With inflation at historic highs, it is severely impacting restaurants bottom line, at least for now! Take for instance Chipotle. High prices for avocados, dairy products and tortillas have forced the fast causal chain Chipotle to raise prices last quarter above 4%. Even with this increase it is not allowing them to achieve the margins that they would like to obtain. Chipotle CFO, Jack Hartung said, “there are no signs that food or packaging prices will decline anytime soon, but that they do appear to have stabilized recently, at least for the time being. He said it would likely be sometime next year before costs begin to drop.”
With margins 3% lower than last year for the food chain, they can hang on even with the increased price of goods, as their sales grew 16% over the last year. A lot of restaurants are feeling the pressures, but forecasters think things will likely stabilize by the end of the year and start to drop back to normal levels by 2023. If not, Chipotle and other fast-food chains will have to take the appropriate actions of raising their pricing again which will start to really hurt customers.
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