Chicago, New York, and Washington DC, its president, Carl Bachmann, told Insider.

Though the new restaurants were planned before the pandemic, they’ll offer customers contactless ways to collect food. This includes using food lockers to keep food hot until customers collect their meals. These are also in the works for other fast-food chains, including KFC and Burger King.

Smashburger
Customers will be able to collect their orders from heated food lockers.

The new restaurants won’t only have enhanced collection options. The dine-in experience is getting a makeover, too.

This includes open kitchens, so customers can see their orders being cooked, and restaurant interiors that are specific to the city.

Smashburger
The restaurants will have open kitchens.

Smashburger also launched a new website and app during the pandemic, but still plans to offer delivery through a network of delivery service apps.

Other fast food chains are also redesigning their restaurants as demand for drive-thru and digital ordering continue to boom during the coronavirus pandemic. Shake Shack is opening its first drive-thru in Orlando, Florida, later this year, and plans to debut new delivery and collection methods, too. Burger King is also rolling out new-look stores will open in Miami, Latin America, and the Caribbean in 2021.

Read the original article on Business Insider

Smashburger is opening 40 restaurants in 2021 with food lockers and open kitchens. Take a look inside.

Smashburger
The dine-in experience is getting a makeover option, too.

Fast-casual chain Smashburger is planning on adding to its global network of 250 corporate and franchise restaurants by opening 40 new restaurants in 2021.

The chain has focused on a dine-in model in the past but plans to offer more takeout and collection services, accelerated partly by the pandemic.

Smashburger
The restaurants will offer a range of collection and delivery options, as well as traditional dine-in.

The company plans to focus on “aggressively” opening new stores in busy suburban areas of Brooklyn, Chicago, New York, and Washington DC, its president, Carl Bachmann, told Insider.

Though the new restaurants were planned before the pandemic, they’ll offer customers contactless ways to collect food. This includes using food lockers to keep food hot until customers collect their meals. These are also in the works for other fast-food chains, including KFC and Burger King.

Smashburger
Customers will be able to collect their orders from heated food lockers.

The new restaurants won’t only have enhanced collection options. The dine-in experience is getting a makeover, too.

This includes open kitchens, so customers can see their orders being cooked, and restaurant interiors that are specific to the city.

Smashburger
The restaurants will have open kitchens.

Smashburger also launched a new website and app during the pandemic, but still plans to offer delivery through a network of delivery service apps.

Other fast food chains are also redesigning their restaurants as demand for drive-thru and digital ordering continue to boom during the coronavirus pandemic. Shake Shack is opening its first drive-thru in Orlando, Florida, later this year, and plans to debut new delivery and collection methods, too. Burger King is also rolling out new-look stores will open in Miami, Latin America, and the Caribbean in 2021.

Read the original article on Business Insider