Denver -- Chipotle Mexican Grill said it will hike prices for the first time in three years, saying that customer loyalty will insulate the chain from pricing fallout.
New menu boards reflecting the 3%-5% higher prices will be in place at all restaurants by this summer, said Chipotle.
In defense of the raised prices, CFO Jack Hartung said in a conference call with analysts that "most of the value comes from the experience." He added that the chain had earned "permission" from customers to raise prices because of that experience.
Hartung suggested that additional price increases could be in the offing. "We've still got room," he said.
Chipotle’s decision was based on rising costs from goods such as beef, avocados and cheese, which have negatively impacted margins. First-quarter net income missed Wall Street expectations. Sales, however, rose 13.4% in the first quarter and, said Chipotle, the increased pricing will drop more dollars to the bottom line and ease margin pressures.