These were Brian Niccol decisions before he parachuted over to his ~$100M pay package at Starbucks as their CEO.
> In 2018, Niccol became the CEO of Chipotle Mexican Grill, replacing founder Steve Ells. Although Niccol had moved west to Newport Beach, California to join Taco Bell, he did not move back east to Denver when he joined Chipotle. Rather, under his leadership, Chipotle moved its headquarters from Denver to Newport Beach. During his tenure, he helped double Chipotle's revenue while its profits increased almost seven times. The stock price of Chipotle has increased by almost eight times under Niccol. Niccol also increased salaries for Chipotle's retail staff and expanded employee benefits. In 2023, Niccol's total compensation at Chipotle was $22.5 million, or 1,354 times the median employee pay at Chipotle for that year.
As govt inflation rates are often reported lower than actual, there's a good chance real inflation (or perhaps food inflation) was higher, and in spitting distance of 45%.
All takeout food did. I struggle to find why Chipotle would be considered expensive relative to other takeout options. You're getting chicken and 10 additional whole foods options for $10, when most other Mediterranean, Chinese, Japanese, taqueria, etc. options are at least a few $ more.
In the East Bay, I've noticed that the chain restaurants are consistently more expensive. Chipotle is more expensive than the taqueria down the street, not by a lot, but by a buck or two. And the bigger chains jacked up prices by more than the more regional ones: Subway costs the same as Togo's. McDonald's costs more than In n Out.
Businesses have found that people are willing to spend ~$20 on a fast/fast-casual lunch, and now most everybody charges that amount. But the national chains are also aiming for food consistency between locations, which means that my Chipotle and McDonald's meal is going to be only as good as they can economically make it in a blasted food desert like Indianapolis, whereas the local restaurants and regional chains can take advantage of me living less than 200 miles of 40% of the country's fresh produce production.
The fast food / fast-casual segments are losing price differentiation, and the fast food options are losing on quality.
That’s interesting because I’m in the East Bay Area too and have the opposite experience.
Chipotle burrito is $10.50, 80% of taquerias are $15 burritos.
In N out double double meal is $11, but McDonalds app has free fries so a Double Quarter (with 2x meat), fries, and drink is $9…
I just looked it up. At my local Chipotle, a burrito is $13.65 + $2.50 guac + $2.80 for chips and salsa + $2.85 drink, comes out just over $21.80 before tax. Tacqueria around the corner, Super fajitas burrito $15.49 + free chips and salsa + $3.75 for a drink, comes out to $19.25 before tax.
If you consider guacamole an extravagance, the more basic burrito at the tacqueria is $13.49, so the gap shrinks, but is still in the tacqueria's favor.
Between the two, Chipotle's chips are better, but everything else is a downgrade quality wise.
And I don't think it's reasonable to include coupons in McDonald's pricing. I'm not installing malware on my phone to save the $3 a McDonald's fry costs.
Other fast food options have recently marketed and offered cheaper options. Chipotle doesn't have a very deep menu. I see they sell a single taco for around $4 but not many other "value" options.
That’s kind of why Chillis is doing pretty well. It costs almost the same as McDonalds and for a few bucks extra, you’d get a reasonable sit down experience.
They're also benefiting from being practically the last man standing in the family dining segment. They're not in a menu category that was going to butt up against nicer sit-down dining places (if Olive Garden, for example, raised their prices much they'd be running up against sit down Italian places, likewise for Red Lobster and nicer seafood). And they adapted well to the COVID-era takeout boom, which suggests that they were actually serving food people would choose to eat, not merely offering the sit down experience like say Applebees.
All the expensive local run city restaurants benefited from inflation.
The McDonalds burger went from $12 to $18, but it's still the same terrible product. The hipster burger joint price went from $20 to $22, and that is a dramatically better burger.
The difference is that the local burger place doesn't have to show a 7% increase in profit year after year in perpetuity. Their price was set for "I can live a modest life off the profit and pay my employees a wage competitive enough to actually staff my restaurant, and therefore also end up with people more competent than your average fast food worker". That gives you more value per dollar, because more of your dollar is being spent on actual product and service rather than paying absurd and unjustifiable salaries to an entire building full of overpaid "management" and administration in the highest cost of living part of the country. Fewer shareholders to pay too.
So instead of the price delta between absolute trash and quality being $8, now it's $4.
I am told inflation is a bad thing, but it is making lots of small business that we desperately want and need much more competitive. A smaller business has far less pricing power and therefore less ability to pass on a cost increase.
