San Francisco, California, Chipotle locations reportedly raised the price of their food as much as 14.4 percent around the same time the city’s 14 percent minimum wage increase took place.
The average raise in price was 10.5 percent in San Francisco at Chipotle restaurants, with beef entrees going up 14.4 percent, a large soda up 11.1 percent, chips up 10.3 percent, and water rising 10 percent, reports Investor’s Business Daily based on figures calculated by William Blair’s Sharon Zackfia in a report.
Other Chipotle locations across the country, including Denver, Minneapolis, Chicago, and Orlando, Florida, experienced increases but they averaged around 0.5 percent across all items.
“We believe the outsized San Francisco price hike was likely because of increased minimum wages (which rose from $10.74 per hour to $12.25 on May 1) as well as scheduled minimum wage increases in future years," Zackfia said in the report.
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Chipotle spokesperson Chris Arnold confirmed that the San Francisco pricing hike was “done in part to offset higher labor costs,” reports The Blaze.
“California, and San Francisco in particular, has a high cost of doing business,” Arnold said. “In San Francisco, for example, our occupancy costs are about double the Chipotle average as a percentage of sales, and our menu prices there are right around the average for Chipotle restaurants around the country, so increases to wages can have a greater impact than they might elsewhere.”
By 2018, the minimum wage in San Francisco will be $15 per hour. Los Angeles and Seattle have also recently approved a $15 per hour minimum wage increase. It is unknown whether Chipotle will raise prices in these cities as well to offset the higher labor costs.