Chipotle hikes prices to cover the cost of raising wages(cnbc.com)
cnbc.com
Chipotle hikes prices to cover the cost of raising wages
https://www.cnbc.com/2021/06/08/chipotle-hikes-prices-to-cover-the-cost-of-raising-wages.html
9 comments
Never saw that one coming.
Weren't we expecting that executives would generously decide to take take a pay cut and shareholder dividends would be reduced so that line workers could be paid more?
Weren't we expecting that executives would generously decide to take take a pay cut and shareholder dividends would be reduced so that line workers could be paid more?
Wasn’t sure if this was sarcasm but for anyone thinking this as a serious one, heavy recommendation to Innovators Solution and Innovators Dilemma, which go into why this isn’t the case pretty much ever.
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This is a good thing. Everyone _should_ be happy to pay an extra 5-10% if it goes to the workers.
Oh, how simple it is to fool the common folk. Chipotle is going to pay market wages, regardless, or it will have to close stores due to lack of employees. Its pre-pandemic operating margin was over 20% so it can rather easily absorb a 4% boost in labor costs. What you, as a Chipotle customer, are paying, is a surcharge to help the CEO and exec team grow operating margin and profits and earn a big bonus. That's all.
(https://ir.chipotle.com/2020-02-04-Chipotle-Announces-Fourth...)
(https://ir.chipotle.com/2020-02-04-Chipotle-Announces-Fourth...)
But does this grow operating margin or does it keep it around 20%?
Labor costs have gone up, if by enough, then this is simply maintaining margins.
Labor costs have gone up, if by enough, then this is simply maintaining margins.
Hike is a bit hyperbolic
Its called inflation.
I'd be happy to have the cost of a $7 burrito increased by $.28 to think that the people involved in giving it to me aren't going hungry themselves.
I don't for a minute think that it's really "covering the cost of raising wages". It doesn't work that way. They set their prices to extract what they think they can get. They weren't losing money on a $7 burrito. They set that price because they were afraid if they charged more I'd go to Burger King next door.
They're raising prices because they now think they can get an extra quarter out of people. Which they probably can. If that happens to coincide with them giving raises to workers, great. Especially if that raise is a lot more than 4%.